Category: Benefits

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Medical Mythbusters Crack Back on Health Care Costs

If you think that wellness programs are an effective way to manage health care costs and improve the overall health of your employees, think again. The same goes for accountable care organizations, on-site health clinics, using claims data to predict future health problems, pharmacy benefit managers and a variety of other fashionable trends springing up in the post-health care reform world.
 
In the recent book, “Cracking Health Costs: How to Cut Your Company’s Costs and Provide Employees Better Care,” co-authors Tom Emerick and Al Lewis skewer sacred cows and debunk prevailing wisdom in short order. The gist of the book is summed up with this pithy advice: “Keep vendors away from your checkbook, keep consultants away from your conference room and keep providers away from your workforce.”
 
Emerick, chief strategy officer at Chicago-based Laurus Strategies, is the former vice president, global benefit design for retail giant Wal-Mart. He spoke with Workforce recently about the problem with the latest approaches to managing health care costs and quality.
 
How will the Affordable Care Act impact the way employers manage health care costs, and how effective are wellness programs to that end?
Under ACA, employers won’t have control of health care costs. I’m troubled that as more evidence piles up that the wellness approach isn’t working, more companies are doubling down on it. Employers will have to conform to a government-issued plan design. 
 
The time that employers will realize that wellness programs aren’t effective is when they are being mandated to provide it. You will have to report if it’s improving the health of the population you are targeting, which creates another level of bureaucracy. I imagine that a sanction for not meeting certain health goals won’t be far behind.
 
On the positive side, it will force employers to see if they are having an impact.
 
What is the problem with wellness programs?
The three factors that impact an employee’s health are age — no wellness program can change that — genetics, which you also can’t change, and how well you like your job. In Europe, study after study shows that the single risk of mortal hazard for working-age people is whether they have a job they can tolerate. If you’re in a job that you hate it causes metabolic syndrome, or high blood pressure, it causes alcoholism, it causes obesity. 
 
If you want to offer a wellness program to show employees that you care and it’s not intrusive, go ahead. But please don’t do it and think you’re going to save money.
 
If wellness programs are so ineffective, why have so many employers embraced them? 
Wellness sounds like a great solution. It also sounds noble. Who doesn’t want to think that they can improve the health of their workforce? Also, HR departments are under a lot of pressure to control costs, and this is a relatively easy way to show that you are trying to do that. Wellness vendors send reports on how they are saving you money. They will say things like, “You’ve decreased the risk of heart attack by 150 percent.” But if you decrease the risk of heart attacks 150 percent, that means someone will have to rise from the grave. If you do the math you will see that you’re getting impossible numbers. But offering a wellness program is more attractive than raising deductibles and changing plan design.
 
More and more companies seem to be offering incentives to get employees to adopt healthier lifestyles, yet your book urges employers to spend their money creating a culture of wellness instead. Can you explain?
 
Incentives have a long history of inducing things like smoker’s amnesia. There were a huge number of these incentive programs around smoking that started back in the latter 1970s and early ’80s and a lot of companies canned them. People wouldn’t tell the truth. Joe would come in and say he saw Bob in the break room smoking and Bob is getting the $50 incentive anyway. What are you going to do, fire him? That’s why a lot of programs from that time got canceled. It’s troubling because those kinds of programs have come back with a vengeance. Companies have lost tribal knowledge of what happened the first time they tried incentives.
 
What does work is doing things like putting healthy food choices on the company menu and creating an environment of wellness by building walking trails. Another way to show that you care about your employees is making sure the restrooms are spic and span. You’re better off reallocating those incentive dollars toward creating a wellness culture.
 
The concept of using claims data to predict which employees are likely to face medical problems has gained a lot of traction, yet you call it health care’s biggest fraud after wellness programs. Why doesn’t it work?
There are people who have strokes and heart attacks all the time with no history of it, but it was genetic. You can’t capture that in claims data. What you have in claims data is a whole lot of medical bills and not much else. If you’re trying to take what people say in their health risk assessments and dovetail it in, oftentimes you’re not asking the right questions. I don’t want to participate in a health questionnaire that asks, “Did your mother, father, brother, uncle have a heart attack?” That’s a bit intrusive in my opinion. When employers ask those kinds of intrusive questions they may or may not get a truthful answer.
 
