Category: Archive

Supporters of a bill that would make it easier to file pay discrimination lawsuits launched an effort on Thursday, July 17, to revive the legislation after a major setback in the Senate earlier this year.

The Lilly Ledbetter Fair Pay Act would allow workers to sue a company within 180 days of receiving any paycheck that they believe has been diminished by discrimination.

It would overturn a Supreme Court decision last year that held that pay suits had to be filed within 180 days of the original discriminatory action, even if it went unnoticed for decades. In some jurisdictions, the statute of limitation is 300 days.

The case was based on a suit by Ledbetter, a 28-year veteran of a Goodyear tire plant in Gadsden, Alabama, who was paid less than male counterparts in a similar supervisory position.

In late April, the bill fell three votes short of the 60 required to end Senate debate and move to final action. The House approved the bill last year.

Opponents charge that the measure would effectively eliminate the statute of limitations on pay discrimination and force businesses to defend themselves against stale claims. The bill has drawn a veto threat from the White House.

Now advocates are vowing to find the support required to take the bill to a final up-or-down vote in the Senate, where it would almost certainly achieve a majority.

“We’re going to come roaring back,” said Sen. Barbara Mikulski, D-Maryland, at a sweltering Capitol Hill rally that included dozens of young women holding placards calling for pay equity. “You’ve got to be riled up. You’ve got to be revved up.”

The event featured Ledbetter and several congressional female leaders, including House Speaker Nancy Pelosi, D-California, and former presidential candidate Sen. Hillary Rodham Clinton, D-New York.

It’s unclear when or if the measure will be placed on the Senate calendar. Legislative days are dwindling. Congress will be out of session for almost all of August and may return for only a few weeks after Labor Day before adjourning for the year.

Advocates say the bill would bolster women and minorities in the workplace, where they often don’t realize they make less than white men because pay scales are secret. They assert that unfair compensation especially hurts low-income women who are the sole providers for their children.

“This is not just a women’s issue, this is a family issue,” Clinton said.

She asserted that the economic argument in favor of the Ledbetter bill is resonating with voters and forcing Republicans to offer an alternative measure rather than simply oppose Ledbetter.

“It is not as good or as thorough as what we’ve proposed,” Clinton said of the bill written by Sen. Kay Bailey Hutchison, R-Texas. “But it sends a signal that [Republicans] are feeling pressure.”

The Hutchison bill would start the clock on the statute of limitations on the date when the alleged victim “has, or should be expected to have, enough information to support a reasonable suspicion of such discrimination.”

The bill, which has eight GOP co-sponsors, is an attempt by Hutchison to negotiate with Democrats. Her spokesman says that the Senate was not given an opportunity to amend the original Ledbetter bill on the Senate floor or in committee.

“She is trying to be constructive,” said Hutchison spokesman Matt Mackowiak. “We want to have a seat at the table … and correct the injustice” of workplace discrimination.

But supporters of the Ledbetter bill say it addresses the core issue of unfair limitations on discrimination claims.

The Hutchison bill focuses on the process of determining who should have known what when, which can lead to endless “he said, she said” arguments, says Jocelyn Frye, general counsel at the National Partnership for Women & Families.

“A discovery rule is not a substitute for a paycheck rule that was in place before the Ledbetter decision,” Frye said.

But business groups continue to have concerns about the Ledbetter bill. WorldatWork, an HR organization that concentrates on total rewards, doesn’t take positions on legislation. But it is leery of the measure’s potential effect to ratchet up retirement costs.

“The [Ledbetter] bill is problematic because it could have an impact on pension payments,” said Cara Woodson Welch, director of public policy for WorldatWork.

While legislative details are addressed in Washington, supporters of the Ledbetter bill say the issue it raises has political momentum.

“For younger women, pay equity is a determining factor in terms of their vote,” said Lisa Maatz, director of public policy and government relations for the American Association of University Women.

—Mark Schoeff Jr.

Representatives of the presumptive Republican and Democratic presidential nominees met with employers on Tuesday, July 15, in Chicago to discuss each candidate’s health care plan, exposing differences in how they would close the coverage gap, reduce health care costs and affect employers.

Outlining their health policy plans, the two speakers reflected the basic ideological differences between their parties. Sen. John McCain, R-Arizona, wants consumers to be responsible for purchasing health insurance and would provide tax breaks for those who do; Sen. Barack Obama, D-Illinois, says the government will work in partnership with employers and health insurers to provide portable and affordable health care for nearly all Americans.

