Category: Archive

The three-judge appeals court panel that earlier this year allowed San Francisco to temporarily implement its controversial health care spending law will decide the fate of the ordinance.

The 9th U.S. Circuit Court of Appeals disclosed Monday that Judges William Fletcher, Alfred Goodwin and Stephen Reinhardt will hear oral arguments April 17 on a lower court ruling that found the federal Employee Retirement Income Security Act pre-empted the San Francisco law that requires employers to spend a certain amount of money on employees’ health care coverage or pay certain fees.

Those judges in January allowed the law, being challenged by a San Francisco restaurant trade association, to go into effect pending a final decision by the appeals court. In allowing implementation of the law, Judge William Fletcher wrote that San Francisco has a “strong likelihood” of prevailing in its argument that ERISA does not pre-empt the ordinance.

The San Francisco Health Care Security Ordinance does not require employers to adopt an ERISA plan or other health plan and does not require offering specific benefits in a health plan, the judge wrote.

Under the San Francisco measure, large employers are required this year to spend no less than $1.76 per hour per eligible employee on health care. Employers have a variety of options to meet the spending requirement, including paying employees’ health insurance premiums, contributing to health savings accounts or health reimbursement arrangements, or paying fees to the city.

Since the law went into effect in January, many San Francisco employers have discovered that the law affects them even though the costs of their health care plans exceed the minimum requirements set in the statute. For example, the spending requirements apply to employees working as little as 10 hours a week and who rarely are covered in corporate plans.

Interest in the outcome of the challenge to the law extends beyond San Francisco. If the law is upheld, it could set the stage for cities and states to adopt their own health care spending measures, imposing on multi-state employers both administrative burdens to keep track of the mandates and cost pressures if they have to upgrade their health care programs.

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

In an effort to help companies hire and retain more highly skilled foreign nationals who graduate from U.S. universities, the Department of Homeland Security is proposing to expand a program that would allow them to stay in the country longer after receiving their degrees.

On Friday, April 4, the agency announced a preliminary regulation extending the time that foreign graduates in science, technology, engineering or mathematics can work for a U.S. company without obtaining a visa.

That will give them a greater opportunity to secure an H-1B visa, which is for people who have at least the equivalent of a U.S. bachelor’s degree. The H-1B cap is likely to be exceeded again this year, forcing spring graduates to wait until next April to apply.

H-1B opponents criticized the DHS proposal.More criticism may be generated by a condition in the regulation that mandates that only companies using E-Verify, a government-run electronic verification system, can participate.

The Society for Human Resource Management and many other HR groups assert that E-Verify is inefficient, error-prone and could potentially designate many legal workers as ineligible for employment. They are promoting a bill that would establish an alternative verification system.

The new DHS regulation is subject to a 60-day comment period. Then DHS can promulgate a final rule. It’s unclear whether the process can be concluded before the end of the Bush administration.

Under the regulation, the Optional Practical Training program would increase from 12 months to 29 months. Microsoft chairman Bill Gates called for such a reform in congressional testimony last month, saying that hiring and retaining foreign-national graduates is critical to helping technology companies innovate.

The push for a longer training program is the result of a shortage of H-1B visas. For the last fiscal year, companies sent in 123,000 applications for 65,000 H-1B visas, exceeding the cap on the first day they were available, April 2.

Under current law, if a foreign-national hire doesn’t get an H-1B visa within 12 months, he or she must leave the United States.

For the 2009 fiscal year, the cap is set again at 65,000, and an even greater demand is expected. DHS may announce as soon as Monday, April 7, that the cap has been exceeded and that the visas will be distributed by lottery.

The move to expand the training initiative may ease the disappointment of companies, especially in the technology sector, who say they can’t fill high-skill jobs.

“It’s a good first step,” says Robert Hoffman, vice president of government and public affairs for Oracle and co-chair of Compete America. “The administration has clearly recognized through this action that there is a severe skills shortage in this economy.”

Hoffman says that there are 140,000 openings at S&P 500 companies for engineers, scientists and other highly skilled professionals.