You write that most employers will never know how much value, if any, pharmacy benefit managers provide because PBM contracts are impossible to understand. So how can employers cut through the smoke and mirrors?
 
It wasn’t designed this way by accident. I’ll tell you what’s wrong with PBMs. I worked with a company that had a brand-name drug on their preferred list. It was there because it came with a $4 rebate. The employer got $2 and the PBM got $2. But there were drugs with no rebate available that cost less than one-fifth of what that drug costs and they weren’t on the preferred list. That $2 rebate ended up costing the employer about $80 on each prescription. Also, the literature said that the rebated drug was not as effective as the cheaper drug. Employers need to question the PBMs about what they’re doing and why they’re doing it that way. The reason that some drugs get higher rebates is because they are not as effective and they need to offer a rebate to get employers to buy them. 
 
I ask benefits managers why they don’t address these issues more aggressively and they say that they’re too busy managing the medical plan and no one is complaining about the pharmacy plan. The reason no one is complaining is because things run pretty smoothly with a PBM and they let a huge number of drugs into the formulary.
 
Employers can save a lot of money by being more restrictive about the drugs they allow on that preferred list, but HR people see that as disruptive and as something that could generate complaints.
 
Popular wisdom says that the best way for employers to control health care spending is to focus on the 10 percent of the people who account for 80 percent of their health care dollars, but you debunk this theory. What does work?
The 10/80 fallacy is that the 10 percent of people with chronic conditions spend 80 percent of plan dollars. That is a huge fallacy. What's true is that 6 percent of the people, who I call outliers, in the middle of an acute health care episode, e.g., cancer, heart or valve surgery, spine surgery, etc., spend 80 percent of plan dollars. Most of what they have is not preventable and many have chronic but coincidental conditions. An example is someone with liver cancer who also has asthma. Many consultants are simply misreading data by looking at averages and not distributions, or erroneously falling into a post-hoc fallacy. It's that simple.  
 
Companies like Wal-Mart, Lowe’s and Pepsi are using the clinics and hospitals that are the most effective in treating these outliers. There are extreme differences in how hospitals manage these illnesses. About 10 to 20 percent of that population is misdiagnosed. That kind of thing is epidemic today. You need to spend the money to get them the correct diagnosis.
 
Rita Pyrillis is Workforce’s senior editor. Comment below or email editors@workforce.com. Follow Pyrillis on Twitter at @RitaPyrillis.
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Differences Between SUB-pay and Traditional Severance Pay

For employers using SUB-pay:
1. Saves 7.65 percent in Federal Insurance Contributions Act tax, and are exempt from federal and state unemployment taxes.
2. Reduces stress on cash flow. Payouts are made on periodic basis, not lump-sum.
 
For employers using traditional severance:
1. Payment is considered a wage, so is taxable.
2. Employer can decide to use lump sum or periodic payment.
3. Typically less administrative work.
 
For employees eligible for SUB-pay:
1. Typically receives the 7.65 percent of salary that would pay FICA tax.
2. Collects unemployment benefit and SUB-pay simultaneously.
3. SUB-pay tax benefit stops when worker finds a new job.
 
For employees receiving traditional severance:
1. Severance is considered a wage, so is taxable.
2. Workers can get bumped into higher tax bracket when receiving lump sum.
 
Source: Total Management Solutions, Inc.
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2013 Game Changer: Katie Nedl

Just like the investment professionals she serves, Katie Nedl saw an opportunity others might miss and seized it.

Nedl, 33, is global head of benefits at BlackRock Inc., an asset management firm. BlackRock recently rolled out a brand campaign targeting individual—rather than institutional—investors. Viewing BlackRock’s own employees as individual customers as well, Nedl decided to piggyback on the external initiative with an internal campaign that would call attention to the firm’s financial benefits.

In just six weeks, she snagged buy-in from senior management and created a global financial wellness program for employees.

The program repackaged existing benefits, made resources and benefits available to workers’ immediate family where possible and included informational events. BlackRock financial resources, educational programs and benefits have been brought together on financial wellness pages accessible through the firm’s HR portal.

Nedl’s work seems to have paid off: Employee surveys indicate the perceived value of the benefits program increased significantly after Nedl launched her campaign.

Ed Frauenheim is associate editorial director of Human Capital Media, the parent organization of Workforce. Comment below or email editors@workforce.com. Follow Frauenheim on Twitter at@edfrauenheim.

