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Posted on June 3, 2009June 27, 2018

TOOL Six Tips on How to Weather a Twitterstorm

Thanks to Twitter, Facebook and YouTube, all sorts of new critics and activists are finding their voices amplified online. So what to do when an online firestorm erupts?


The two most recent case studies are Amazon—which was recently the target of a “Twitterstorm,” as thousands of titles, many of them gay- and lesbian-themed, disappeared from its all-important sales ranking system—and Domino’s, whose public relations problem lies in a YouTube video showing two employees defacing a yet-to-be-delivered sandwich.


“Credibility is the currency of the ‘new normal,’ ” says Steve Cody, managing partner and co-founder of communications firm Peppercom. “Tell me what happened yourself. Don’t allow me to hear it from others. If I do, I’ll lose my faith and trust in you. And, in an era when faith and trust has been tested to the breaking points, brands like Amazon and Domino’s need to be a whole lot smarter and a whole lot swifter.”


Here, six tips for if—or when—it happens to your organization.


1. Listen to the what—and to the who. Sure, the usual advice about having a social-media-monitoring infrastructure is important, but not nearly as important as knowing exactly who’s doing the talking and gauging where that might lead. Who’s angry—and how angry are they? Is the uproar isolated or widespread? Are these people your customers or not?


Priority No. 1 has to be the people who make up the majority of your company’s customers.


2. It’s OK to say, “We don’t know.” By far the biggest issue most of the angry Twitterers had was that Amazon didn’t respond quickly and, when it did, the vague answer it offered—the problem was a “glitch in the system” that was being fixed—didn’t satisfy the masses who had already gotten fired up. The next response from Amazon came a day later, when it issued a statement calling the incident an “embarrassing and ham-fisted cataloging error.”


Now, it’s likely Amazon didn’t really know what was going on—at one point a hacker even tried to take credit for the issue—but most social media experts say that wasn’t the problem.


“A lot of people have this idea that you can only respond when you have every ‘i’ dotted and ‘t’ crossed and have figured out what’s going on,” says Jeff Rutherford, founder of Jeff Rutherford Media Relations. “It’s perfectly fine if you say, ‘We’re aware there’s an issue; we’re not ignoring it, and we’re working hard to get to the bottom of it.’“ Amazon has always been tight-lipped from a public relations standpoint, and in this case it cost them.


3. Address the crowd where it’s gathered. Understandably, companies don’t necessarily want to call attention to a crisis by making a big, flashy statement. After all, in many cases (and some would argue most) these firestorms don’t leave the insular communities in which they start. While a small number of consumers had heard about the Motrin debacle, the brand called further attention to the issue when it issued a public apology on its Web site and confused consumers who ended up there for completely unrelated reasons.


Amazon would have gone a long way toward quelling the uproar by addressing it on Twitter, where it was largely taking place. And had it swallowed its pride and tagged the posts #amazonfail, it would have been rewarded with hundreds of retweets—valuable earned media from the crowd it had previously angered.


“You don’t have to bow to the Twitter torches and do everything they tell you to do,” says Jackie Huba, co-author of the Church of the Customer blog. “But you can’t stick your head in the sand and ignore this building, growing outrage about what you’re doing.” A little secret about human nature: Knowing someone is listening to you is often more important than getting exactly what you want.


4. Tone matters. In the case of Amazon, what grabbed several observers was the incongruity of its cold-sounding responses (“The problem is a glitch and it’s being fixed”) and the friendly, easy brand persona it has cultivated over the years.


“People don’t expect companies—even Amazon—to be infallible,” says Diane Hessan, CEO of Communispace. “They do expect those companies to want to learn, to want to engage with their customers, to want to listen hard, and to show genuine commitment to fixing the problems, with the human voice that they’ve become known for.”


5. Explain how you’ll address the future. So Amazon’s issue was a mistake, a cataloging error. Most people seem to be buying that. But what if it happens again? And how should Domino’s assure customers its sandwiches are safe? Marketers must communicate how they will prevent future pitfalls.