But he warned that the DHS regulation alone is not enough. Congress must increase the number of H-1B and permanent work visas, or green cards. Bills to do so are mired in a political stalemate on immigration reform.

If Congress doesn’t act, “you’re going to create one heck of a bottleneck,” Hoffman says. “You’re going to find (that many) more highly skilled individuals are forced to leave the country.”

Opponents of the H-1B program contend that it displaces U.S. workers and depresses wages. They also criticize the training program expansion.

“It’s completely unnecessary,” says John Miano, a Summit, New Jersey, lawyer and computer consultant who founded the Programmers Guild. “Student visas are not supposed to be the gateway to immigration, but they’re being transformed into that.”

Outsourcing companies from India obtain many H-1B visas in order to send foreign workers to the United States who ultimately take jobs away from U.S. applicants, Miano says.

Data on the impact of H-1Bs doesn’t exist, and Department of Labor enforcement is limited, according to Miano.

“No one knows what’s going on in the system,” he says. “There is no ability to investigate these things.”

But Homeland Security Secretary Michael Chertoff promoted the extension of the training program as a way to bolster the U.S. economy.

“This rule will enable businesses to attract and retain highly skilled foreign workers, giving U.S. companies a competitive advantage in the world economy,” he said in a statement.

—Mark Schoeff Jr.

Though a Bureau of Labor Statistics report revealed companies shed 80,000 jobs from the U.S. economy in March and a whopping 232,000 jobs have been lost since January, recruiting experts say talent acquisition is still going strong in certain areas.

“We are still swamped with requisition orders,” Jim Lanzalotto, vice president of Yoh, a talent and outsourcing services provider, said after the labor report was released Friday, April 4. “I checked all of our numbers this morning to make sure I wasn’t losing my mind.”

Lanzalotto said the labor market outlook will depend on the sector.

“There are areas, such as biosciences and engineering, where unemployment rates are in the 1 to 2 percent range,” he said. “Companies just can’t get their hands on this type of talent fast enough.”

March marked the third consecutive month of job losses, according to the BLS report, and it’s a clear sign the labor market is feeling the impact of a contracting economy, said Bart Van Ark, vice president and chief economist at the Conference Board in New York.
 
Van Ark is projecting not a deep recession but a prolonged economic slowdown, which could mean sluggish labor market conditions persist for several more months.

“It took us a long time to get to this point,” he said. “I don’t think a speedy recovery is in the cards.”

The fact that jobs were shed did not come as a surprise, Van Ark said. What caught many people off guard was the spike in unemployment, which climbed from 4.8 percent to 5.1 percent—the highest monthly increase since September 2005.

Because labor conditions are so varied from one industry to another, it behooves employers to increase communication and transparency with workers during such a tenuous time, said Manny Avramidis of American Management Association, a training and development provider in New York. This may mean holding conferences or requiring managers to meet with employees to explain how a company is doing.
 
Avramidis said opening the lines of dialogue is most critical with rank-and-file workers.

“Managers will be more or less in the know of where they stand on their jobs,” he said. “But the little guy can get easily spooked from what he sees in the media and decide to leave without reason.”

Companies that anticipate reductions in staff need to take further action.

“They better make sure that their succession plans are solid,” Avramidis said. “It will help them make smart reduction decisions.”

Employers’ growing use of social networking sites such as Facebook and MySpace to scrutinize job applicants could lead to charges of employment discrimination and litigation, experts warn.

    Observers say that without adequate policies in place, employers may be leaving themselves vulnerable to charges that they are using the data available on the Web sites to cull minorities, homosexuals and other applicants who are members of protected classes.

    With Facebook alone claiming 66 million active users, more employers are using these popular sites to check out job applicants, observers say.

    A survey of about 350 employers in October 2007 by New York-based Vault.com, a media company focused on careers, found that 44 percent of employers use social networking sites to examine the profiles of job candidates, and 39 percent have looked up the profile of a current employee.