Speaking first, Michael Millenson, a health care consultant and advisor to Obama, said the Democrat’s “Plan for a Healthy America” would insure all but 2 percent of Americans by providing a new public mechanism to make private health insurance affordable for those Americans who do not have health care. Currently, about 47 million Americans are uninsured.

The Obama health plan would provide those who do not receive insurance through their employer or Medicaid the same benefits as those received by federal employees. To help individuals purchase insurance that would be affordable and meet this standard of coverage, Obama would create the National Health Insurance Exchange to create price and coverage standards for participating health insurance companies.

Employers that already provide “meaningful” health insurance would not be affected, while employers that do not provide coverage would pay a “percentage of payroll” toward the costs of the national plan. Small employers would receive a tax credit to help pay health benefits for their employees.

“There is a significant difference between a position paper and a priority,” Millenson told the audience of human resource executives and benefits managers from McDonald’s, Kraft, Pactiv Corp., Comcast, DuPont, Amtrak and other firms. “Sen. Obama has repeatedly promised to pass universal health care in his first term of office. Health care is a cornerstone of his candidacy. John McCain took on health care reform only when cornered into doing so by winning his party’s nomination.”

Millenson said the policy was designed to become law by meeting the often competing needs of varying constituencies. The campaign has said the program will cost $50 billion to $60 billion a year, paid for by letting the Bush administration’s tax cuts expire in 2010.

Jay Khosla, health policy advisor to McCain, said the Republican candidate believes the consumer should be at the center of the health care system with government providing support through tax credits to make health insurance more affordable.

“I think Sen. McCain’s vision for health care can be described as three small phrases,” he said. “It’s your life, it’s your heath, it’s your decision.”

McCain’s health policy is notable for its use of tax credits—$2,500 for individuals and $5,000 for families who purchase health insurance on their own. The plan would focus on giving individuals control of their health insurance by promoting the adoption of high-deductible plans and health savings accounts and increasing hospital, doctor and insurance pricing information. McCain would also allow people to purchase health insurance across state lines in an effort to open the insurance market to more competition. Current law prohibits individuals from purchasing insurance from outside states in which they reside.

“At the end of the day, Sen. McCain’s health care plan has a primary focus, and that is the consumers, the patients, should be at the center of the health care system,” Khosla said. “We don’t need big government to come in and tell us what health care should be like.”

The meeting, part of an effort to engage the candidates in issues important to the employers that pay for the health care of 160 million Americans, came at the request of  technology-benefits company VitalSpring Technologies of McLean, Virginia, and some of its Fortune 500 clients.

Sreedhar Potarazu, president and CEO of VitalSpring, said he asked the candidates to speak because employers have not been vocal enough in the national debate on health care reform.

“Everyone is ignoring the employer, the very entity that is responsible for financing health care,” he said.

Employers would be affected differently by each plan depending on their size. The Obama campaign stressed that employers currently providing adequate health care to their employees would not be affected. Millenson said universal coverage would help reduce costs normally passed on to employers and their employees.

A chief criticism of McCain’s tax credits is that they could lead to what health care economists call “adverse selection.” The tax credits could make it cheaper for healthy people to find insurance outside of their employer, leaving employers to cover the sicker, more expensive employees and dependents and driving up the cost of providing coverage.

Khosla stressed that the tax credits alone would not address the underlying problem of the health care system, which is cost.

“Tax credits are not the solution by themselves,” he said.

McCain would focus on improving price and quality information and using wellness programs to make Americans healthier. The tax credits would make prices in the individual market more competitive.

While the discussion left many employers’ questions unanswered, it initiated a conversation appreciated by those in attendance.

“There are forward-thinking but realistic people in the business community who want to be involved,” said Wayne Lednar, chief medical officer for DuPont.

Potarazu of VitalSpring said employers could be involved in the election-year discussion on health care policy by joining a task force of employers he plans to launch in the coming weeks.

Andrew Rosa, director of health and welfare benefits for Philadelphia-based Comcast, said it is important for employers to reach out to the candidates and for the campaigns to reciprocate so that those paying the health care bill would have their concerns about the cost and quality of health care addressed.

“As employers, we haven’t fully captured the power we have; we’ve been more focused on our individual issues,” Rosa said. “But if people are going to change health care, employers need to be involved.”

—Jeremy Smerd

A new association of companies focused on sharing job candidates to cut recruiting costs has attracted some big names. But it also confronts some big challenges.

