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IRS May Relax 401(k) Rule for Troubled Firms

The Internal Revenue Service is taking steps to ease financial pressures on companies that make automatic 401(k) plan contributions under a safe harbor provision that allows them to avoid nondiscrimination testing.


In a proposal published Monday, the IRS said that employers that automatically contribute the equivalent of 3 percent of employees’ pay to workers’ 401(k) plan accounts—to avoid nondiscrimination tests—could suspend those contributions if they incur a substantial business hardship.


Employers, though, would have to meet numerous criteria set by the IRS, including ensuring that their 401(k) plan passes the nondiscrimination test.


Under federal law, employers do not have to run an IRS nondiscrimination test—used to determine whether average salary deferrals of higher-paid employees exceed those of rank-and-file employees by a legally set amount—if their plans qualify for certain safe harbors.


To qualify for one safe harbor, an employer has to match 100 percent of employees’ deferrals up to the first 3 percent of pay and match 50 percent of deferrals made on the next 2 percent of pay.


Employers that automatically enroll employees in 401(k) plans also are exempt from nondiscrimination testing if they fully match employees’ salary deferrals on the first 1 percent of pay and 50 percent of deferrals on the next 5 percent of pay.


The rule the IRS published Monday, May 18, would affect safe harbor provisions for employers that automatically contribute an amount equal to at least 3 percent of pay into employees’ 401(k) plans.


Previously, the IRS allowed employers that qualified for the matching safe harbor to suspend the contribution if they incurred a substantial business hardship. The latest proposal would extend that relief to employers that qualify for the safe harbor through automatic employer contributions.


If adopted, the rule, published in the May 18 issue of the Federal Register, would apply to plan years beginning after December 31, 2009.


Benefits experts welcomed the proposed change.


“Companies that are really suffering right now will be more likely to be able to keep their plans,” said Anne Waidemann, a director with PricewaterhouseCoopers in Washington.



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



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Mandatory Enrollment Now You See It, Now You Dont

There won’t be mandatory automatic enrollment for 401(k) plans—at least for now.


The proposal was not included in President Barack Obama’s fiscal 2010 budget, as many had been hoping.


“If the administration is not going to proactively support it, I don’t think it’s anything we’re going to see anytime soon,” says Elizabeth Varley, managing director of government affairs at the Securities Industry and Financial Markets Association in Washington. SIFMA opposes an automatic 401(k) enrollment requirement.


But some industry executives say they still see a future for a proposal that could dramatically increase the number of employees participating in employer-sponsored defined-contribution plans. Under existing Department of Labor rules, the decision on offering automatic enrollment is voluntary for employers.


“I still think we are going to see legislation, but it looks like we won’t see it right away,” says Robert Holcomb, vice president of legislative and industry affairs at JPMorgan Retirement Plan Services in Kansas City, Missouri.


Mandatory auto enrollment was in Obama’s 2010 budget blueprint released in late February and confirmed by Thomas E. Gavin, spokesman for the White House’s Office of Management and Budget.


But in a May 14 interview, Gavin conceded the proposal had been dropped for now.


An administration source who asked not to be identified says the proposal was deleted from the budget because Treasury Department executives—including J. Mark Iwry, the newly appointed deputy assistant Treasury secretary for retirement and health care policy and senior advisor to Treasury Secretary Timothy Geithner—wanted to focus first on creating an automatic individual retirement account. The IRA proposal is in the budget.


Before joining the Treasury Department, Iwry developed and championed the concept of requiring employers that don’t offer retirement plans to enroll their employees in an automatic IRA.


“The administration is not proposing to require auto enrollment in 401(k) plans,” Iwry says. He declined to say why.


“The administration is committed to expanding savings for as many people as possible,” the OMB’s Gavin says. “The automatic IRA would be a first step, but certainly not the last.”


Inclusion of automatic enrollment in Obama’s budget blueprint surprised many pension industry officials, administration executives outside the White House and OMB, and key lawmakers. Industry lobbyists say it was deleted in response to concerns that it would represent a major mandate in what has otherwise been a voluntary retirement system.


In fact, some say the auto enrollment proposal was never in the budget in the beginning.


“It was never actually in the budget,” says Dallas Salisbury, president and CEO of the Employee Benefit Research Institute in Washington. He says his own White House sources confirmed that when the president’s budget blueprint was issued.