    Observers say “failure to hire” lawsuits are far smaller in number than other types of employment litigation, such as those involving termination or charging retaliation, but they do expect litigation to emerge from employers’ growing use of social networking sites. Use of these sites could be used as evidence in litigation, even if it is not necessarily the primary motivation behind a lawsuit, they say.

    Few firms, however, have formal policies on this issue, experts say.

    Looking someone up on a Web site is not illegal because the Internet is public property, said Sue Murphy, manager of the National Human Resources Association.

    “But where the liability starts to come into play is when people are making hiring decisions based on that information without coming back and talking to the applicant,” she said. “I think it is going to be tested in the courts.”

    Observers say employers long ago stopped asking job applicants to submit photos with their job applications to avoid being accused of rejecting applicants on the basis of their age, race or other factors. Today, however, it often takes no more than the click of a mouse to locate an image of an applicant.

    If it is found employers have been looking at the sites, “I have a feeling you’re probably going to see lawsuits, and the burden is going to be back on the employer to show the protected category” did not enter into its “decision to hire or not hire,” said Anthony Zaller, an attorney with Van Vleck Turner & Zaller.

Be careful what you look at
    Matthew S. Effland, an attorney with Ogletree, Deakins, Nash, Smoak & Stewart, said he knows of no decision so far “that says using this information is a violation of some employee’s rights, but the law is notoriously slow to catch up to technology. I very much see this becoming an issue in the future.”

    Non-demographic information also can be found on the Web sites. Miriam Wugmeister, an attorney with Morrison & Foerster, said employers should be wary of laws in some states, including New York, that say employers “can’t discriminate against somebody in employment based on activities they engage in, in their private time,” such as smoking.

    Many states’ laws also forbid making job decisions based on applicants’ political activities, Wugmeister said.

    This issue will lead to increased litigation, at least in the short term, “until some parameters are set” as to what is private and public knowledge, she said.

    “We haven’t yet settled on where the boundary is,” she said. As a result, “we may see legislation even more than litigation” on this issue, she said.

    “We have good-sense policies,” said Tim DeMello, founder and chief executive officer of Ziggs Inc., a firm that helps its clients manage their Internet “online brand.”

    DeMello said as an employer, he occasionally looks at applicants’ social networking sites to get some sense of their character. If you go to Facebook and see someone pictured with swastikas and then do not hire them, “do you call that discrimination?” he asked rhetorically.

    Employers should have a policy in place that “details what the purpose of the Internet search is,” and that specifically spells out that the firm does not base its decision on race, color or national origin, said Effland.

    Jennifer M. Bombard, an attorney with Morgan, Brown & Joy, said, “Make sure there’s a legitimate business rationale for rejecting applicants and that your hiring decisions are not motivated by information you found on an applicant’s social networking site. Make sure you can point to a legitimate reason for rejecting” the applicant and document and be prepared to justify that decision, she said.

Unfair inference
    Neal D. Mollen, an attorney with Paul, Hastings, Janofsky & Walker, advised employers to avoid looking at social networking sites altogether.

    “I think it’s unlikely employers are going to learn a good deal of job-related information from a Facebook page they won’t learn in the context of a well-run interview, so the potential benefit of doing this sort of search is outweighed by the potential risk.”

    Tim Best, president of PreScreen America, a background investigation agency, said he tells his clients not to use these sites. If the information an employer learns turns out to be false and relies on it in making a decision, the company is in danger of being sued, he said.

    “It’s at best risky doing that,” said Best, who is chairman of the Privacy and Personnel Information Management Council of ASIS International, a security organization.

    Refraining from checking the Web sites in the prescreening stages protects “the employer from an unfair inference that they relied on demographic data that was not visible on the application,” said Manesh K. Rath, an attorney with Keller & Heckman.

    But once the candidate has been met, “I think that employers are entitled to consider the whole of an applicant,” said Rath, who is a member of the Society for Human Resource Management’s expertise panel.