“I’d rather be open and transparent about a problem such as the ones you describe, own up to it, explain why it happened, talk about what steps have been put in place to ensure it doesn’t happen again and, critically, apologize for the mistake,” says Peppercom’s Cody.


6. Invest now to prepare for accidents later. Strong, emotional brands that have built up years of consumer good will seem to be more insulated from long-term hurt. Few consumers judged much-loved Whole Foods when its CEO was caught posting comments on financial sites under a fake name. Another consumer darling, JetBlue, has recovered valiantly from its Valentine’s Day massacre, in which passengers were left stranded on board on a runway for eight hours.

Posted on June 3, 2009June 27, 2018

Dear Workforce How Do We Train Our Trainers?

Dear Back to School:

This is a great question that has two answers: a short one, and a longer one (which might be more important).

Short answer:
• Gather stakeholders and subject-matter experts and create the training content.
• Identify potential trainers.
• Equip the trainers with the tools they need (training materials, program templates, etc.).
• Equip the trainers with the skills they need (facilitation and presentation skills).
• Pay attention to trainer evaluation and evaluation of the training program as a whole.

The size of the population to be trained and your pool of candidates to become trainers will determine a great deal regarding what “training the trainers” will entail.

If expertise in the subject is not prevalent, then the trainers might be learning the topic first themselves as part of the process of equipping them to then train others.

Your favorite search engine can probably provide you with tons of examples of how other organizations went about this, but the fact that this is a new move for your organization warrants special attention.

The longer and more important answer:
Since this is a first for your organization, take a step back and make sure you have proper context before launching into identifying trainers and building content.

Any training initiative needs to start with a clear understanding of what the purpose of the training is (i.e., what is the result the organization wants?). What will success look like? How success will be measured will translate into how you will be judged, so making sure you fully understand that is where to start.

If this is a new path for the organization, you really need to explain why it’s being pursued.

Obviously, this must be approached carefully and respectfully, but do not be afraid to do a bit of digging to understand what is driving this move. Remember that this is a first for the organization, and not just you, so make sure everyone is in sync about key objectives.

If there are any significant disconnects or conflicting expectations, you must identify these early, because making sure everyone is in sync will determine your chances for success.

Here are some possible driving factors:
• To reassign or increase the use of internal employees to avoid layoffs or to increase employee engagement.
• To “insource” in an effort to rein in training costs because of economic issues.
• To address a new area needing training (such as ethics) that previously did not have training associated with it.
• To comply with regulations (e.g., mandatory sexual harassment training).
• To address concerns related to the value or quality of existing or past training programs or initiatives.

There are distinct nuances to each of these, but whatever the driving factors are, they should be guiding your efforts throughout the entire process.

Successfully hitting milestones and target dates are valuable accomplishments only when the driving factors of the training program are met in the process. So, make sure you know these. That is where you need to start.

SOURCE: Scott Weston is the author of HR Excellence: Improving Service Quality and Return on Investment in Human Resources, May 5, 2009

LEARN MORE: Organizations have been growing their own training experts internally for a long while, and the trend likely will continue amid the economic crunch.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.


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Dear Workforce Newsletter
Posted on June 3, 2009June 27, 2018

Dear Workforce How Do We Help Employees Understand All Our Benefits, Both Tangible and Intangible

Dear Speechless:

 

Employers offer many types of rewards—both tangible and non-tangible—to motivate and retain employees and to attract prospects. To receive these rewards, employees offer their effort and contributions, their continued membership in the organization and, hopefully, a positive attitude. Frequently, however, employees have minimal knowledge of the value of the programs available to them. This is because little has been done to communicate how the programs fit together to provide a supportive environment to grow both professionally and personally.

Total rewards
Many organizations are using a total rewards approach to unite and integrate these rewards—the organization’s people policies, practices and programs—under a single structure. This helps employees and candidates more easily view all the components of a work experience offered by an employer. Once the programs are viewed holistically, a variety of tools and media can be used to educate and communicate their value and how employees can make the best use of them.