But Ed Ferrigno, vice president of Washington affairs for the Profit Sharing/401k Council of America in Chicago, says the auto enrollment proposal was in the blueprint. “There was no doubt that it was in and there’s no doubt that it’s out.”


Paul Schott Stevens, president and CEO of the mutual fund industry’s Investment Company Institute in Washington, says that while ICI executives believe lawmakers might eventually want to consider a mandatory 401(k) enrollment requirement, the institute believes they should proceed cautiously.


“If you mandate auto enrollment today, the effect will be to put more pressure on more employers to reduce or eliminate their match, and that will ultimately disserve employees, not serve them,” Stevens says.


Even JPMorgan’s Holcomb says his company’s support for a mandate is conditioned on ensuring that it wouldn’t cause undue administrative burdens for plan sponsors.


“We are generally supportive of anything that will help encourage participation in defined-contribution plans, but we always want to look at how it’s implemented to make sure it’s administratively feasible,” Holcomb says.


“It [an auto 401(k) mandate] is controversial,” SIFMA’s Varley says. “I think people [already] see a very nice steady increase in the number of people adopting automatic enrollment. We don’t need to shove employers into doing it.”


In the section dealing with the automatic IRA proposal, Obama’s budget seeks as much as $1 billion to establish a federal organization to oversee the proposed plan.


The OMB’s Gavin says the agency could be established as a stand-alone entity, or as part of an existing government agency. Details will be hashed out in the coming months.


The automatic-IRA agency would carry a $200 million startup price tag in 2010 and up to $1 billion in federal support over time, according to details disclosed in the budget.


“We’re trying to make sure that we anticipate all of the program’s potential needs,” Gavin says.


The administration “has clearly placed a high premium on establishing the auto-IRA program,” says David John, a senior research fellow at the Heritage Foundation in Washington and one of the co-creators of the original auto-IRA proposal.

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Special Report on Training & Development Powering Up a Hispanic Workforce

Officials at Florida Power & Light Co. preferred not to dally until national demographic trends eroded the core of their nuclear expertise: their employees. The median age of a nuclear energy worker had reached 48, according to data from the Nuclear Energy Institute, a Washington-based industry lobbying group. Up to 35 percent of existing employees nationally will qualify for retirement within the next five years.


Florida Power & Light had traditionally hired through several routes for its nuclear plant in South Florida, including recruiting former military personnel, says James Auld, industry and community training coordinator for the 11,000-employee company. Since those employees usually relocated from elsewhere, they were prone to later jump ship, fleeing Florida’s hothouse climate or moving back closer to family.


So officials began to brainstorm several years ago about ways to better cultivate local talent. That meant reaching out to the predominantly Hispanic community living near the nuclear plant, which is about 25 miles south of Miami. The result: a partnership with nearby Miami Dade College that has already produced its first class of graduates, with more in the pipeline, and a growing waiting list.


Teaming up with a nearby community college is only one of various strategies that corporate employers in Florida and elsewhere are implementing to better train and support Hispanic employees, a demographic group that’s poised to constitute a significant portion of the labor force’s backbone.


Within the next decade, one out of every four new U.S. workers will have legally emigrated from Latin America, according to a recent analysis of federal data. Training programs, though, shouldn’t be limited to English classes for entry-level employees, multicultural experts say. Initiatives also should incorporate math skills, computer basics and, as Hispanic employees are promoted into supervisory roles, additional training and mentorship efforts.


By 2016, 16.4 percent of U.S. workers will identify themselves as Hispanic, compared with 9.5 percent in 1996, according to the Bureau of Labor Statistics. Companies ignore these trends—even amid the current economic downturn—at their own peril, says Mariita Arosemena Conley, who leads Hispanic Source, a Chicago-based firm specializing in Hispanic cultural awareness and diversity training.


After the recession lifts, “the landscape is going to be different,” she says. “You will have baby boomers retiring. And that younger workforce—you can see it now at job fairs. You go to a job fair today and it’s a sea of brown faces.”


Training at the ground floor
Although no racial or ethnic group has been immune to the recession, job losses have hit Hispanic workers particularly hard, according to a Pew Hispanic Center analysis of Census Bureau data. By the fourth quarter of 2008, the unemployment rate had reached 9.5 percent among U.S.-born Hispanics and was 8 percent among foreign-born Hispanics, compared with 6.6 percent for the workforce overall. That rising unemployment rate coincided with the downturn in construction that began two years ago, says Rakesh Kochhar, the Pew center’s associate director for research. “Since then, it’s only picked up steam,” he says.


