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Educating Patients to Protect Themselves

Some employers are trying to change the health system to prevent medical errors from occurring. Others may opt to provide employees with tools that will help them make better decisions about their medical care.

Ilene Corina’s son died from a medical error more than a decade ago. Now she helps run Pulse, an organization that provides education programs she refers to as the “driver’s ed of patient safety.” The programs run a half-hour to a half-day and are taught to “the general public wherever they congregate.” Pulse has taught community groups, schools and the AARP. The organization would like to expand the course to employees in the same way that employers teach workplace safety and nondiscrimination.


Pulse covers topics on health literacy such as how to avoid infections, where to find how many times a doctor has performed a certain procedure, what criteria patients should look for in a hospital and how to check medication to make sure it has been correctly prescribed and dispensed. The programs also encourage patients to ask questions and become more involved in their health care and teach people how to become patient-safety advocates for friends and family members who are hospitalized during an emergency.


Corina, a resident of Wantagh, New York, on Long Island, believes employees who take the free course should get a discount on their health care premiums, just as teenagers who take driver’s education classes get reduced auto insurance rates. In the long run, doing so would reduce costs associated with medical errors, she says.


“When my son died, my employer let me take weeks off. My husband took even more off because he had a breakdown,” she says. “But employers are not looking at it as a result of a medical error; they are looking at it as a sick day.”


The skills Corina teaches now are ones she wishes she had when her son was admitted to the hospital in 1990 to have his tonsils removed. It’s among the most common procedures, yet her son bled to death from a botched tonsillectomy and a subsequent infection.


“How am I supposed to know that people die from tonsillectomies?” she says. If she had known that, she says, she would have demanded more information and “maybe he wouldn’t have died.” More information is at www.pulse america.org.


Organizations like the National Patient Safety Foundation are also clearinghouses for educational tools.


Helen Haskell has become a more forceful advocate of patient safety after her son died from a medical error in a South Carolina hospital. She hopes employers agree that harmful errors can be prevented if patients are educated to be consumers of safer health care.


“My son had essentially a cosmetic procedure that was much riskier than we realized,” she says. “There was medical literature documenting the risk, but we just didn’t understand the risk. It’s true of most people who have surgery.”


Health insurers, as well as some employers and consumer-oriented Web sites, are providing more information on the quality of hospitals and doctors. Philadelphia-based health insurance company Cigna offers reduced costs to members who go to doctors and hospitals that are recognized for the quality and safety of their health care by the Leapfrog Group and the National Committee for Quality Assurance—organizations focused on improving the quality of health care. Cigna’s Web site also ranks specialists and hospitals according to how they perform.


“What we do is try to raise the odds that folks can avoid medical errors,” says Cigna spokesman Joe Mondy.


Most patients, however, are unaware that the rankings exist, Corina says. She believes employees need basic training in how to approach health care decisions.


“Employers need to make sure their employees are safe,” Corina says. “The way they do that is to make sure their employees have knowledge.”


Workforce Management, June 11, 2007, p. 18 — Subscribe Now!

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A Credibility Project

Scientists working on the Yucca Mountain Project are learning more these days than how to safely dispose of radioactive nuclear waste. Since January, they have been trained and tested on tasks ranging from communication skills to the proper procedures for recording research data.


Refining these and other skills could come in handy should they need to testify before Congress and defend their research—a likely scenario when lawmakers hold hearings in 2008 on the future of Yucca Mountain.


Rather than sitting in classrooms, scientists receive training online via 20-minute modules that are followed by exercises in which they demonstrate applied knowledge of the information. Flash-animated and narrated PowerPoint demonstrations are used to drive home key points and make the material interesting.


Training is oriented around common procedures that scientists use on a daily basis, says Cheryl Ann Seminara, who in January was hired to lead organizational development initiatives for Yucca Mountain’s 625-person workforce, including about 400 research scientists.


“What we’re doing is training them not just on how to follow a procedure, but also the impact on the entire organization of not following those procedures,” Seminara says.


Renewed focus on training corresponds to organizational change taking place at Yucca Mountain, a research arm of the U.S. Department of Energy. Federal officials envision Yucca Mountain, situated about 100 miles northwest of Las Vegas, as a possible dump site for the nation’s nuclear waste. A congressional committee in October 2006 appointed Sandia National Laboratories, based in Albuquerque, New Mexico, to manage the Yucca Mountain Project, replacing Bechtel SAIC as prime contractor.