    Gerald L. Maatman Jr., an attorney with Seyfarth Shaw, said the pros and cons of seeking out this information should be weighed. If there is a subsequent discrimination suit, and an employer honestly acknowledges having looked at a social networking site, “it makes that case more problematic to defend.”

    Filed by Business Insurance, a sister publication of  Workforce Management.
 

You can forget reports showing a surprising improvement in the labor market.

The Labor Department released its weekly report on unemployment Thursday, April 3—and the news was not cheery.

Indeed, the number of U.S. workers applying for unemployment benefits soared by 38,000 last week. That’s the highest reading since September 2005, reinforcing fears that the U.S. economy has stalled.

A Labor Department official said there were no special factors to explain the increase in initial claims during the week ended March 29, but he said seasonal adjustments to the data owing to the early timing of the Easter public holiday this year may have influenced the reading.

Economists polled by Reuters had expected initial jobless claims to increase to 370,000 in the week ending March 29, compared with 369,000 the prior week.

But the numbers were far worse than that. The new data shows 407,000 initial unemployment claims were filed last week.

What’s more, the four-week moving average of new claims—thought to be a more reliable guide to underlying labor market trends—also increased sharply. It rose to 374,500, which was the highest reading since October 2005.

Analysts fear a housing slump and credit crunch may have tipped the U.S. economy into recession and are scrutinizing the labor market for evidence of slackening jobs that could chill consumer spending.

Today’s report should give those analysts a pretty clear view of which way things are heading.

Filed by Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

3M Co. is phasing out its pension plan in favor of an enriched 401(k) plan as the exodus of major employers from the defined benefit plan system continues.

Employees hired on or after January 1, 2009, will be covered by a new 401(k) plan, to which 3M will make an automatic contribution equal to 3 percent of employee pay. It also will fully match employees’ salary deferrals, up to 6 percent of pay.

The diversified products manufacturer, though, is retaining pension plan coverage for current employees and is raising its 401(k) plan match. 3M now matches 35 percent to 50 percent of deferrals, up to the first 6 percent of pay.

The new plans “will help us attract and retain talent and address the needs of today’s changing workforce, which desires more portability and greater involvement in decisions affecting their financial futures,” Jan Angell, 3M’s vice president of compensation and benefits, said in a statement.

At the end of 2007, 3M’s pension plan was overfunded, with $11.1 billion in assets and $10.2 billion in obligations. St. Paul, Minnesota-based 3M reported $4.1 billion in net income in 2007 on $24.5 billion in sales.

Other corporate giants that in recent years have announced phase-outs of their defined-benefit plans include Hewlett-Packard Co., IBM Corp., Lockheed-Martin Corp. and Verizon Communications Inc.

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

Employers still have a lot of work to do to make their wellness programs more effective, according to a study released Thursday, April 3, by Hewitt Associates.

While companies are devoting more time and money into helping employees live healthier lifestyles, employees aren’t sure they want their employers taking on this role, according to Hewitt.

Eighty-eight percent of employers surveyed plan to invest in ways to improve the health and productivity of their workforces, up from 66 percent last year.

But only 12 percent of employees believe that it’s appropriate for their employer to play this role. This presents a huge challenge for companies, says Jim Winkler, leader of Hewitt’s health management consulting practice.

“Employees trust their doctors and view them as the sole people who own their health,” he says.

Even employees who do take a health risk assessments as part of their company’s wellness program often don’t act on their results, the study finds.

While eight out of 10 employees took a health risk questionnaire when given the opportunity, 40 percent of them didn’t take any actions based on specific recommendations provided by the follow-up report, according to the study.

That’s not good news for employers, particularly since more than half of employees or their dependents have a chronic health condition, the study says.

The problem is that too often companies rely on incentives or penalties to get employees to participate in their wellness programs, Winkler says. While offering a carrot or stick may help initially, companies need to think more about long-term ways to motivate employees to join and become engaged with their wellness programs.

Employers need to take a look at their corporate culture and figure out what motivates their employees. They also need to focus on health issues that are relevant to their workforces, Winkler says. “February was Healthy Heart Month, but does that make sense for your population?” he says.