But some Hispanic employees may actually be in greater demand in the years to come, says Louis Nevaer, an economist who helped author the 2007 book HR and the New Hispanic Workforce. In some industries outside construction and restaurant work, companies are disproportionately laying off older workers, he says. As a result, managers will find themselves leading a noticeably different workforce in the years ahead, one with less institutional memory and younger workers who are more likely to be Hispanic, he says.


To date, though, a lack of education has limited advancement for some Hispanics. Among all major racial and ethnic groups, Hispanics are least likely to hold even a high school degree. The resulting gaps in basic skills can fuel turnover, which is costly for employers and employees alike, says Jeannine La Prad, president of the Corporation for a Skilled Workforce. The nonprofit research organization, which is based in Ann Arbor, Michigan, highlighted the Florida Power & Light initiative and a handful of others in analyzing the role of corporate partnerships in advancing immigrant Hispanic workers who had low skills.


In her work, La Prad has noticed a recurring pattern: The newly hired employees “were engaged initially in the work, but did not have some of the skills that were needed to successfully perform their jobs,” she says. “The businesses became frustrated and the people became frustrated. And we were seeing both people leaving and companies letting people go.”


Programs that combine education and work can help bridge that skills gap and can also address the need among some Hispanics to start working at a relatively young age, La Prad says.


At Miami Dade College, the two-year associate’s degree in electric power technology quickly launches students into paying work. After focusing the first year on a core curriculum, the students work over the summer at Florida Power & Light before returning to Miami Dade to specialize in a particular area of the nuclear industry. As many as 20 of the graduates who meet the academic qualifications, along with demonstrating on-the-job proficiency, will be hired at a starting salary typically of $45,000 to $50,000 annually, Auld says.


In the first class, 11 of the 12 graduates were Hispanic, according to a Florida Power & Light spokeswoman. Roughly two-thirds of the 26 to 30 students expected to graduate this spring also are Hispanic. It’s not uncommon for graduates to be first-generation college students, Auld says, recalling that the first ceremony occurred “with big tears and smiles—it was quite an event.”


In the years ahead, the partnership will save the power company in recruiting costs, Auld says, although Florida Power & Light officials declined to provide specifics. Plus, the collaboration will reduce the need for on-the-job training. Meanwhile, power company officials essentially get to run a two-year job interview, he says. “By the time they’ve graduated from this program, we’ve identified those with the aptitude to be successful.” It’s a win not only for the company, but for the community and college as well, Auld says.


Beyond teaching English
Language training often forms a cornerstone of training for entry-level Hispanic employees, particularly those who are first-generation U.S. residents. Increasingly, though, companies are realizing that basic language instruction should not be confined to Spanish speakers, says Bob Garcia, a human resources and training consultant at Gagen MacDonald, a Chicago-based employee engagement firm. “I’m seeing companies saying, ‘We need to provide English as a second language, but we also need Spanish language for frontline supervisors,’ ” he says.


Garcia, who is bilingual and specializes in multicultural education, also believes that cultural training should run along a two-way track. He successfully made that case earlier this year to a large manufacturing company that has approximately 4,000 employees. Along with training entry-level Hispanic employees about the importance of timeliness, avoiding absenteeism and other job expectations, the company also provided non-Hispanic employees and supervisors with some background on Hispanic customs and traditions, Garcia says.


For example, it’s important that managers understand the significance of the quinceañera, the coming-of-age celebration of a daughter’s 15th birthday. “It’s always an honor for a manager or a supervisor to be invited to that,” Garcia says. Thus, such an invitation should not be lightly turned down, and if managers can’t attend, they should later ask about the festivities, he says. “For me, this all comes down to respecting tradition and respecting someone else’s culture, no matter what it is.”


As Hispanic employees move into supervisory roles, the need for other types of training may emerge, although the necessity is more subtle and less likely to be addressed, Garcia says. “It’s definitely a missing component,” he says. For first-time managers, the learning curve can become significantly steeper when an extended network of friends and family work together at the same company or possibly on the same factory floor, Garcia says. As an example, Garcia casts himself as an employee in a close-knit work group who is offered a $3-an-hour raise to assume a supervisory role and takes the job.


“The thing is, I just know how to work hard,” he says. “I don’t know how to manage people. And now I’m managing my best friend, my son and two of my nephews.”