Print/online cool tools
A number of communication approaches can be used both in print and online:

• Personalized statements. All the generic information in the world does not have as much impact as giving an employee a snapshot of their own health and retirement benefits. Personalized statements are voted the most appreciated communication among employees. A personalized statement—in print or online—should include all the people programs offered by the organizations. The quantifiable benefits should be on the statement pages and a cover page should introduce and provide context for the statement and linkage to total rewards and the organization’s employer/employee philosophy.

• Printed pieces—newsletters/bulletin—become online spotlights for posting to the Internet.

• FAQs become online interviews with audio files.

• Create a “how to read your statement” audio file to help employees better understand their online personalized statements.

• Introduce online open enrollment by adding a “how to enroll” audio file.

• Turn scripted PowerPoint presentations into webinars.

• Conduct long-distance focus groups via webinars.

• Measure ROI via online surveys.

• Create podcasts for communicating with employees via iPods.

• Set up an internal blog to introduce wellness, promote the value of your 401(k) and educate on making the right choice at annual enrollment by having carefully selected internal subject-matter experts develop and manage the content.

• “High-touch”: Don’t forget the power of in-person presentations, especially when issues/messages are complex, challenging or negative.

Resources
• CAMTASIA: Create online training videos or stream narrated PowerPoint presentation on a Web page.

• Swish Jukebox: Plays audio on a Web page in Flash format without a separate audio player.

• Movable Type: Blogging software for professionals and enterprises.

• WebEx LiveMeeting: Online presentations or webinars that can be recorded for future playback.

SOURCE: Nenette Kress, senior vice president, Segal/MGC Communications, New York, June 8, 2007

LEARN MORE: Communicating the value of benefits is important, as a recent survey suggests.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Ask a Question
Dear Workforce Newsletter
Posted on June 3, 2009June 27, 2018

Dear Workforce How Do We Combat Swine Flu Outbreaks at Work

Dear Health-Conscious:

 

Your concern about the potential spread of the swine flu virus among your employee population, and its subsequent impact on your business, is appropriate. Though it is small comfort, you are not alone. As of May 13, some 3,352 cases of H1N1 had been confirmed in 45 U.S. states.

Information: Given that this is a new strain of flu virus, some education is in order for you and your workforce. We have found the Centers for Disease Control and Prevention to be quite helpful. In addition to the latest factual updates on the management of this disease, you’ll find links to a host of audio, visual and print media that you can rebroadcast to your employees. The site also contains an entire section for employers.

Policy: One of the first things you’ll want to do is review your internal policies vis-à-vis the objective of maintaining a functioning, relatively disease-free workplace.

Specifically, do your current policies further or impede this objective? As a case in point, many organizations have attendance policies that put employees in a disciplinary mode after a set number of illness occurrences. If your policies—and the threat of disciplinary action—potentially coerce an employee to come to work who shouldn’t, consider temporarily suspending the automatic punishment provisions in favor of a more reasoned approach.

Similarly, as you point out, people might be induced to work when they shouldn’t due to economic sanctions. This might be a good time to reconsider your sick-day policy in general or at least in view of the virus-related cases.

If you truly want people to stay home when they are sick, you simply must remove those things that serve to punish desired behavior.

The simple fact is that people, all of us, do what we are incented to do. We have found a very strong bias among world-class employers for treating employees like responsible adults and then expecting them to measure up. They usually do.

Be advised that any changes of this sort will require some careful communication with your management team to ensure they understand that the organization is not lowering standards or “going soft.”

Facilities: As the CDC has maintained continuously, the exercise of simple hygiene measures may provide the best weapons against the spread of H1N1.

To wit, it just makes sense to do things like making hand sanitizer, tissues and appropriate refuse containers readily available. The same for keeping restrooms well stocked and scrupulously clean. Make sure there is ample hot water for hand washing.

Similarly, you will want to review any policies, processes or practices that put large numbers of employees into close proximity with one another.

Break rooms, fitness facilities and meeting rooms pose an opportunity for the airborne spread of disease. To the extent that you can schedule smaller numbers of people into these facilities at one time, it may make sense to do so. (As for the meetings, you can probably eliminate a lot of them entirely and get a standing ovation for your effort.)