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SUB-Pay Plans Could Ease Employer Severance Costs

Beyond the increased workload on employees who remain on staff, the strain of layoffs has other effects on an organization. 

Severance packages — and the taxes that piggyback on them — can stress a company’s cash reserves. But a supplemental unemployment benefit plan, also known as a SUB-pay plan, can be a great way to lay off workers in a fair way financially and help companies lower severance costs, experts say.

Because these plans fall under a federal law that governs benefit plans, SUB-pay plans are not considered salaries or wages. It’s a tax-exempt trust account set up by employers to offset state unemployment insurance. Many companies that serve as administrators to SUB-pay plans say employers can save 30 percent or more compared with handing out taxable severance packages to laid-off workers.  

“Today many of our clients are struggling to provide former employees with a typical severance package,” said John Lihzis, president and CEO of Total Management Solutions, a company that serves as administrator to SUB-pay plans, based in Norton, Massachusetts. “With a SUB-pay plan, companies are taking advantage of their paid-in asset [of state unemployment taxes] to supplement payment to individuals.”

SUB-pay programs have been around since the 1950s and were typically used for union-based workforces Lihzis said. Workers would rely on supplemental pay and unemployment benefits when companies had to lay off workers.

It works similarly today, Lihzis said. Several requirements must be met for the plan to work. First, workers need to be eligible for state unemployment benefits. Next, payments have to be periodic — like paychecks — not lump sums.

Many workers who are laid off at PNC Financial Services Group don’t get a traditional severance package. If they qualify for unemployment benefits, these workers can take advantage of PNC’s supplemental unemployment benefits and take home their regular pay, plus the money they would have paid in state and federal taxes.
“Employees like it because it is helping them. It’s a larger payment that goes to them,” says Jim Popp, PNC’s director of employee relations. “There are advantages to both the employer and the employee.”

Many workers who are laid off at PNC Financial Services Group don’t get a traditional severance package. If they qualify for unemployment benefits, these workers can take advantage of PNC’s supplemental unemployment benefits and take home their regular pay, plus the money they would have paid in certain state and federal taxes.

“Employees like it because it is helping them. It’s a larger payment that goes to them,” says Jim Popp, PNC’s director of employee relations. “There are advantages to both the employer and the employee.”

Many workers who are laid off at PNC Financial Services Group don’t get a traditional severance package. If they qualify for unemployment benefits, these workers can take advantage of PNC’s supplemental unemployment benefits and take home their regular pay, plus the money they would have paid in state and federal taxes.
“Employees like it because it is helping them. It’s a larger payment that goes to them,” says Jim Popp, PNC’s director of employee relations. “There are advantages to both the employer and the employee.”
Many workers who are laid off at PNC Financial Services Group don’t get a traditional severance package. If they qualify for unemployment benefits, these workers can take advantage of PNC’s supplemental unemployment benefits and take home their regular pay, plus the money they would have paid in state and federal taxes.
“Employees like it because it is helping them. It’s a larger payment that goes to them,” says Jim Popp, PNC’s director of employee relations. “There are advantages to both the employer and the employee.”

Plans can be structured differently to fit the needs of the company and to comply with state unemployment rules, said Elizabeth Corley, senior vice president for Transition Services Inc., which is based in Stamford, Connecticut. In some cases, plans can be used as an incentive, encouraging displaced workers to find new jobs. For example, if a former worker finds a job before benefits run out, the employer can claim the savings or reward some or all of it to the worker for finding something earlier than expected.

“We work with companies to design how they want the SUB-pay plan to operate,” Corley said. “Bridging people to the next employment opportunity is a fair benefit.”

Again, because of the plan’s benefit-vs.-wage status, workers don’t pay federal or state taxes on the money they get from the SUB-pay plan. That can be key, especially in situations where employees get bumped to higher tax brackets when receiving lump-sum severance packages, Corley said.

“The big savings for everyone is the taxes,” Corley said. “It can really add up, and for some people, they can wind up taking home more than their weekly wage.”

SUB-pay plans remain unpopular mostly because of misconceptions, Corley and Lihzis said. Administrative obstacles, communication issues and the general stigma of a benefit being linked to a state unemployment program steer many employers away from using the program.