Rather than try to coordinate training remotely through the Albuquerque headquarters, Sandia officials decided to bring programs in-house. That necessitated creating training programs from the ground up, says Patrice Sanchez, the business operations manager for Sandia’s Yucca Mountain Project office.


Particularly challenging is the fact that all employees—from scientists to administrative support workers—are bound by certain procedures.


“We have some very unique requirements around procedures that we have to follow, particularly because all of our processes are auditable,” Sanchez says.


For example, scientists are being trained to follow prescribed procedures when they make entries in scientific notebooks. Haphazard scribbling is out; instead, researchers have a long list of painstaking rules to follow.


Stipulations include what information can be written in page margins, whether accompanying documents may be affixed with staples or adhesive tape, how corrections are to be handled, how often the recorded work has to be reviewed by superiors, and a slew of other details.


“All of our data is recorded into scientific notebooks, and [the data] forms the basis for longer documents such as reports. Everything we do is based off that data,” so failing to adhere to the procedure could cast doubt on the validity of the research, Seminara says.


Previously, training consisted of little more than scientists acknowledging that they had reviewed existing procedures, she says.


The need to improve training procedures was underscored in 2005 following allegations that some former Yucca Mountain scientists had fabricated their data. A Department of Energy report in March blamed upper management at Yucca Mountain for failing to hold workers accountable and neglecting to put effective reviews in place to ensure the integrity of the research being performed.


The new training initiatives are an attempt to address those concerns, Yucca Mountain officials say. Thus far, about eight programs have been developed, with a catalog of 30 training courses expected to be available by July, Seminara says. A committee comprising representatives from the training department, a manager and subject-matter experts is assigned to evaluate each new training initiative every six months, “to make sure it’s still applicable.”


Scientists are performing tests and analyzing various scenarios in connection with a license application to be submitted this month to the Nuclear Regulatory Commission. Obtaining the license is required before the Energy Department can begin construction of the repository.

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A Menu for Management

When Bubba Gump Shrimp Co. goes trawling, tiny sea creatures aren’t the only catch. The San Clemente, California-based company is also trying to haul in the best workforce possible—one that’s competent, highly motivated and fiercely loyal.

    Themed after the 1994 Tom Hanks film “Forrest Gump,” the restaurant franchise is reshaping perceptions of the restaurant industry, which for decades paid little attention to high turnover and even less to career development. From a single restaurant on Cannery Row in Monterey, California, in 1996, Bubba Gump Shrimp has grown into a chain of 25 restaurants globally, including 18 in the United States. Many are in tourist hot spots, including Honolulu; Breckenridge, Colorado; Daytona Beach and Orlando, Florida; Gatlinburg, Tennessee; and midtown Manhattan.


Since formally establishing its training and development department in 2001, turnover in the managerial ranks has been reduced by half, from 16 percent down to 8 percent. In addition, most of its approximately 200 store managers have been promoted from within.


Retention of managers shows up in hard dollars. Having well-trained managers who stick around saves a Bubba Gump restaurant about $600,000 in recruiting costs, or about 10 percent of its estimated annual sales of $6 million, says Steve Moreau, who launched the initiatives when he was director of training and development. Moreau took over as the company’s communications director in 2006.


In addition, Moreau says year-over-year increases in same-store sales, as well as a higher concentration of sales per square foot—two key metrics used by restaurants and other retailers—are the direct result of more intensified training efforts.


In an industry that has a tough time luring new recruits—much less persuading them to pursue food service as a career—Bubba Gump Shrimp is setting standards for innovative training. It was one of five food service chains in 2005 to win a Spirit Award from the National Restaurant Association Educational Foundation, given to restaurants that demonstrate industry-leading practices in hiring, training and retaining employees.


“People are our greatest asset simply because they are the [main] point of contact with our guests. Failure to invest the training and development of those people would be a failure to grow our business,” Moreau says.


Trawling for talent
   Employee training at Bubba Gump Shrimp is closely integrated with such functions as recruitment and hiring. Candidates are assessed during behavioral-based interviews that focus on personality and aptitude. Emphasis on related job experience often is secondary to a person’s attitude, Moreau says, which makes it easier to train someone after they are hired.