AllianceQ, announced earlier this month, is a joint effort among Fortune 500 companies to swap data on job candidates. Wachovia, Automatic Data Processing and Starbucks are among the founding members of the alliance, which was formed by recruiting technology firm QuietAgent.

The idea is to reduce recruiting costs for major employers and serve job seekers by creating a shared pool of qualified job candidates and offering rejected applicants opportunities with other alliance members.

Peter Weddle, executive director of the International Association of Employment Web Sites trade group, calls AllianceQ an interesting development. But he said the initiative “faces two pretty big challenges.”

One is that the passive job seekers that companies prize—people not actively looking for a new job—aren’t likely to be drawn into the AllianceQ database, Weddle said. The other is that corporate recruiters often fail to review even the résumés they have within their system, making additional candidates of questionable value.

“The issue is not getting more candidates, but getting better ones,” said Weddle, who also is head of Weddle’s, a research and publishing firm focused on recruiting issues.

Phil Haynes, managing director of the alliance, said its job-matching approach from QuietAgent is superior to the typical method of comparing résumés against job descriptions. While both résumés and job postings can be poorly written and result in firms missing the best candidate for the job, he said, AllianceQ relies on a competency-based system designed to better connect job-seekers and openings.

“It’s like eHarmony,” he said, referring to the popular online dating site.

Organizations with more than 5,000 employees can join the alliance. Members will send rejected job applicants an e-mail inviting them to make themselves available for jobs at other AllianceQ member firms by filling out a competencies profile.

The QuietAgent technology then works to find matches between job openings and candidates in the QuietAgent database. That database currently holds about 300,000 candidates, with most of the existing job-seekers coming through other QuietAgent partners, such as the National Urban League.

QuietAgent’s system is designed to be anonymous, with the identity of the job seeker cloaked. Companies that get a match and want to contact the candidate invite the person to reveal their contact information.

AllianceQ member firms don’t pay anything to join the group or for candidates they get from other members. If a company wants to connect to a candidate from outside the alliance and the candidate accepts the invitation to share their contact information, the firm is charged $34.95. That fee is waived for founding members of the alliance.

AllianceQ isn’t the only attempt by large employers to pool resources in an effort to cut recruiting costs. DirectEmployers Association, which runs the JobCentral National Labor Exchange, is another example.

The new group effectively will compete against the résumé database services provided by DirectEmployers and job boards such as industry giant Monster.

But Haynes said AllianceQ already has generated a buzz among employers interested in joining. The organization expects to be around “100 companies strong” in the first quarter of 2009, he said.

Employers increasingly are using financial incentives to steer employees toward healthy lifestyles and reduce health care costs, according to a recent survey. But the effectiveness of those incentives depends on how they are used.

About half of the 453 employers surveyed by Watson Wyatt and the National Business Group on Health say they use financial incentives to encourage healthy behaviors, such as quitting smoking or losing weight. Seventy-nine percent of employers surveyed say they will offer such incentives next year.

“Three years ago, these incentives were in very limited use,” says Shelly Wolff, practice lead for health and productivity at Watson Wyatt’s Stamford, Connecticut, office. “There’s been a significant change in how you design health plans to reinforce behaviors and accountability for decisions you make every day.”

This sentiment was echoed in a separate study by the Center for Studying Health System Change, which concluded that employers believe financial incentives are necessary to encourage employees to take more responsibility for health care decisions and costs.

Wolff says the best-performing companies in the survey that use financial incentives saw health care costs increase 1 percent in the past two years, compared with the average of 6.2 percent. Poor-performing companies, meanwhile, saw health care costs rise by 10 percent.

Financial incentives are most effective when designed as part of a larger strategy intended to treat patients more like health care consumers, Wolff says.

High-deductible health plans are the clearest examples of ways employers are trying to change employee behavior by making them more responsible for the cost of health care. But like other incentives, they are best utilized when employers also provide quality and cost information for doctors, hospitals and other services.

Nearly half of best-performing companies in the survey cover the entire cost of preventive health care services and cover the use of retail health clinics for primary health care; about 40 percent offer financial rewards to employees who participate in disease management and smoking cessation programs. Thirty-one percent require plans to disclose the price for medical services. And about a quarter reduce co-pays on drugs that treat chronic illnesses.

Incentives can work, but they also can backfire. Some employees may feel their employer is impinging upon their privacy by collecting health information. This distrust may ultimately affect the validity of information collected on health risk appraisals, one reason why employers may have more success rewarding healthy behavior than punishing unhealthy behavior, says Debra Draper, associate director at the Center for Studying Health System Change.