Cultural conflicts also can develop within work sites. Hispanic culture is not monolithic, and problems can crop up if the supervisor is originally from a different country than the crew being supervised, Nevaer says. In that respect, training and promoting talented employees from within not only can help improve long-term retention, but also can potentially bypass such cultural rifts, he says.


In some circumstances, relatively little training is required to produce a visible payoff, says Kim Kooy, a human resources coordinator at The Decc Co., an industrial coating company in Grand Rapids, Michigan. One of Decc’s team leaders, she says, had “marginal English” before recently taking an ESL class.


“Afterwards, she started e-mailing notes to us and using the intercom more in English,” she says. “I think she knew more than she let on that she knew—she just didn’t have the confidence to use it.”


Employers that shortchange training and support of talented Hispanic employees risk watching them migrate into more supportive industries in the years ahead, La Prad says. And that’s not good strategic planning, she says. Auld agrees. “I think common sense dictates that once this economy turns around, and those 401(k)s start heading in the right direction, we’ll see folks retiring again,” he says.


Auld’s not losing any sleep about that, though. As of this writing, the waiting list for Miami Dade’s next class in electrical power technology, limited to about 40 students, ran more than 200 names long.


Workforce Management, May 18, 2009, p. 25-29 — Subscribe Now!

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Sad for Grads

Survey after survey tells the same story: Companies just aren’t hiring as many college graduates this year as in 2008. Rich Milgram, CEO of Beyond.com, an 11-year-old company that has built a network of 15,000 targeted and niche job boards through ownership and strategic relationships, even goes a step further.


“This is probably the toughest time I’ve ever seen, and it’s the toughest time these grads have ever seen,” he said.


Every year, the National Association of Colleges and Employers conducts several surveys to shed light on its employer members’ recruiting strategies. This year’s Job Outlook 2009 Spring Update survey, conducted in February and released in March, showed that employers expect to hire 22 percent fewer graduates than last year.


“That’s the only reduction since 2003,” says Andrea Koncz, NACE’s employment information manager. “And that was just a 3½ percent decrease.”


NACE’s quarterly salary survey, which focuses on offers by major employers, complements the job outlook survey. This spring’s survey released in April shows that the average salary offer in 2009 is $48,515, down by 2.2 percent from spring 2008’s average of $49,624. According to the survey, computer science salary offers are down by 5 percent, engineering salary offers are up by 2.3 percent, and both business and liberal arts majors’ offers are flat.


“Business graduates are the hardest-hit majors,” Koncz says. “Computer science majors usually get higher salaries, because they are usually pretty well in demand, but we are still seeing decreases.”


In January, career management and job search specialist Vault surveyed 150 corporate recruiters across a spectrum of industries and found that 77 percent had reduced hiring goals just since September. Fifty-two percent of respondents said salary offers would remain flat for baccalaureate graduates, and 51 percent said the same would be true for offers to newly minted MBAs.


“Recruiters are going to fewer campuses and doing more electronically because their budget for travel has been cut,” says Vault CEO Erik Sorenson. “Forty-three percent of respondents are slightly or dramatically reducing pay, although most said pay would be the same as in 2008 but with fewer hires.”


At the University of Houston, “Demand is down almost across the board,” says David Small, associate vice president for student services. “Salaries are flat, with marginal increases in some areas. We’ve seen companies cut back on recruitment resources. They’re making fewer campus visits and coming to career fairs instead.”


Small says companies are also making greater use of online job postings and résumé searches.


“Companies seem to be looking for more immediate needs, not the long term,” he says. “When they do hire, they are looking at their intern pool before new graduates.”


The story is the same at Ohio State University.


“My sense is that companies are being more conscientious about recruiting dollars, so they are conducting more phone interviews and coming to campus less often,” says Stephanie Ford, director of the university’s Arts and Sciences Career Center. “They’re operating on less information.”


Recruiters plan campus visits, but find out just before their trip that there’s no money to hire.


“So we are having employers schedule for employee information sessions and career fairs, but pulling out when they find there is no money,” Ford says.


She notes that the number of recruiters coming to campus is down from last year, but that companies are doing what they can, such as helping students with mock interviews or by speaking to student groups.


At Ohio State’s Fisher College of Business, interviews are down by 20 percent and job postings are down by 25 percent from 2008.