“Rarely do we ask about an individual’s experience level. We are most interested in who are they in terms of their attitudes and behaviors,” Moreau says.


He adds: “We can train people to be effective servers, cooks, bartenders, whatever. But we can’t train them to be kind, thoughtful of each other, and [to] interact well with colleagues and guests.”


The approach of hiring for attitude enables Bubba Gump Shrimp to begin grooming potential leaders from the first day on the job, using a combination of job shadowing, classroom work and relevant skills training.


“The goal isn’t to have people complete training in a set number of days,” Moreau says. “The goal is to train them so they’re prepared” to do the job confidently


Bubba Gump Shrimp illustrates how attitudes toward employee training are shifting within the restaurant industry. For years, restaurants were content to tolerate high staff turnover as a way to keep payroll costs low. It is a practice that experts say is slowly dying out, as large dining chains recognize the value of staff continuity brought about by career development.


“If you’re spending lots of money to find good people, it makes good sense to invest in their development,” says Teresa Siriani, president of People Report, a Dallas organization that tracks human resources trends in the food services sector.
Siriani’s organization notes that two-thirds of casual-dining restaurants plan to launch new training programs in 2007, with one in three fast-food chains doing so.


Competition for consumer dollars is intensifying. The restaurant business may be the unheard signal of a strengthening U.S. economy. As consumers grow more confident, they are eating out more and spending more when they do. Restaurants across the country are looking forward to a record-breaking year, with sales expected to jump 5 percent to $537 billion in 2007, according to the National Restaurant Association, a Chicago-based trade group.


The skyrocketing sales are generating above-average job growth in the industry. Roughly 13 million people work in the U.S. food service industry, second only to the federal government in total employment, according to the Bureau of Labor Statistics. By 2014, employment growth in dining establishments is expected to increase 16 percent. That equates to about 1.9 million new jobs. By comparison, the total U.S. labor force is projected to increase 1 percent annually during the same time frame.


To prepare, restaurant chains are pushing food services as a potentially lucrative career option, especially for people who aspire to positions in management. To overcome the grueling schedules, companies have begun to pay restaurant managers handsomely. General managers are usually between 30 and 33 years old, much lower than the average age for managers in other U.S. industries, and operate franchises that generate about $2.5 million in annual sales, Siriani says.


“How many people in their 30s can say they’re running a $2.5 million business?” Siriani says, adding that it it’s not unusual for established GMs to earn six-figure salaries.


Top-flight managers at Bubba Gump Shrimp often get recommended by their peers for an advanced development program known as President’s Camp. Instituted in 2002, the invitation-only program is part of Bubba Gump Shrimp’s succession planning.


President’s Camp enables restaurant managers to meet with top executives to hone the skills they’ll need to move up to more advanced managerial slots, Moreau says. During the weeklong event, promising top performers get some of the tools they’d need for management, including lessons in how to read financial statements and courses in personal development.


Managers are chosen by peers based on sets of objective criteria, such as a manager’s rate of employee retention, guest satisfaction surveys and guest return rates—although selection also is somewhat subjective. If an established manager believes a younger manager can benefit, that is another valid criterion for recommendation, Moreau says.


In addition, Bubba Gump Shrimp runs an in-house coaching program that certifies fast-rising professionals as employee trainers. They include bartenders, chefs, head waiters and other managers who interact with employees and coach them on the job. In a sense, these trainers embody a type of retention success by assuming greater leadership roles and “ownership” of the business, Moreau says.


With the employee-trainer piece in place, new managers assigned to run a store already have a ready-made support system to ease their transition. Restaurant managers at Bubba Gump Shrimp also undergo a form of reverse mentoring, learning each job skill from employees in a real work setting. Managers train a minimum of three days in each job, with employees coaching and evaluating them. This approach does two things, Moreau says.


“First, it establishes empathy [in managers] for what employees go through and the demands they face,” he says. “Second, it establishes our trainers as valuable assets for managers once they graduate” from training to run the restaurant. On average, general managers stay with the company about 6½ years before changing jobs, Moreau says.


Other franchises are following similar development paths. Monical’s Pizza, a 57-store chain in the Midwest, has partnered with Harvard Business School Publishing to provide a suite of workforce development programs for its 1,000 employees, from people in entry-level jobs to upper management.