Special measures: Some organizations make private or co-op medical facilities (physician, clinics, etc.) available to their employees.

Indeed, we know of another California employer, the Pebble Beach Co., that has an excellent facility and medical staff for its workers and families. Though a facility like that takes time and real commitment, it is possible to organize private outpatient, in-home or on-site screening and treatment services for your employees pretty quickly.

This is something that can be done on your own or in concert with other area employers. Your health insurance administrator or workers’ comp carrier can likely offer guidance and make referrals.

Whatever you do, don’t wait, because time is not your friend.

SOURCE: Richard Hadden and Bill Catlette, co-authors, Contented Cows MOOve Faster, May 13, 2009

LEARN MORE: A Workforce Management webcast on preparing for pandemics provides deep discussion and tips.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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Dear Workforce Newsletter
Posted on June 3, 2009June 27, 2018

What’s in a Target-Date Fund’s Name Mislead Investors and ‘Troubling’ Results Could Lead to Crackdown

The Securities and Exchange Commission is considering cracking down on the use of target-date retirement fund names that could be “misleading or confusing to investors,” SEC Chairwoman Mary L. Schapiro testified Tuesday, June 2, at a Senate subcommittee hearing.


“Among other issues, we will consider whether the use of a particular target date in a fund’s name may be misleading or confusing to investors and whether there are additional controls the SEC should impose to govern the use of a target date in a fund’s name,” Schapiro said in prepared remarks to the Senate Financial Services and General Government Subcommittee.


Target-date funds “have produced some troubling investment results,” Schapiro testified.


She said the average loss in 2008 among 31 funds with a 2010 retirement date was almost 25 percent. In addition, she said the different investment strategies used by the 2010 funds resulted in investment losses last year ranging from 3.6 to 41 percent.


“These returns cause concern for investors and regulators alike,” Schapiro said. “I can assure you that SEC staff is closely reviewing target-date funds’ disclosure about their asset allocations. In addition, in connection with our joint hearing with the Department of Labor, we will consider whether additional measures are needed to better align target-date funds’ asset allocations with investor expectations.”


The joint hearing by the SEC and Labor Department on target-date funds is scheduled for June 18.


Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Posted on June 2, 2009June 27, 2018

Health Care Groups Outline Ways to Attack Costs

The American Hospital Association told President Barack Obama on Monday, June 1, that it would focus on short- and longer-term measures, as well as initiatives that require commitment from a host of other providers, in order to help reduce overall annual health care expenditures during the next 10 years.


In a 28-page letter sent to the White House and backed by five other health care groups, the AHA said it would immediately focus on reducing common infections from surgeries.


Longer term, the association said it would encourage its members to improve how care is coordinated, use a variety of health information technology tools and boost overall efficiency. Many initiatives require the participation of providers of care both at the bedside and elsewhere.


The steps are meant to be taken in concert with a host of other groups, including America’s Health Insurance Plans, the Advanced Medical Technology Association, the Service Employees International Union, the Pharmaceutical Research and Manufacturers of America and the American Medical Association.


In short, the groups Monday identified three main areas where savings can be realized. Those areas are in the utilization of care, where up to $180 billion in savings are projected; chronic-care management, which could yield $850 billion in savings; and administrative simplifications, which at the high end are predicted to save $700 billion.


On May 11, the coalition made a highly public pledge to the president himself to do their part in helping lower overall health care expenditures by more than $2 trillion over the next decade.


In the letter June 1, each group identifies a number of different areas where costs could be recouped.


For instance, AHIP said it would wring savings by moving toward a standardized and electronic way to deal with claims, submissions and payments.


The group also said it would create a Web portal that will allow physicians to conduct business with insurers through a singular Web site. And PhRMA said it would support a “well-designed” comparative-effectiveness program.


Meantime, the SEIU said it wants to see expanded efforts on the home care front, including bonus Medicaid payments to some states.


At least one key senator said he was unsure about the proposals.