These concerns, however, have not hampered employer enthusiasm for health risk appraisals, which are now used by 83 percent of employers, compared with 65 percent in 2006, according to the Watson Wyatt survey.

Premium rates for health maintenance organization will increase by an average of 11.8 percent nationally in 2009, preliminary data from Hewitt Associates shows.

The projection is a decrease from the 13.2 percent increase projected for 2008 and a slight increase over the 11.7 percent estimate for 2007. The rate projection continues to outpace inflation and underlying medical cost increases, said consultants at Lincolnshire, Illinois.-based Hewitt.

However, employers likely will be able to reduce these overall increases to an average of 9.4 percent through aggressive negotiations with HMOs, by switching from fully insured to self-insured arrangements, and by emphasizing wellness and prevention among plan members, Hewitt consultants said.

“While initial 2009 HMO premium rate increases remain high, we expect to see that employers will once again be able to reduce overall increases by at least two or three percentage points,” said Jeff Smith, a senior consultant and co-leader of Hewitt’s HMO rate analysis project, in a statement.

Hewitt’s HMO analysis project also discovered that employers in certain regions of the country are likely to experience greater increases.

For example, HMO premium rates paid by employers in the Southeast region, which includes such states as Florida, Mississippi and Georgia, will grow by as much as 15.4 percent, compared with just 7.3 percent in the Southwestern states of New Mexico, Texas and Oklahoma, which will experience the lowest regional rate increase.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

House Democrats want to put more teeth into the federal agency that helps workers collect pay that has been wrongly denied by their employers, but the thrust of their efforts probably won’t come until next year.

At a House Education and Labor Committee hearing on Tuesday, July 15, the Government Accountability Office released a study showing that enforcement actions by the Department of Labor’s Wage and Hour Division have fallen by more than one-third in the past decade—from 47,000 in 1997 to 30,000 in 2007.

The GAO, the investigative arm of Congress, asserted that the agency is short-staffed, fails to effectively utilize resources available for investigations, poorly targets industries where wage violations are likely to occur and does not properly assess its own performance.

A separate GAO case study stated that the division “inappropriately rejected complaints, failed to adequately investigate complaints or neglected to investigate until it was too late.”

Alexander Passantino, acting administrator of the Wage and Hour Division, charged that the GAO study was flawed. He touted his agency’s success during the past 10 years in collecting back wages—an increase from $96.7 million in fiscal year 1997 to $220.6 million in fiscal 2007.

The division enforces the Fair Labor Standards Act. Most of its activity focuses on situations where employers violate minimum wage and overtime standards or withhold a final paycheck.

Democrats at the hearing labeled such practices “wage theft” that particularly hurts low-income workers who are most vulnerable during an economic downturn.

Rep. George Miller, D-California and chairman of the committee, acknowledged in an interview after the hearing that there is not enough time left on the congressional calendar this year to move legislation related to wage and hour compliance.

But he vowed to continue pursuing the issue next year.

“Clearly some of the enforcement tools have to be strengthened,” he said. “They sparingly use stepped-up enforcement. They have to rethink that.”

Miller was referring to a GAO finding that the Wage and Hour Division assessed civil monetary penalties only 6 percent of the time from 2000 to 2007.

In an interview, Passantino said his agency is limited in its ability to fine companies. It can only do so if a firm is a repeat or willful violator. The agency also is prevented from seeking liquidated damages.

Passantino maintained that an emphasis on punishment could undermine the ability of workers to collect the pay owed to them.

“There are tradeoffs,” he said, pointing out that employees can get money in their pockets faster through settlements with companies than through protracted court cases.

Weak enforcement wasn’t the only problem that bothered Miller during the hearing. He also railed against Passantino for poor field office management that prevents timely response to worker complaints.

“I would have a lot of trouble if I was on the other end of the phone trying to recover wages,” Miller said. “That may not be the standard that workers in this country deserve.”

Committee Republicans were more sympathetic toward the agency. Rep. Howard “Buck” McKeon, R-California and the ranking member of the panel, praised it for collecting $1.25 billion for nearly 2 million workers since 2001.

He cautioned against efforts “to politicize the work of the Wage and Hour Division.” He also said Democrats were ignoring other “pocketbook issues … in particular, the burden of the high cost of gasoline” on workers’ wages.

For Democrats, the point is that workers have to get paid before they can start spending on necessities.