Employees can get burned out on messaging if it’s not relevant, Winkler says. “If one year is about losing weight, the next year is stop smoking and the next year is get your screenings, people are going to get fatigued,” he says. “Employers need to refresh their messaging, but keep it relevant.”

One way to do this is by “negative framing,” or targeting employees about a specific health concern, says Tim Stentiford, a principal at Hewitt. For example, one manufacturing company with a large male population recently sent out postcards to employees’ homes that depicted a 57-year-old man saying that he had just found out he had colon cancer. “They scrapped the 24-page guide on prevention and wellness and chose this instead,” he says.

The postcards included information on what steps employees should take regarding how to get a colonoscopy and where they could find more information based on what health care provider they used.

Another way that companies can keep employees engaged in their wellness programs is by making their benefits portals easier to use, Stentiford says. Right now there is too much information and it’s too confusing for employees to figure out what they should do, he says.

“For most employees right now there would be 13 different resources just for diabetes,” he says.

Many companies are figuring out ways to make it easier for employees to find the information they need. In some cases, this means not requiring employees to sign in to find information, like doctors in their areas or phone numbers for specific services, Stentiford says.

“Employers are taking off their HR and benefits hats and putting on their employee hats to figure out where there might be issues,” he says.

A shortage of commissioners has caused the National Labor Relations Board to set aside about 15 percent of the cases in its pipeline, according to its recently appointed chairman.

Only two people are serving on what should be a five-person board that administers federal law governing labor organizing. Nominees for the other three positions haven’t been confirmed by the Senate, as the Democratic majority tussles with President Bush over dozens of nominations.

Peter Schaumber, a current NLRB member who was elevated to chairman by Bush on March 18, told a Senate appropriations subcommittee on Wednesday, April 2, that the board continues to operate.

Schaumber and Wilma Liebman, who was appointed by President Clinton, issued 54 decisions from January 1 through the end of February. For the last five fiscal years, the board has issued 500 cases annually.

The short-handed board is limiting its agenda. “We cannot decide cases which raise issues of first impression and we can’t revisit board law,” Schaumber said in an interview following his Capitol Hill appearance. He has instructed NLRB staff to look for older cases in which there is likely to be common ground between him and Liebman.

During the hearing, they disagreed on how the NLRB has performed during the Bush administration, when it has had a Republican majority.

Schaumber said that in fiscal year 2007 the board issued decisions on 105 of 111 post-union-vote appeals in a median time of 131 days and resolved 78 percent of representation cases within 100 days.

The board has reduced its case backlog by 66.5 percent over five years to a total of 207 cases. In the last fiscal year, it has collected $110.3 million in back wages and reinstated 2,456 employees.

“The agency’s accomplishments, gauged by almost any statistical measure, have been impressive,” Schaumber said.

Liebman asserted that the board is biased toward management, undermining worker confidence in its ability to protect their organizing rights.

“More and more, unions are seeking to negotiate recognition in the workplace, rather than use the board’s election machinery,” she said in prepared testimony. “The board’s procedures are seen as taking too long, leaving workers vulnerable to coercion by employers and generating campaign animosity that can taint a new bargaining relationship.”

Sen. Tom Harkin, D-Iowa and chairman of the Senate appropriations subcommittee on labor, also expressed skepticism. He wasn’t impressed with the $110 million in back-pay recovery over the last fiscal year.

“What that doesn’t tell us is how many [companies] didn’t have to pay back pay,” he said. “That sounds like a lot of money. We don’t know what that means in the broad picture.”

He also was frustrated by the lack of statistics on how many unfair-labor-practice complaints are filed during unionization campaigns.

Gordon Lafer, an associate professor at the University of Oregon, said that one in 17 eligible voters in a workplace union election are fined, demoted or suspended. He argued that companies have too much power to squelch efforts to establish collective bargaining.

“They’re problems that require fundamental changes in the law,” he said.