“I’m skeptical that these proposals will add up to anywhere near $2 trillion. In the legislative process, proposals rise or fall based on what [the Congressional Budget Office] says about them, and the same will be true here.”



Filed by Matthew DoBias of Modern Health Care, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com


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Posted on June 2, 2009June 27, 2018

Delphi Says It’s Not Taking On Company Pension Plans

Delphi Corp. says it will not assume responsibility for its pension plans when it emerges from Chapter 11 bankruptcy protection, under modifications to its reorganization plan filed Monday, June 1, in U.S. Bankruptcy Court in New York.


According to a Delphi news release, the “remaining assets and liabilities of Delphi’s hourly pension plan will be addressed by GM.” General Motors accepted $2.1 billion of net unfunded liabilities for the hourly pension plan on September 29.


The auto parts maker’s combined defined-benefit plans totaled $6.147 billion as of December 31, according to its annual report.


Delphi said in its release that it explored “numerous alternatives” for the salaried plan and plans of certain subsidiaries, but none was “feasible” and as a result, the Pension Benefit Guaranty Corp. “may initiate involuntary termination” of the company’s salaried pension plan.


The Delphi statement said the PBGC “is expected to enter into a settlement with Delphi” that will result in it getting an unsecured claim once the firm emerges from Chapter 11.


PBGC spokesman Jeffrey Speicher said the agency has not reached a final settlement with Delphi, has not decided to terminate the Delphi plans and has held a substantial unsecured claim against the auto parts maker since it went into bankruptcy protection in October 2005.


Delphi spokesman Lindsey Williams did not return a call seeking comment.


The release said that as part of the new plan, Parnassus Holdings II, an affiliate of private equity manager Platinum Equity, will acquire and manage Delphi’s U.S. and non-U.S. operations after the bankruptcy for $3.6 billion. GM will provide Delphi with up to $250 million of capital through July 31 as part of the reorganization.


GM will acquire some of Delphi’s U.S. manufacturing operations and its global steering business.


The approval hearing for Delphi’s revised reorganization plan is scheduled for July 23.


Filed by Christine Williamson of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


Workforce Management’s online news feed is now available via Twitter.
 

Posted on June 2, 2009August 3, 2023

Five Years of Corporate Pension Plan Funding Gains Gone in Market Collapse

The top 100 U.S. corporate pension plans saw their funded status drop by nearly 30 percentage points in 2008, giving up all gains of the previous five years, according to a review of annual reports conducted by Pensions & Investments, a sister publication of Workforce Management.


The plans had an aggregate funding deficit of $198.9 billion in 2008, based on projected benefit obligations, a sharp reversal from surpluses of $111.1 billion in 2007 and $37.3 billion in 2006.


That’s the worst since 2002, when the top 100 plans had an aggregate deficit of $151 billion.


Gains of the previous five years were erased by plunging markets and declining corporate bond yields, with the average actual return on plan assets at -30.7 percent.


Only three plans saw positive actual returns, two of which—General Mills Corp. of Minneapolis and FedEx Corp. of Memphis, Tennessee—have fiscal years that ended last May, well before the market’s collapse. The third, Prudential Financial of Newark, New Jersey, had an actual return on plan assets of $334 million, or 3.4 percent of plan assets.


The average actual return on plan assets was 9.4 percent in 2007 and 11.7 percent in 2006.


The pension deficit, combined with pressures of the Pension Protection Act of 2006, means companies will have to ramp up pension contributions, according to Steven J. Foresti, managing director at Wilshire Associates in Santa Monica, California.


“A lot of corporations came into this environment with really solid balance sheets, so while it’s been a tough environment, I think many corporations were able to make sizable contributions.” Foresti said.


Company contributions rose slightly in 2008, to $19.1 billion from $17.3 billion in 2007. Three companies each contributed more than $1 billion to their plans last year: Bank of America Corp., Charlotte, North Carolina, at $1.4 billion; Raytheon Co., Waltham, Massachusetts, $1.2 billion; and Merck & Co. Inc., Whitehouse Station, New Jersey, $1.1 billion.