In an industry where turnover is as high as 300 percent, Monical’s recognized that motivated managers can quickly make a positive impact on a restaurant’s bottom line and its ability to satisfy customers, says Harry Bond, the company’s president.


By focusing on individual training for managers and giving non-managers a chance to prove themselves, Monical’s companywide annual turnover has dropped to 53 percent. Management turnover is better, at 7 percent, Bond says.


Turnover by the hour
   As effective as management training is in the industry, similar programs for hourly employees aren’t having the same impact. The rate of hourly turnover spiked to 114 percent in 2006, its highest level since 2003, according to People Report. At 127 percent, Bubba Gump Shrimp’s hourly turnover rate is slightly higher than industry average, a fact partially attributable to many of its restaurants being in areas that thrive on seasonal tourism.


But restaurant chains of all types, from fast-food joints to fine-dining establishments, face similar woes. Siriani notes several factors conspiring to make staffing an acute challenge for restaurants and other firms in the food service and hospitality industries.


For one, she notes many people between 16 and 24—traditionally a strong demographic for finding hourly workers—are opting out of the workforce. Many are deciding to attend college before joining the workforce, but a good many view restaurant jobs as dead-end positions.


Also, now that the U.S. economy is on firmer footing, other talent-hungry industries are aggressively recruiting restaurant employees to fill their own needs.


“If you need energetic, hospitable people who can think on their feet—all the criteria that make for a terrific restaurant employee—why wouldn’t you want that [person] in your business?” Siriani says.


The restaurant industry is trying to capture the attention of would-be workers much sooner. The National Restaurant Association Educational Foundation has been successful in getting its ProStart curriculum in 1,400 schools in 47 states. About 54,000 students take the courses annually.


“We see this as an opportunity to change students’ perceptions of the food service industry and get them to focus on it as a career,” says Wendi Safstrom, vice president of management development at NRAEF.


ProStart consists of two years of coursework, exams and 400 hours of work experience for students to receive a national certification of merit that is widely recognized within the industry. The program also enables students to compete for scholarships and other forms of advanced study in food services at about 60 U.S. colleges and universities.
Those are the types of initiatives that could help restaurants change their approach to training and professional development.


Notes Moreau: “It doesn’t serve us in any way to turn over staff randomly. That’s old-school thinking that just isn’t productive.”

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Senate Likely to Squelch Unionization Legislation

A bill that would make it easier for workers to form a union likely will fail in the Senate in the next few days.



Sometime between Thursday, June 21, and the July 4 recess, the Senate is expected to conduct a cloture vote on the measure, the Employee Free Choice Act. It takes 60 votes to invoke cloture—or end debate—on a bill and move to a final vote.



It is likely that nearly all of the Senate’s 48 Republicans will vote against cloture, ensuring that it will not reach the 60-vote bar. The bill, which has 46 Democratic co-sponsors, would allow a union to form if a majority of workers sign cards authorizing a bargaining unit. Under current law, a company can insist on a secret-ballot election conducted by the National Labor Relations Board.



The bill would enable any party in a first-contract negotiation that is not concluded within 90 days to take it to federal mediation. If no agreement is reached within another 30 days, it would go to arbitration.



The legislation also would impose fines of up to $20,000 per violation if a company violates a worker’s rights during an organizing campaign.



The House approved the bill 241-185 on March 1. President Bush has vowed to veto it.



Unions have made the measure their top priority, while the business community has been lobbying against it fiercely.



Advocates for what has come to be known as the card-check bill argue that companies intimidate workers during unionization drives. Opponents say that a card-check election would foster intimidation by unions.



Rhetorically, Democrats place the measure on a roster of proposals that they say will strengthen the middle class because workers are more likely to have health care and pension coverage if they’re represented by a union.



Republicans label the bill “undemocratic” and assert that it would violate workers’ rights to a secret-ballot election—like the one that puts senators in office.



At a sweltering rally near the Capitol on Tuesday, June 19, Democratic office holders addressed hundreds of union members and organizers, in part to thank them for delivering Democratic majorities in the House and Senate last fall.



But they stopped short of saying that approval of the card-check bill is possible. They stoked the crowd by declaring that senators would be forced to take a stand on the issue.



Achieving a win may require more electoral gains in the Senate—and the White House—for Democrats.



“Unions are essential to this country’s success and absolutely critical to the middle class,” Sen. Hillary Rodham Clinton, D-New York, told the union rally. “If [President Bush] vetoes it, when I’m president, I’ll sign it and we’ll finally get it done.”