“It could be worse, but it isn’t,” says Jeff Rice, the executive director in the Office of Career Management at Fisher College. “That’s because in 2001 and 2002, companies took a year off from recruiting. When a company does that, it loses about three years in terms of its brand. Also, companies gain momentum in hiring from one year to next as the graduates talk to one another. So [this year], companies have reduced hiring, but they are keeping the pipeline going.”


One key to finding a job in the 2009 economy seems to be a graduate’s ability to produce immediate results.


“Employers are cutting back, only recruiting for people who can drive revenue or maintenance of current projects,” Milgram says.


So sales is a hot area, as are health care, technology and engineering. According to Milgram, good salespeople can improve a company’s overall balance sheet, so they are in demand. Although new technology projects and research are on hold for now, companies “still need to maintain systems and current projects.” Milgram says health care is stable in any economy, and engineers have specific skill sets that people with other majors can’t match.


Sorenson agrees that graduates who can immediately contribute to an organization have the best opportunities, like teaching.


“It’s not enough just to have a college degree in education,” he says.


Certified public accountants willing to work in industry are more likely to find jobs than those seeking positions in banking. According to Sorenson, jobs with high skill sets are hot now, including health care, IT, engineering, teaching and accounting—similar to Milgram’s list.


Rice has identified yet a third set of opportunities for new graduates.


“Follow the stimulus money for the jobs,” he says. “It’s encouraging how focused this generation is on the economy. They’re following where the stimulus money is going because that’s where the jobs will be—in government, energy, health care, education and technology.”


Rice sees stimulus opportunities for majors in accounting, engineering, technology, finance, operations management, and marketing and sales.


For liberal arts graduates, who always face tough job markets, the University of Houston’s Small has some rare good news. “The State Department said that 50 percent of its new hires will be liberal arts majors,” he says. And although finance is not hot this year, Small says financial planners who can work with small companies have opportunities.


“Even companies that are growing are being more cautious so they don’t end up on a downward spiral,” Milgram says. “Companies doing well are waiting it out. They’re not firing, but they’re not hiring, either. Companies doing poorly are firing. College students face increased quantity and quality of competition. That’s not good news for graduates.”

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Survey Finds Few Firms Will Drop Mental Health Coverage

Only a few employers are considering dropping mental health coverage in response to new parity rules that take effect for plan years beginning after October 3, according to a survey.


Meanwhile, nearly 38 percent of responding employers plan to increase the promotion and use of employee assistance program services to help them achieve mental health parity, which is required under a 2008 law, concludes the survey conducted by the Partnership for Workplace Mental Health, a program of the American Psychiatric Foundation in Arlington, Virginia.


The Paul Wellstone and Pete Domenici Mental Health Benefits Parity and Addiction Equity Act requires companies with 50 or more employees to provide the same coverage for mental disorders—and in some cases, substance abuse treatment—as they do for medical illnesses. The parity requirement applies to self-funded plans and fully insured plans.


The survey found 7.1 percent of employers are considering dropping mental health benefits and 7.8 percent are thinking about discontinuing coverage for substance abuse treatment.


However, 73.5 percent said they would not drop mental health coverage, while 76.7 percent said they don’t plan to discontinue coverage for substance abuse treatment. Another 19.5 percent said they do not know whether they plan to drop mental health coverage, while 15.5 percent are undecided about whether to discontinue coverage for substance abuse treatment.


In addition to the 38 percent of respondents who plan to step up EAP use and promotion, 26.1 percent plan to increase promotion and disease management to achieve mental health parity.


In addition, 23.9 percent are considering adding or increasing use of case and/or disability management, while 21.7 percent plan to increase utilization management and/or prior authorization for mental health treatment.


A large proportion of respondents—35.7 percent—said they expected their health benefit costs to increase less than 2 percent as a result of instituting mental health parity; 23.8 percent said they anticipate costs will remain the same.


Another 16.7 percent said they expect cost increases exceeding 2 percent, while 21.4 percent said they were uncertain what costs will do. An equal number—1.2 percent—said they expect costs to increase more than 2 percent or decrease less than 2 percent.


The survey results reflect 143 responses primarily from human resource and benefits managers.


For more information about the survey or the Partnership for Workplace Mental Health, visit www.workplacementalhealth.org.



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


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New York City’s IT Job Losses Seen Bottoming Out

Nationwide, people continue to lose jobs. But for New York City’s IT sector, the job market appears to have bottomed out.


That’s the conclusion of the Pace/SkillProof IT Index Report for the first quarter, which Pace University released last week.