But John Raudabaugh, a partner at Baker & McKenzie in Chicago, attributed the drop in unionization—currently 12 percent of all workers—to changes in the economy that have hurt such sectors as manufacturing, where unions are strongest.

He said that in the last fiscal year, unions won 54 percent of 1,559 workplace elections, the same success rate that they achieved in the early 1970s.

“Unionization is in decline in most Western democracies,” Schaumber said.

Liebman maintained that rising income inequality demonstrates that the National Labor Relations Act, which has been in place for more than 60 years, is not working and needs to be reformed.
—Mark Schoeff Jr.

Pressure is mounting in the five-week-old United Auto Workers strike against American Axle & Manufacturing Holdings Inc.

In developments over the past two days, Automotive News revealed that within two weeks the stoppage will shut production of General Motors’ hit sedan the Chevrolet Malibu. More GM car assembly plants, including its operations in Lordstown, Ohio, are threatened.

Also, American Axle CEO Richard E. Dauch placed want ads in various newspapers for possible replacement workers to restart production at the five striking plants.

And GM has moved a small but significant parts contract from American Axle to archrival Dana Holding Corp., Automotive News has learned.

Taken together, these are signs of restlessness that should bring American Axle and the UAW back in earnest to the bargaining table—and perhaps GM too, said Aaron Bragman, research analyst with the suburban Detroit office of Global Insight Inc.

“I think you’re going to see these talks take on a more urgent tone,” Bragman said.

Hot seller
GM cannot afford to lose Malibu production, Bragman said. The redesigned vehicle is one of the few shining stars in a stable that overall experienced a U.S. sales drop of 13 percent in March and 11.4 percent in the quarter compared with a year ago.

But GM is running out of a key American Axle part for the Malibu—a knuckle on the rear suspension.

American Axle is the only producer of the part for the sedans built at the Fairfax assembly plant in Kansas City, Kansas, and the Orion, Michigan, assembly plant in suburban Detroit. Within two weeks, the knuckle shortage will shut production of the G6 sedan at Orion.

GM’s role in any strike settlement probably would be limited, says Dave Cole, chairman of the Center for Automotive Research, an automotive think tank in Ann Arbor, Michigan.

So far, GM has stayed out of the talks, allowing the strike at American Axle to reduce high inventories of light trucks on dealership lots. About 30 GM plants are either closed or operating at partial capacity because of parts shortages.

GM could make a deal that allows some of the 3,650 striking UAW workers to hire in at GM at top wages if a GM buyout program opens positions, Cole said. But the automaker would want something in return, perhaps lower prices for axles and other parts, Cole said.

Cash help unlikely
What’s unlikely is that GM, which spun off American Axle in 1994, would offer cash to help American Axle buy out workers or buy down their wages in exchange for one-time bonuses, Cole said.

GM had to pay at Delphi Corp. because of UAW contract provisions that called on the automaker to help in an emergency. That’s not the case with American Axle, Cole said.

On the other hand, Cole said, GM does not want to see the strike, which began February 26, affect Malibu production.

During a conference call Tuesday, April 1, Mark LaNeve, GM vice president of North America sales, service and marketing, declined to comment on the American Axle situation, except to say that GM still had adequate inventories of most vehicles. American Axle provides axles and other parts for all GM pickups and SUVs built in North America.

In a press release Tuesday, American Axle said it had provided the UAW with additional requested information to promote bargaining. An American Axle spokeswoman did not return phone calls Tuesday.

In a statement released late Tuesday, UAW vice president James Settles Jr. said American Axle provided information originally requested by the UAW’s bargaining team on December 7.

The delay is one factor that caused the strike at American Axle, Settles said, contending the delay violated federal labor law.

The strike was also caused, according to Settles, by American Axle’s termination of disability payments, health care coverage and compensation for injured and laid-off workers.

Said Settles: “We hope the company will do what is required to meet its legal obligation to provide data necessary for bargaining—and reinstate benefits to injured and laid-off workers—so that we can settle this dispute and bring our members back to work as soon as possible.”

Filed by David Barkholz and Robert Sherefkin of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.