Republicans in the Senate are just as passionate in their opposition. “The bill is un-American,” Sen. John Ensign, R-Nevada, said at a Capitol press conference on Wednesday, June 20. He argues that it would strip workers of their right to a secret-ballot election.



Sen. Orrin Hatch, R-Utah, asserted that the bill also would dramatically change collective bargaining rules, weakening the contract-negotiating process.



“It’s an overreach like I’ve never seen before,” he said, noting that unions already win 60 percent of the time in NLRB elections. “This is a very, very important battle. We’re going to do everything in our power to make sure employees are protected.”



Democrats invoked similar language in promoting the bill. “We need to do it for the American worker,” Senate Majority Leader Harry Reid, D-Nevada, told the June 19 labor rally. “It’s time they were moved up on the agenda.”



But Reid has drawn criticism from Republicans for putting the bill on the Senate calendar without having it approved by the Senate Health Education Labor and Pensions Committee. The panel held a March 28 hearing but did not mark up the bill.



“They didn’t have the courage to take it through the committee, which means it’s purely political,” says Sen. Mike Enzi, R-Wyoming and the panel’s highest-ranking GOP member.



Wrangling is also occurring among interest groups. The AFL-CIO says that 53 percent of U.S. workers, or 60 million people, would join a union if they could.



Rick Berman, executive director of the Center for Union Facts, an anti-union advocacy group, disputes that number, questioning labor’s polling methodology. He says independent surveys indicate that upwards of 75 percent of nonunion workers don’t want to form bargaining units.



He also asserts that this week’s activity is a preamble for labor. “This is simply part of a staged setup by the unions to create a more meaningful vote after the 2008 elections,” he says. “Business is not taking this campaign seriously. The unions are playing a long-term game.”



—Mark Schoeff Jr.


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U.S. Automakers Say Labor Costs Must Shrink to Compete

Detroit automakers are vowing to fight for significant labor savings in master contract negotiations with the UAW.

At a series of background sessions this month, executives from the three major U.S. car companies said they need to close a labor cost gap of $20 to $30 per hour with their Japanese counterparts in North America.

The UAW is accustomed to wages and benefits gradually growing, not shrinking. But these negotiations, which run until the September 14 expiration of the current contract, must bring change, says Dave Cole, director of the Center for Automotive Research, a think tank in Ann Arbor, Michigan.

“I think you could see a lockout,” Cole says. “The car companies won’t settle for anything short of transformational change in their labor agreements.”

UAW president Ron Gettelfinger has said the union already gave General Motors and Ford Motor Co. substantial relief on health care costs over the past few years. He has said the UAW is not interested in giving up more in the current negotiations.

Ford has a goal to cut its labor costs by 30 percent, The Detroit News reported last week. Ford declined to confirm the report.

But in the face of massive financial losses, the Detroit automakers must bring labor costs that are now about $72 per hour ($28 an hour in wages plus benefits and pension costs), closer to the $45 to $50 per hour of the Japanese car companies operating in North America, Cole says.

Among the ideas being floated by the Detroit automakers is a new structure to pay for retiree health care. Under various scenarios, the car companies would pay the UAW 60 cents to 70 cents on the dollar to assume a combined liability of $93 billion for the Detroit companies.

The union would then control the money and the risk of meeting the obligations through a trust known as a Voluntary Employee Benefits Association.

The union isn’t interested in that plan—at least not now, Cole says. But it is listening to the idea as a hedge against possibly losing all those benefits should any of the companies falter into bankruptcy, he says.

The UAW declined to comment last week.


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

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Iraq War Bill Makes Changes To Pension Rules

When President Bush signed a bill just before Memorial Day that would provide funding for the Iraq war, he also ushered in new employment law.


The high-profile workforce provision included in the Iraq bill raises the minimum wage to $7.25 during the next two years. But buried in the legislation were changes to a massive 2006 pension reform bill.


The modifications may be a harbinger for further tinkering to that 900-page measure, which, among many other reforms, tightened funding rules for defined-benefit plans and required them to cover 100 percent of liabilities.


The legislation was spurred by spectacular pension defaults following the economic downturn early in the decade and the specter of future airline pension collapses. It was that industry that received the most substantial relief in the Iraq legislation.