There’s also a danger that “the timing of the PPA and the timing of a horrendous market” will force more employers to freeze their defined-benefit plans, Foresti said. The number of Fortune 1,000 companies that sponsor one or more frozen defined-benefit plans increased to 169 in 2008, from 138 in 2007 and 113 in 2006, according to a Watson Wyatt Worldwide study.


On December 23, President George W. Bush signed the Worker, Retiree and Employer Recovery Act of 2008, a law easing some funding regulations put in place by the Pension Protection Act of 2006, such as the requirement of what interest rates plan sponsors must use to calculate pension liabilities.


Lobbying for relief
Despite the legislation, pension executives have been lobbying for further relief from PPA requirements. A proposal being considered by Democratic members of Congress would give additional breaks to active plans, provided they are not frozen for several years.


“You want to keep the system alive, and it’s delicate and the timing was such that it wasn’t in place very long before some tweaks were needed,” Foresti said.


“What companies have learned over the last two years is that they need retirement systems [that] are sustainable,” said Kevin Wagner, retirement practice director at Watson Wyatt Worldwide in Atlanta.


“A lot of companies are looking at their plans and making sure they make sense from a financial perspective and an HR perspective,” he added. Plan sponsors will be looking at long-term solutions that fit a wide variety of economic environments, Wagner said.


“The crisis we are clearly going to see is that people will not have sufficient assets to retire. It’s possible that companies will revisit this when people are ‘retired on the job,’ ” Wagner said.


“If you’re going to participate in risk-based investments, there is no avoiding this kind of situation,” Foresti said. “To find yourself at 81 percent funded when there have been two bear markets in the last decade, it kind of puts things in perspective.”


“Once the doctor tells you you’re going to die, and then you realize you’re not going to, you’re feeling pretty good,” Wagner said.


Of the 12 plans that were fully funded, the best-funded for the fourth year in a row was FPL Group of Juno Beach, Florida, with a funding ratio of 156 percent despite a return on plan assets of -34.9 percent. The plan’s funding ratio in 2007 was 216.5 percent.


The second-best was General Mills, with a funding ratio of 128.1 percent.


Rounding out the top five were MeadWestvaco Corp. of Glen Allen, Virginia, with a funded ratio of 126.4 percent in 2008, down from 152.2 percent in 2007; Prudential Financial at 120.1 percent, down from 126.5 percent; and Alcatel-Lucent at 115.3 percent, down from 132.9 percent.


The worst-funded pension plan was Atlanta-based Delta Air Lines Inc. This was the first year in which Delta assets were combined with assets of Northwest Airlines following the companies’ 2008 merger. Delta’s funding ratio in 2008 was 45.8 percent. In 2007, Delta’s funding ratio was 66.1 percent, while Northwest’s was 68.7 percent.


The Delta plan’s actual loss on plan assets was $1.1 billion, or 14.9 percent of the fair value of plan assets. In 2008, Delta contributed $125 million to its pension plan. It expects to contribute $275 million in 2009.


The next worst-funded pension plan belonged to Exxon Mobil Corp. of Irving, Texas. The plan’s funding ratio in 2008 was 50 percent, down from 88 percent in 2007. The actual return on plan assets was -47.2 percent. The company contributed $52 million to its U.S. defined-benefit plan in 2008 and expects to contribute $3 billion in 2009.


Houston-based ConocoPhillips saw its funding ratio fall to 51.4 percent in 2008, down from 73.3 percent in 2007. The plan’s actual return on plan assets was -35.4 percent and the company contributed $407 million to its U.S. pension plan in 2008. The company intends to contribute $930 million to the plan in 2009.


Delphi Corp. of Troy, Michigan, had a funding ratio of 53.9 percent in 2008, down from 76.5 percent in 2007. The plan had the worst actual return on plan assets on a percentage basis of the top 100 plans, with a loss of $3.2 billion, or 51.3 percent of the fair value of plan assets.


Delphi reported an allocation of 55 percent equities, 20 percent fixed income, 8 percent private equity, 11 percent real estate and 6 percent other for its U.S. pension plan in 2008 in its 10-K.