“Many companies are not properly educated about the benefits of SUB-pay plans,” Lihzis said. “But it can actually provide companies with a lot of flexibility to achieve objectives and goals. It may also mean fewer layoffs in the future.”

PNC’s Popp agrees that the details can be difficult for some companies to handle. PNC manages the plan in-house; HR and payroll are in constant communication, making sure employee status changes are handled correctly.

“Communication to [former] employees is most critical too,” Popp says, adding the importance of identifying and notifying past workers of changes in their status.Beyond the increased workload on employees who remain on staff, the strain of layoffs has other effects on an organization.

 

Typical plans can take a few weeks to install and must be in line with state requirements and in place before triggering layoffs. And even though July’s unemployment numbers dropped slightly to 7.4 percent, the continued tepid economic recovery could encourage continued cuts from payrolls, Lihzis said.

“Employers should take a step back and look” at the plan’s benefits, Lihzis said. “If they are going to lay folks off, why not save as much money as possible and do something with the savings?”

Patty Kujawa is a writer based in Milwaukee. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.

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There Are No Magic Words to Invoke the FMLA

Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

The Family and Medical Leave Act does not require an employee to use the word “FMLA” to request leave under, and invoke the protections of, the FMLA. Instead, an employee only needs to do the following:

  • For foreseeable leave, an employee only needs to provide “verbal notice sufficient to make the employer aware that the employee needs FMLA-qualifying leave, and the anticipated timing and duration of the leave.”

  • For unforeseeable leave, an employee only needs to provide “sufficient information for an employer to reasonably determine whether the FMLA may apply to the leave request.”

In either instance, this informal notification triggers an employer’s designation obligations under the FMLA.

How vague can verbal notice by an employee be to trigger an employer to consider the notice a request for FMLA leave? In Wiseman v. Awreys Bakeries LLC (6th Cir. 5/22/13) [pdf], the plaintiff, an employee with a history of back problems, verbally complained that he was “injured” and “couldn’t work.” The company fired him for unexcused absences, claiming that he provided no explanation or medical reason.

The appellate court reversed the trial court’s dismissal of the FMLA claim, finding that an issue of fact existed over whether the employee provided FMLA-qualifying notice. The court held that the employee’s verbal statement that he was “injured” and “couldn’t work,” coupled with the company’s knowledge of his history of back injuries and the employee’s request to see the company’s doctor, could lead a jury to conclude that the employee had invoked the FMLA.

Cases like Wiseman should rarely happen. The FMLA provides protections for employers who, in good faith, doubt whether the FMLA covers an employee’s request for time off. When there exists any doubt over whether an employee is seeking time off for a reason that could qualify under the FMLA, there is no harm in treating the request as one for FMLA leave. In fact, an employer has greater protection in an FMLA-covered scenario than not.

  • If the employer fails to treat the request as one for FMLA leave, the employer assumes all of the risk. If the employer is wrong, and the employee was requesting FMLA leave, an employer is severely limited it its ability to defend an FMLA interference lawsuit.

  • If, however, the employer treats the request as one for FMLA leave, the employee assumes all of the risk. The FMLA provides an employer tools to verify the legitimacy of the request. The employer can (and should) require that the employee provide a medical certification justifying the need for the FMLA leave. Moreover, if the employer doubts the initial certification, it can require a second (and, sometimes, even a third) medical opinion. If the employer ultimately concludes that the leave does not qualify under the FMLA, it can retroactively deny the leave and treat all intervening absences as unexcused, which usually results in termination.

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Best Practices in Benefits (May 2013)

Learn from two industry experts how offering voluntary benefits is helping organizations retain top talent, increase employee satisfaction and loyalty and positively impact their company’s bottom-line.

    Best Practices in Benefits includes two new white papers, on the following topics:

  • New Evidence that Legal Voluntary Benefits Influence Employee Loyalty and Satisfaction. The majority of Americans – 71% – will face a new or ongoing legal issue each year. Learn about the cost and time to administer legal voluntary benefits and the impact that such a program has on your employees’ satisfaction and productivity.
  • How to Get Employees on the Right Financial Track – and Stay There. A recent study shows that the majority of employees worry about financial security and that these personal financial concerns have a negative impact on worker productivity. This white paper shares how offering financial education benefits and non-traditional, voluntary benefits such as employee purchase programs can result in a happier, healthier workforce – and company.