The index, which looks at the number of IT job openings in New York relative to a 2005 baseline, fell 4.5 percent during the first quarter. Compared with the 50 percent plunge in the index in the fourth quarter of 2008, a 4.5 percent dip is cause for optimism.


“The worst of the layoffs is over,” said Henning Seip, president of SkillProof Inc., the technology company that compiles the underlying data for the index. “The situation has started to stabilize.”


The index tracks 11 standardized IT sector job categories. Among those, the smallest drop in demand was for IT managers, and the largest was for software engineers. But the report found that the drop in demand for both categories was declining.


“There’s a better feeling among employers,” said Farrokh Hormozi, a Pace University economics professor who contributes analysis to the report.


Hormozi believes the downturn has stabilized enough for some employers to be concerned about having too few employees. He also thinks outsourcing may be losing favor as a money-saving measure, as the cost of doing business rises in India and declines in the U.S.


“Naturally, New York City is more expensive than anywhere else,” he says. “But the trend is that companies feel it’s a lot more reasonable to ‘insource’ rather than outsource.”



Filed by Matthew Flamm of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Senate Panel to Review Controversial Changes to Employer-Provided Health Insurance Tax Deductions

The Senate Finance Committee will discuss controversial options that include curbing the tax-favored status of employer-provided health care coverage, wiping out health care flexible spending accounts and placing new restrictions on health spending accounts when it meets Wednesday, May 20.


The policy options include several potential ways to modify the tax treatment of employer-provided coverage to “eliminate inconsistencies and discourage wasteful health care spending,” according to a committee summary of options being considered to raise revenue to expand coverage.


Several options relate to current tax law in which employees are not taxed on premiums or claims paid by their employers. The tax-free status encourages employers to offer overly generous plans that result in the overuse of services, driving up costs, the summary says.


Options to deal with that issue include capping the cost of coverage that would be excluded from employees’ taxable income or basing the amount of the tax exclusion on employees’ incomes.


Similar proposals were made during the early years of the Reagan administration in the 1980s.


However, employers at the time fiercely opposed the ideas, citing the administrative complexity of trying to value the coverage, while union groups fought the proposals, charging they would be unfair to employees living in areas of the country with high health care costs and would impose new taxes on workers.


Other issues to be discussed at Wednesday’s Senate Finance Committee meeting include limiting contributions to FSAs or wiping them out entirely. Nearly all major employers now offer FSAs, which allow employees to make pretax contributions to pay for uncovered health care-related expenses.


On HSAs, policy options to be discussed include reducing the maximum contributions permitted, doubling to 20 percent from 10 percent the tax penalty imposed on distributions used to pay for nonmedical expenses, and requiring certification from an employer or an independent third party that distributions were used to pay medical expenses.


The House of Representatives several years ago approved requiring certification of distributions, but the Senate took no action.


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


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DeLauro Says Paid Sick Days Bill Won’t Disrupt PTO Plans

During the recent swine flu outbreak, President Barack Obama told ill workers to stay home so that they wouldn’t infect their colleagues.


Rep. Rosa DeLauro, D-Connecticut, found irony in the warnings. She says that tens of millions of Americans can’t take time off because they don’t have paid sick days.


On Monday, May 18, she introduced the Healthy Families Act, a bill that would enable workers to accrue one hour of paid sick leave for every 30 hours they work up to a total of 56 hours, or seven days.


“Every worker should have paid sick days,” DeLauro said at a Capitol Hill event Monday, May 18, sponsored by the Center for Economic and Policy Research. “It is a matter of right and wrong … [it] is a matter of values. The time for this is now.”


DeLauro said that 57 million American workers do not get paid sick days, including 79 percent of the lowest-wage earners.


Her bill was introduced with 100 co-sponsors in the House—all Democrats. The Senate version is slated for introduction later this week. A hearing of a House Education and Labor subcommittee has been scheduled for June 11.


The measure would allow employees time off to care for themselves or a sick family member or to obtain preventive or diagnostic treatment. Employers could require certification for leave of more than three days in a row. The bill would apply to businesses with 15 or more employees.


Business groups are wary of how the measure might affect paid-time-off plans used by many companies.


“Employers that already provide this leave will not have to change their current policies at all, as long as their existing leave can be used for the same purposes described in the [bill],” says a statement released by DeLauro’s office.


A recent survey of 507 members of the Society for Human Resource Management found that 80 percent of their companies provide some form of sick leave—42 percent through a PTO plan, which allows workers to use the time for illness, vacation or personal reasons.