“Wage theft affects everyone from poultry workers to construction workers, nursing home employees to retail employees, farm workers to landscapers,” Miller said.

—Mark Schoeff Jr.

After years of taking a wait-and-see approach, large employers are beginning to offer employees the option of receiving medical care overseas.

Americans with limited or no health insurance have for years sought elective surgery in foreign hospitals, pioneering so-called medical tourism in places like India, Thailand and Costa Rica where patients recover in five-star hotels and beach resorts.

Now, the cost savings offered by overseas hospitals have won over several large employers.

“We want people to have options,” says Jacqueline Moye, vice president of human resources at Doctors Care, which operates health clinics primarily in South Carolina. Doctors Care has offered employees a medical tourism option since January. “It’s an opportunity for people to go someplace new, see things differently and have a tremendous cost savings.”

None of the 1,000 employees and dependents covered by Doctors Care have chosen to go abroad for medical care since the company started making the option available though its health insurer, BlueCross BlueShield of South Carolina. The insurer offers the service through medical travel company Companion Global Health Care and sends patients to Joint Commission International-accredited hospitals in Thailand, Singapore, Turkey, Ireland and Costa Rica.

Doctors Care, based in Columbia, South Carolina, covers five procedures abroad: heart bypass surgeries, hysterectomies, total knee replacements, total hip replacements and spinal fusions.

The potential savings are significant. In the U.S., a hip replacement surgery can cost $30,000 to $40,000 for uninsured patients, according to BlueCross BlueShield of North Carolina, compared with about $9,000 in India and $12,000 in Singapore.

A spokeswoman for Aetna says the Hartford, Connecticut-based health insurer has launched a pilot program with Portland, Maine-based Hannaford Bros. supermarkets to allow its 27,000 employees to go overseas for surgery.

Another medical tourism company, California-based Planet Hospital, has signed several medium-size employers, including Snow Summit Ski Corp. in Big Bear, California. Planet Hospital president Rudy Rupak says the company is conducting a pilot program with a large self-insured California school system.

Though the foreign hospitals provided to Doctors Care employees are accredited by the Joint Commission International, concerns about quality remain, as do questions regarding the legal recourse patients would have should they suffer a medical error.

Rick Wade, a spokesman for the American Hospital Association, advises patients and employers to ask about the training and experience of foreign hospitals and their doctors before seeking care.

“Medical mistakes are not confined to this country,” he says. “If there is poor treatment or medical errors, what are your alternatives?”

Doctors Care, confident its health insurer is contracting with safe foreign hospitals, plans to expand coverage next year to include more surgeries at foreign hospitals, Moye says.

As the economy continues to sour, employees may soon find their 401(k) matches are the next casualty.

In the last market downturn, in 2001-02, companies hit hardest—such as Ford Motor Co. and Bethlehem Steel—suspended their 401(k) matches to save money.

And while 401(k) consultants say they haven’t yet seen any employers cut their 401(k) matches this time around, they wouldn’t be surprised if some financially distressed companies take this route if the markets continue to drop.

“It tends to be limited to companies in dire financial straits, but it does happen in an environment like today,” said Lori Lucas, defined-contribution practice leader at Callan Associates.

But companies may be more hesitant to cut their 401(k) matches today than they were six years ago, Lucas said.

“A lot of companies have already reduced their retirement costs by cutting retiree health care or their pension plans,” she said. “Today, the 401(k) isn’t just a supplemental retirement savings plan, it is the primary retirement savings plan. Cutting the match on that could be more difficult from a PR perspective.”

Also, under the Pension Protection Act of 2006, companies are granted a safe harbor if they automatically enroll employees in their 401(k) plans and offer a match—another reason companies may resist eliminating their matches, Lucas said.

But not all companies will care about the safe harbor. And companies with automatic enrollment may find that even if they cut their 401(k) match, the participation levels of their 401(k) plans won’t drop significantly, she said.

A recent study by professors from Harvard and Yale universities, titled “The Impact of Employer Matching on Savings Plan Participation Under Automatic Enrollment,” found companies with automatic enrollment that went from a 3 percent match to no match saw participation rates in their plans drop only 5 percent to 11 percent.

However, companies that want to avoid bad publicity may choose to move from a fixed match to a variable match, consultants say.

In the last market downturn, a number of companies took this route, said Lisa Arko, a consultant at Watson Wyatt Worldwide.

“We would not be surprised to see the percentage of plans using discretionary or profit-based matching contribution formulas increase over the next year or two,” she said.