Download our Best Practices in Benefits white paper today! It’s FREE; all you have to do is register.

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Nicotine Screenings Snuff Out Some Employment Offers at Health Care Companies

Job opportunities are going up in smoke for applicants who use tobacco products—particularly among health care organizations, which are screening for nicotine use as well as drugs before new hires can start working.

One health care organization tapping into the trend is Baylor Health Care System, which implemented a nicotine screening policy in January 2012. “We just have to practice what we preach,” says Becky Hall, Baylor’s vice president of health and wellness. The Dallas health care system is highly regarded for its treatment of cancer and heart disease.

It joins the 4 percent of companies—in states where smokers aren’t part of a protected class—with a policy not to hire nicotine users, according to the 2013 Employer Survey on Purchasing Value in Health Care of 583 employers by consultancy Towers Watson & Co. and the National Business Group on Health.

Helen Darling, president of the National Business Group on Health, says most of those companies are health care systems, which see their employees as “role models and advisers to patients.”

For Baylor, implementing the policy was the next step in a wellness journey that began in 2007. When the program launched, Baylor offered tobacco cessation sessions to employees and their spouses, even if they weren’t members of the system’s health insurance plan.

Baylor then became a smoke-free campus, and in 2011 it began charging smokers $25 more per pay period, or $625 per year, for health insurance, Hall says.

Less than 10 percent of Baylor’s more than 20,000 employees smoke. When the surcharge was implemented a few complained, but the majority said, ” ‘It’s about time. I’m tired of paying for them,’ ” Hall recalls.

Last year, the health care system started screening out those who use tobacco. Its online application asks if job seekers are smokers. If they answer “yes,” they can’t continue with the application and are directed to resources to help them stop smoking, Hall says. They can reapply after being nicotine-free for 90 days.

Anyone with a preliminary employment offer goes through drug screening, which includes nicotine screening. The test will detect any kind of nicotine product, including cigarettes, a nicotine patch, nicotine gum and e-cigarettes. So far, 69 of about 400 offers have been rescinded, she says, and there is no evidence Baylor is losing out on top-notch talent because of the screening.

Testing is possible because nicotine users are not a protected legal class in Texas. Currently 29 states and the District of Columbia offer legal protection to smokers, according to the American Lung Association.

If a company in one of those states is considering establishing a nicotine-screening policy—which is typically conducted as part of pre-employment drug screening—it’s essential that potential hires be aware that companies will be testing for nicotine, says Stephen Fink, a partner specializing in employment and labor law in the Dallas office of the law firm Thompson & Knight. If the screening for nicotine isn’t disclosed, potential employees can argue it’s a violation of their privacy.

Under federal law, smoking is considered an activity, rather than a medical condition, so it’s not protected under the Americans with Disabilities Act, Fink says.

In 2010, nearly 20 percent of American adults smoked, according to the Centers for Disease Control and Prevention.

Fink contends the move to nicotine screening and other wellness policies is aimed less at cutting health care costs and more at maintaining employee productivity. “Employers have a real stake in employees being able to report to work and do their jobs on a fairly regular basis.”

Cigarette smoking costs more than $193 billion annually—about half in lost productivity and half in health care expenditures, according to the CDC.

While health care providers are the main organizations now trying to extinguish nicotine usage, it’s slowly spreading to other types of businesses. Hall gets calls at least once a week from companies such as manufacturers, retailers and restaurants, inquiring about the prohibition.

And the Towers Watson and National Business Group on Health survey found 2 percent of organizations plan to implement such a policy next year, driven by a desire to keep health care costs down. “What you pay as an employer is very substantially driven by how much [tobacco] usage there is,” Darling says.

According to a report by the American Lung Association, employees who smoke cost employers an average of $1,429 more in health care costs than nonsmokers.

Broadway Bank, based in San Antonio, started nicotine screening of potential new hires on Feb. 1. Next year, employees who smoke will pay an insurance premium surcharge. The amount has yet to be determined, says Carlos Torres, senior vice president of human resources and wellness director.

Less than 10 percent of the bank’s 650 employees smoke. “The only pushback has been, ‘How are you going to help us quit smoking?’ ” Torres says. The bank has teamed up with the American Lung Association to offer counseling and medical resources to employees or their family members who smoke.

Torres expects it will only cost the company a couple of hundred dollars per employee who go through smoking cessation programs. Many resources are available for free or at minimal cost from groups such as the American Lung Association.