In the original pension bill, Northwest and Delta, which had put their pensions in a “hard freeze,” were allowed to use an 8.85 percent interest rate to calculate liabilities. American and Continental, whose plans were in a “soft freeze,” had to use a yield curve interest rate of about 6 percent.


But those two carriers were able to secure language in the Iraq bill that would allow them to use an 8.25 percent interest rate, a much more favorable rule because a higher rate lowers pension costs.


The nimble footwork by American and Continental lobbyists has drawn the ire of two senators who are instrumental in setting pension policy.


Finance Committee Chairman Max Baucus, D-Montana, and Ranking Member Charles Grassley, R-Iowa, sent a letter on June 6 to the CEOs of each airline requesting that they tell the panel how big their projected minimum contribution to their pension plans would be before and after the relief they received in the Iraq spending measure. They also asked for the number of participants in each plan and the amount of accrued benefits in excess of the amount insured by the Pension Benefit Guarantee Corporation.


“These two airlines flew around the Finance Committee to get this pension provision in the spending bill, but we will review in the light of day exactly what deal they got,” Baucus said in a statement.


Grassley said that Congress spent months assembling the pension bill last year, taking into account the airlines’ situations and the potential liability borne by taxpayers if they defaulted on their pensions.


“Now these two airlines and their allies in Congress have undermined that work,” Grassley said in a statement.


Among other changes slipped into the Iraq bill were provisions affecting the use of excess pension funding for retiree medical benefits and setting rules for treating multiemployer plans as single-employer plans.


Meanwhile, House and Senate committee aides have been hammering out a bill that would make technical corrections to the 2006 pension law. It’s not clear whether that measure will include changes as substantive as those provided for the airlines in the Iraq legislation.


As part of the effort to produce a corrections measure, a House Education and Labor subcommittee held a hearing in early May in which witnesses called for an array of changes to the pension bill.


Airline pilots argued that they should receive the maximum federal pension insurance benefit granted to people who retire at 65, even though pilots must quit at 60.


Scott Macey, senior vice president of Aon Consulting Inc., asserted that the effective date of the new funding rules should be delayed from 2008 until 2009, phase-in funding targets should be loosened, and references in the bill to “asset averaging” should be changed to “asset smoothing” to better ensure market valuations.


“The law was so complex and comprehensive that, without a criticism of anyone, you need a few corrections to carry out what the intent is,” Macey says.


The chairman of the subcommittee maintains that he does not intend to rewrite the original pension bill, which took years to produce.


“I’m not interested in upsetting the delicate balance that was struck in 2006,” says Rep. Robert Andrews, D-New Jersey. “I want to see how it works in practice for a reasonable amount of time. We want this to be a thoughtful, deliberative process that improves the law.”


Mark Schoeff Jr.

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Medical Spending Growth Expected to Decline

Lower spending on prescription drugs and increased cost-sharing with employees are expected to lower the growth rate of medical spending in 2008, a sign that premium increases may decline as well, according to data released Tuesday, June 19, by PricewaterhouseCoopers.

The driving force behind the drop is patients’ increased sensitivity to price. Employers have achieved this by sharing more of the cost of medical care with employees. They have also focused on managing the health of employees to prevent disease and encourage healthy lifestyles through health coaches and disease management.


“The causes for the current deceleration are complex,” according to the report’s authors, “but it’s clear that the movement into consumerism is real and is affecting medical costs.”


The use of electronic medical records is partially responsible for the slowing of medical cost increases.


Though a drop in medical cost growth does not necessarily mean a decline in premium growth, the past few years have seen just that.


This year, medical costs at health maintenance organizations, for example, are expected to increase 9.9 percent, compared with an increase of 11.8 percent last year. Consumer-directed plan costs increased 7.4 percent, compared with 10.7 percent a year earlier.


Premium growth rate, meanwhile, has dropped every year since 2003, when premiums rose 13.9 percent nationally. In 2006 and 2007, premiums increased 7.7 percent.


Medical cost trends for employers are a combination of factors: how much medical care costs; how much medical care patients seek; and how much of the cost employers shift to employers.


Jeremy Smerd


 

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Death and Pensions Treasury Proposes New Rules

Companies received more guidance recently on how to implement the Pension Protection Act when the Treasury Department and the Internal Revenue Service issued proposed mortality tables and regulations on mortality tables used to measure pension liabilities.