DeLauro said she does not want to upset existing leave programs.


“Let’s not reinvent the wheel, if companies don’t have to do that,” she said.


But SHRM is concerned that there could be complications in the details of the bill, which SHRM president and CEO Lon O’Neil characterized in a statement as “an inflexible, one-size-fits-all government mandate.” SHRM contends the bill would “lock in” existing leave benefits and make it impossible for employers to adjust their offerings.

Partly in an attempt to find an alternative to the Healthy Families Act, SHRM released a set of principles for workplace flexibility on May 7 designed to ensure flexibility for employees and certainty for employers.


“SHRM envisions a ‘safe harbor’ standard where employers voluntarily provide a specified number of paid leave days for employees to use for any purpose, consistent with the employer’s policies or collective bargaining agreements,” the SHRM principles state. “In exchange for providing paid leave, employers would satisfy current and future federal, state and local leave requirements.”


But DeLauro and other advocates say that too few companies are offering sick days to their employees. A study for the economic and policy research group released Monday shows that among 22 of the most advanced economies in the world, the U.S. is the only country that does not guarantee some amount of paid sick leave.


“The United States is the odd one out,” DeLauro said.


Advocates for the bill dismissed concerns that granting paid time off would be too costly for businesses fighting the recession. They said that allowing workers to stay home while they are sick would increase productivity, lower turnover and reduce the risk of an outbreak of infection.


“What we can’t afford is not to do anything,” said Jody Heymann, a professor of epidemiology at McGill University in Canada and author of the Center for Economic and Policy Research study.


—Mark Schoeff Jr.


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Employers Add Financial Components to Wellness Programs

Last summer, as gas prices rose and housing prices came crashing down, Maia Lucier started hearing more requests from employees who wanted to work from home because they needed to save money. Overall, more employees were coming to her and her team complaining that they were worried about their finances.


“People were talking about their personal finance pressures more and more,” says Lucier, director of compensation and benefits at Dimension Data Americas, a technology company with dual headquarters in New York and Charlotte, North Carolina. “You could feel the tension.”


Dimension Data had an outside financial advisor that often put out communications to the company’s 750 employees, but Lucier and her team felt they had to do more to reach everyone.


Rather than do a one-off financial educational session, Lucier and her team decided to host a monthly financial wellness seminar and regularly distribute materials that would all fall under the firm’s 2-year-old wellness campaign, Think Wellness.


“The point of wellness programs is to get employees to feel good,” Lucier says. “And when we looked at the different things that might cause employees to not be productive, stress over personal financial situations was a cause.”


Wellness programs and financial education aren’t new to the workplace. But just over the past couple of years, a growing number of companies have been marrying these two concepts, experts say.


“There has been a push to focus on personal health and wealth as a way of managing your personal overall well-being,” says Steve Cyboran, vice president and consulting actuary at Sibson Consulting, a division of the Segal Co. “Certainly I think this is exacerbated by the current economic situation.”


Bringing the concept of financial health into a wellness campaign can help employers reduce health care costs—which is often one of the primary goals of these initiatives, consultants say.


For example, smokers might not be interested in attending a smoking cessation program because they aren’t ready to quit, says Sander Domaszewicz, a principal at Mercer. “But if that person attends a program on their financial health that discusses the costs of cigarettes and the potential health care costs associated with smoking, that might get them to participate in a smoking cessation program,” he says.


Also, by integrating financial education with wellness programs, employers can help employees make better decisions about how they spend their health care dollars, Domaszewicz says. For example, more employees may realize that it makes sense to invest more of their paychecks into their flexible spending accounts.


Dimension Data recently ran a feature in its employee newsletter on how employees could save money on their health care bills. In the article, the company noted that employees who get drugs by mail order receive a discount.


The company also highlighted a service it offers, through a partnership with Health Advocate, a Plymouth Meeting, Pennsylvania-based company, that assists employees in resolving health care claims issues and correcting bills that might contain incorrect charges. “We want them to use this service so that they don’t blindly pay their bills,” Lucier says.


The University of Iowa began adding a financial component to its wellness program, LiveWell, over the past two years. For several years, the university has offered a referral for a free financial consultant, but decided to increase its focus on financial wellness as part of its LiveWell campaign in response to employee demand, says Joni Troester, assistant HR director.


“Particularly in the past year we have been getting more requests relative to the economy,” Troester says.