Rounding out the bottom five was Philadelphia-based Cigna Corp. at 54.8 percent, down from 84.5 percent.


J.C. Penney Co. of Plano, Texas, saw the greatest change in funding ratio, with the ratio falling 61.9 percentage points to 92.6 percent in 2008 from 154.5 percent in 2007. The actual loss on plan assets was $1.56 billion, or 45.2 percent of plan assets.


The average discount rate used to determine benefit obligations rose for the third year in a row to about 6.4 percent, from 6.26 percent in 2007. The average discount rate in 2006 was 5.86 percent.


Discount rates
Fifty of the top 100 plans increased their discount rates—20 of them by 50 basis points or more. Twenty-five plans kept the same discount rates.


The average long-term expected return on plan assets fell to 8.22 percent in 2008 from 8.41 percent in 2007. Only three plans raised their long-term expected return on plan assets.


A proposal by the Financial Accounting Standards Board amending Statement 132R was postponed by one year and will take effect December 15, 2009. The new amendment requires defined-benefit plans to release more information about their investment allocations.


In addition, there has yet to be further movement on Phase II of FAS 158, in which the board was expected to decide whether to measure liabilities using accumulated benefit obligations in place of the current measurement using projected benefit obligations.



Filed by Rob Kozlowski of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Posted on June 2, 2009June 27, 2018

Most Public Entities Shifting Benefit Costs, Survey Finds

Public employers are being forced by the economic downturn to shift more benefit costs onto employees, according to a survey by the International Foundation of Employee Benefit Plans.


With less money in public coffers to pick up the tab for employees’ and their dependents’ health care expenses, 72 percent of U.S. public entities are considering increasing deductibles, co-insurance and/or co-pays; 74 percent are considering increasing employee premium contributions; 31 percent are adding consumer-driven health care plans; 20 percent are introducing spousal surcharges; and 26 percent are converting fully insured plans into self-funded plans.


Although many private employers typically have adopted these cost-sharing measures in response to higher health care costs, it’s rarer for public employers to do so, said Sally Natchek, senior director of research at the Brookfield, Wisconsin-based IFEBP.


“The fact that the majority of public employers are now increasing deductibles, co-pays and premiums illustrates the dual effect rising health care costs and the financial crisis are having on their plans,” Natchek said in a statement.


The rise in CDHPs is particularly interesting, since many public employers were skeptical of the plans’ ability to save money, Natchek said.


“The survey showed that while still in the minority, a significant number of public employers are implementing these types of plans,” she said of the survey of nearly 1,300 people.


The survey, “Health Care Plans: The Impact of the Financial Crisis,” is free to IFEBP members. Nonmembers can purchase the survey for $50. To order, visit www.ifebp.org/books.asp?6696E or contact the foundation bookstore at bookstore@ifebp.org.


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


Workforce Management’s online news feed is now available via Twitter.


 

Posted on June 2, 2009June 27, 2018

Employment Law Overtime for Temps

Liability for payment of overtime is a significant area of concern—and a significant source of litigation—for employers in general. In fact, it is one of today’s greatest employment law hot-button topics, and it affects the contingent workforce arena.


Failure to communicate and/or understand the law can result in unanticipated liability. Both users and suppliers of contingent labor need to understand their duties and responsibilities, and need to communicate with each other clearly regarding which entity is responsible for what.


The federal law
The Fair Labor Standards Act requires most employers to pay overtime to nonexempt employees who work more than 40 hours in a given workweek. It is administered by the Department of Labor.


The starting principle under the FLSA is that unless workers are exempt, they get paid overtime. There are three main exemptions—sometimes called the “white collar” exemptions—from overtime liability. These exemptions are for executive, administrative and professional employees. Each exemption has its own test under the FLSA rules.


While being paid a salary is part of the test for exempt status, it is not enough. Even salaried employees must be paid overtime unless they meet other specific criteria. Three other exemptions are the “computer-related occupation,” “outside sales” and “highly compensated employees” exemptions. Again, each exemption has its own test in the FLSA rules.