So far only six employees have signed up for smoking cessation courses. “We think it will take hold over time,” he says.

Neither the bank nor Baylor screen current employees for nicotine usage, and have no plans to do so.

Baylor employees who complete a smoking cessation course have their health care premium surcharge halted for that year, Hall says. Sometimes it can take repeated attempts before they finally kick the habit.

It’s too early to see how the nicotine screening policy will influence health care costs, but Hall expects them to start to fall in two to three years.

Susan Ladika is a writer based in Tampa, Florida. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.

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More Employers Looking to Impose Wellness Program Nonparticipation Penalties in 2014

More employers are planning to use financial penalties to motivate their employees to participate in corporate-sponsored health and wellness programs, according to a recent survey published by Lincolnshire, Illinois-based Aon Hewitt.

The survey reports 83 percent of employers offer incentives for participation in health and wellness programs, such as health risk questionnaires, biometric screenings and smoking cessation programs. Among that group of employers, only 5 percent exclusively use health insurance premium increases or penalties, while 16 percent offer a mix of rewards and penalties. Seventy-nine percent of employers only use awards like premium discounts, cash or gift cards to encourage participation in health and wellness programs, according to the survey, which is due out in April.

But the percentage of employers who use penalties is expected to increase. According to the survey, 58 percent of employers indicated they intend to impose penalties on employees who “do not take appropriate actions for improving their health” in the next three to five years.

Additionally, the percentage of employers who tie financial incentives to specific health management goals is expected to increase as well, the report says. About 24 percent of employers currently offer rewards for employees who achieve healthy blood pressure, body mass index, blood sugar and cholesterol levels, while 66 percent are considering offering similar incentives during the next few years, according Aon’s findings.

“Motivating people to participate through the use of incentives is a best practice in the industry and these strategies will continue to be a critical part of employers’ health care strategies in the future,” Aon Hewitt’s chief innovation officer for health and benefits, Jim Winkler, said in a statement released March 25.

Another recent study conducted by New York-based Towers Watson strengthens the notion that employers are taking a tougher stance on health and wellness. The Towers Watson survey found 18 percent of employers impose premium and/or deductible penalties against employees who do not participate in or do not complete health management programs, and an additional 36 percent indicate they plan to implement similar penalties in 2014.

Outcomes-based incentives in the form of rewards or penalties are offered by 16 percent of the 583 employers surveyed by Towers Watson, and 47 percent indicated they will be offering such incentives to employees in 2014.

Max Mihelich is Workforce’s associate editor. Follow Mihelich on Twitter at @workforcemax. Comment below or email editors@workforce.com.

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Paying Employees for Accrued Vacation Upon Termination—Yay or Nay?

One of the questions clients most frequently ask me is whether they have an obligation to pay employees for accrued, unused vacation days at the end of their employment. My default answer always is, “It depends. What does your handbook or vacation policy say?”

Under Ohio law, the default rule is as follows.

  • If an employer has no policy under which an employee forfeits unused vacation time or other paid time off at the end of employment, an employer must pay out any unused time.
  • If, however, an employer has a clear policy providing that paid vacation time or other paid time off is forfeited on resignation or discharge, then an employer is not obligated to pay out any unused time upon termination.

What does a policy look like that entitles an employer to withhold accrued, unused vacation time or other paid time off as a forfeiture at the end of employment? The employer in Broadstock v. Elmwood at the Springs (Ohio Ct. App. 3/15/13) [pdf] had the following policy:

When a team member leaves Elmwood, all accrued vacation time is paid to the end of the last pay period provided the team member requests the pay; a two (2) week notice is given and fulfilled; an exit conference has been conducted; all items (keys, uniforms, badges) have been returned; and the team member has not been terminated. (Emphasis added.)

According to the court, the employee handbook clearly stated that accrued vacation is forfeited to an employee upon termination. The employee was terminated. Therefore, the court held that the she was not entitled to her accrued vacation time.

To me, however, such as policy is draconian and overbearing. Instead, consider limiting vacation and other paid time off forfeitures to “for cause” terminations. In that case, you won’t benefit employees who lose their jobs through their own misconduct, but you also won’t be punishing employees who lose their jobs through no fault of their own (i.e., downsizing, restructuring, etc.).

Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.