Through the program, the university’s internal employee assistance provider offers seminars on financial topics for the 15,000 benefits-eligible employees. The university also promotes the financial counseling through its health fair events as well as in newsletters, Troester says.


“We see this as part of lifestyle management,” she says. “Financial stress can impede people from having an overall healthy lifestyle.”


One major challenge that many employers face in adding financial education to their wellness programs is that in many instances these two initiatives are handled by separate vendors, Domaszewicz says.


“Often these vendors don’t interact with each other,” he says. Employers need to make sure that the vendors communicate with one another and that their messaging is consistent.


Another challenge that employers are facing today is that while they see the need for financial wellness programs, they don’t have the budgets for them. That’s the case for Dimension Data Americas, Lucier says.


“We just don’t have the resources to offer as much as our employees would like,” she says.


Tracking the return on investment of incorporating a financial aspect to a wellness program can also be challenging, experts say.


However, there are many studies that show that stress leads to poor health, Cyboran says. And it’s a good assumption that many employees are feeling financial stress these days, he says.


“Taking this more holistic approach to wellness is catching on at many companies, but hasn’t quite hit the mainstream yet,” Domaszewicz says


“The most forward-thinking companies are doing it,” he says.

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Dear Workforce What Lessons Could We Learn From Other Companies About Holding On to Older Workers?

Dear Looking Ahead:

How do leaders support their baby boomer team members at midlife? Managers know that career development should be available to all, regardless of age, ethnicity or gender. It sounds good on paper, but it can be tricky to implement. Here’s a model and some tips for engagement that focus on aspirations of many midlifers. See how the five components below relate to your employees and the role that you might play:

  • Cravings: Encourage boomers to tap their unused talents. Help them explore their skills and interests and determine which ones spark creativity. How to begin? Ask each direct report pertinent questions to discover their talents.

Here are a few for starters:

What are your favorite parts of the job?

What would you like to do more of? Less of?

What would you like to learn in the next two years?

How can I help you reach these goals?

  • Competence: Encourage them to raise their competence quotient. Responsibility for development rests with the individual, along with a supportive manager on the sidelines, and an organization that provides systems and structures. In this era of self-management, employees must continually hone their skills and behaviors. Besides content expertise, are your employees prepared to develop their technical skills, be more aware of other generations, balance work and life, expand their language ability and cultural know-how, integrate new information, deal with change and transfer knowledge? All of these are essential survival skills and abilities in the new workplace.
  • Competition: Help your boomers look internally and externally at what’s happening in their professions. Managers need to coach direct reports to ensure they are aware of the impact of globalization, competition, deregulation, new technologies and emerging skills that change the nature of their work. At staff meetings or informal gatherings, ask questions.

What areas are growing within the organization now?

What are trends that could impact how we do our work here?

What skills would it be smart to increase over the next three to five years?

To get ahead of the curve in your profession, what could you do right now?

Employees should know how their current organization could be threatened in the not-too-distant future. Planning ahead is critical.

  • Choices: Help them identify their desired type of work, level of commitment and plan of action. How can managers help employees prepare for the future? Options like cross-training, rotational assignments, travel opportunities, short-term sabbaticals, temporary assignments and transition management need to be carefully considered and implemented as needs arise. Some of these possibilities are more feasible than others. To begin, initiate a dialogue about their interest in each of these learning vehicles.
  • Changes and concerns: Encourage their ability to transfer knowledge and take ownership for making it happen. Industries are facing major internal change as baby boomers retire. The issue of knowledge transfer is essential and is everyone’s responsibility. Are experienced boomers working every day with younger people to help them understand problems and solutions? Do they know how to transfer their explicit knowledge and their tacit knowledge as well? “Legacy-leaving” is a viable, cost-effective way to solve problems internally, escalate creativity and build the next leadership tier.

These five areas are fertile ground to launch and expand conversations. These issues may be discussed in workshop settings, on the job or during one-on-one development, planning or performance review discussions. It doesn’t matter who or what launches the discussion; what matters is that these conversations take place. As the shortage of workers escalates exponentially, future-focused leaders need to be strategic about how to keep their boomer talent engaged.

SOURCE: Beverly Kaye, founder and CEO, Career Systems International, Scranton, Pennsylvania, and Joyce Cohen, a career development and life planning expert, May 2009

LEARN MORE: The ranks of workers 55 and older are swelling, yet few employers have adjusted to meet the needs of this strategically important segment of the workforce.

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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