The proposed regulations include rules on the substitute mortality tables that the PPA authorized companies to construct using data on their own workforces.

Jay Rosenberg, a director in the retirement practice of Buck Consultants, said the proposed regulations cleared up one concern of plan sponsors by saying that companies with a number of pension plans of varying sizes can use plan-specific tables for plans big enough to have sufficient data and rely on the tables the government provides for the smaller plans.

But the proposed regulations did not include any information on the mortality tables used to calculate minimum lump-sum distributions, Rosenberg said.

“Our clients have been very interested in being able to describe to their employees what they can expect in the amount of lump sums if they retire in 2008 versus 2007, or 2009 versus 2008, so that people can make appropriate plans,” he explained. “Hopefully we’ll get some guidance soon. There’s a very pressing need for the government to issue guidance in this area so that employers can notify their employees.”

If companies want to build their own mortality tables, the proposed regulations require that they have “credible data.” The regulations define the amount of information that would be sufficient as data on 1,000 deaths of workers of the same gender.

The regulations also say that companies must notify the government seven months in advance of a new plan year that they are going to use a plan-specific table, but add that companies have until October 1 to notify the government about 2008 plans.


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

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State Law Penalties For Missed Meal, Breaks

John Paul Murphy, an employee of Kenneth Cole, an upscale retail clothing chain, filed a complaint with the California Labor Commissioner for missed meal and rest periods and unpaid overtime. California law provides, in Labor Code 226.7, that if an employer fails to provide a meal or rest period, the employer must pay the employee one additional hour of pay at the employee’s regular pay rate for each day the meal or break is not provided.

Kenneth Cole appealed, raising issues regarding Murphy’s workplace classification—that he was a nonexempt employee, and that payments for meal and rest break violations were a penalty rather than a wage, and thus Murphy’s claims were barred by the applicable one-year statute of limitations.

The California Supreme Court unanimously held that the remedy provided in Labor Code 226.7 constitutes a wage or premium pay that is governed by a three-year statute of limitations, as opposed to a one-year statute of limitations for penalties.

The Supreme Court noted that meal periods and rest breaks “have long been viewed as part of the remedial worker protection framework” and that “due to a lack of employer compliance, the [Industrial Welfare Commission] added a pay remedy to the wage orders” for such violations. Therefore, “payment owed pursuant to section 226.7 is akin to an employee’s immediate entitlement to payment of wages or for overtime.” Murphy v. Kenneth Cole Productions Inc., 40 Cal. 4th, 1094 (4/16/07).


Impact: The court’s decision underscores the importance of ensuring that employers’ meal and rest break policies comply with applicable law, as well as the importance of ensuring those policies are being followed by all employees.


Workforce Management, May 21, 2007, p. 6 — Subscribe Now!

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Employee Rejects Employer’s Harassment Remedies

Susan Baldwin, a marketing representative for Blue Cross/Blue Shield of Alabama, claimed her supervisor, Scott Head, used profanity on almost a daily basis, called women “babes” and “bitches” and referred to marketing representatives in vulgar terms. Head also propositioned her on two occasions and played with his zipper in front of her.


Several months later, following Baldwin’s first complaint to the company’s human resources department, Blue Cross investigated and interviewed Head and other employees, none of whom corroborated Baldwin’s allegations, but which confirmed that Head had used profanity. The company did offer to hire an industrial psychologist to assist Baldwin and Head with their interactions, and when Baldwin indicated that she could not work with Head, she was offered a transfer, which she rejected.


In affirming summary judgment for the employer, the U.S. Court of Appeals for the 11th Circuit in Atlanta held that “the complainant does not get to choose the remedy,” and she refused to take advantage of the reasonable corrective measures offered by the company. Baldwin failed to report her allegations promptly, as required by her employer’s anti-discrimination policy, and refused to accept a counseling plan or a transfer from the Huntsville office to one in Birmingham, 100 miles away.Baldwin v. Blue Cross/Blue Shield of Alabama, 11th Cir., No. 05-15619 (3/19/07).


     Impact: Employer policies should afford employees multiple avenues for employees to complain about harassment and discrimination issues. It is equally important that employers promptly investigate such complaints and respond with appropriate remedial actions as warranted.


Workforce Management, May 21, 2007, p. 12 —Subscribe Now!