Determining liability
The FLSA rules fully apply to contingent labor, and courts frequently find both a staffing firm and its client liable for overtime as joint employers of placed nonexempt contingent employees. If found to be jointly liable, all hours worked by the contingent worker at either the staffing firm or its client are combined for purposes of determining if the employee has worked more than 40 hours in a workweek.


Perhaps more significantly, joint liability means that each of the joint employers must comply with the FLSA. As a result, the employee could choose to sue both employers together or either employer individually for the entire amount of unpaid overtime.


Generally, the Department of Labor Wage and Hour Division looks at several factors to determine if a joint employment relationship exists. The factor that is most important to the contingent workforce is whether one employer is acting directly or indirectly in the interest of the other employer in relation to the employee.


Other factors include whether there is an arrangement between employers to share the employee’s services, whether the employers share control of the employee, and whether there is common ownership or management of the employers. The following cases illustrate how courts analyze employer liability for overtime in the joint employer context.


Case studies
In Barfield v. New York City Health and Hospitals, a certified nursing assistant was directly employed and paid by three referral agencies, each of which arranged for her to work on a temporary basis at a single hospital. As a result, the nursing assistant sometimes worked at the hospital for a total of more than 40 hours per week, but no single referral agency ever directed her to work more than 40 hours. The nursing assistant sued the hospital and the issue became whether the hospital qualified as her joint employer with the referral agencies.


The U.S. Court of Appeals for the 2nd Circuit concluded that although the nursing assistant was employed by the three referral agencies, the totality of the circumstances demonstrated that the hospital so controlled her work that it qualified as her joint employer and, as a result, was liable under the FLSA for her overtime whenever she worked more than a total of 40 hours in a given week.


In reaching its conclusion, the court relied on its four-factor test to determine the “economic reality” of the putative employment relationship. Namely, the court considered whether the employer:


• Had the power to hire and fire employees;


• Supervised and controlled employee work schedules or conditions of employment;


• Determined the rate and method of payment;


• Maintained employment records.


In another case, Schultz v. Capital International Security, Inc., the U.S. Court of Appeals for the 4th Circuit concluded that Capital International Security, the supplier of a personal security detail to Prince Faisal bin Turki bin Nasser Al-Saud, a Saudi diplomat in Washington, was a joint employer of the security agents who made up the detail.


As a result, the court found that the employment arrangement was “one employment” for purposes of determining whether the security agents were employees or independent contractors under the FLSA.


Ultimately, the court held that the security agents were not independent contractors and that CIS was jointly and severally liable for the payment of any overtime required by the FLSA during the security agents’ employment.


In reaching its decision, the court noted that the agents performed work that simultaneously benefited both CIS and the prince. In addition, the prince and CIS were not completely disassociated with respect to the employment of the security agents, and both the prince and CIS shared control of the agents. The prince and CIS were involved in the hiring of the security agents, although the prince exercised a greater degree of authority.


CIS advertised for the agents and screened responses, which were given to the leader of the security detail who was on the CIS payroll. The leader of the detail reported to the prince’s personal secretary who interviewed selected applicants and had the final word on hiring. The prince’s personal secretary generally handled the security agents’ work schedules, compensation, discipline and terminations.


CIS, however, maintained the authority to discipline agents and change the terms of their employment. The prince and CIS shared responsibility for supplying equipment to the agents. Considering these facts, the court concluded that the prince and CIS were joint employers. Furthermore, as a matter of economic reality, the agents were dependent on the joint employers and therefore were not contractors in business for themselves, but rather employees who were covered by the FLSA.


These cases illustrate the need for staffing firms and their clients to communicate with one another regarding the hours worked by a contingent worker. Companies should regularly report the hours worked by contingent employees to the staffing firm that supplied them.


In addition, companies and their staffing suppliers should address in writing which entity is responsible for complying with the FLSA. Note, however, that an aggrieved employee will still be able to sue either employer for unpaid overtime, but clear language in a contract will help to minimize the litigation expense of sorting out liability.

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