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Head Scarf Comments Are Direct Evidence of Discrimination

In May 2004, Angela Harper, an African-American Muslim, was working as a dishwasher at Starlight Restaurant in Ellensburg, Washington. As a part of her religion, Harper wore a head scarf, or hijab. After Harper became a waitress, she was allowed to work only breakfast and lunch shifts and was denied the more lucrative dinner and cocktail shifts, even though her immediate supervisor considered her qualified.

    Harper attempted to transfer to the position of cocktail waitress, but said she was told “It wasn’t about your race, it was more about your scarf thing.” The restaurant owner, Doris Morgan, made negative comments about Harper’s scarf, expressed a preference for white waitresses and said that restaurant patrons would not want “a girl like that” serving cocktails. Harper was offered a job as a cocktail server, but considered the offer “insincere” and resigned.

    On Harper’s behalf, the Equal Employment Opportunity Commission filed suit in U.S. District Court for the Eastern District of Washington, alleging claims for discriminatory refusal to promote and constructive wrongful termination in violation of Title VII of the Civil Rights Act of 1964.

    The district court denied Starlight’s motion for summary judgment on a Title VII claim. The EEOC presented evidence that Morgan had asked Harper to “wear a fancier headdress” and stated that she did not understand “the whole Muslim thing.” Morgan also told the dining room manager that she wanted only “really gorgeous girls” serving cocktails and preferred “hot white girls.” The court ruled that the evidence was more than sufficient to show unlawful discrimination on the basis of religion or race and for constructive termination because a reasonable jury could find that Harper was “driven from the workplace.” EEOC v. Starlight, LLC, 2008 U.S. Dist. LEXIS 60257, E.D. Wash. (8/4/08).

    Impact: An employer’s derogatory comments about an employee’s religious clothing may provide direct evidence that its refusal to promote was prompted by the employee’s religious beliefs.


 


Workforce Management, September 22, 2008, p. 13 — Subscribe Now!

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Congress OKs Extending Health Coverage for Ill Students

Congress has given final approval to legislation to allow seriously ill college students to continue coverage under their parents’ health insurance plans even if they can’t maintain status as full-time students.


The measure—which the Senate cleared without opposition Thursday, September 25, after House approval earlier this year—would allow college students to retain coverage for up to 12 months after they take a leave of absence. Coverage would continue on the same basis as before the student went on leave.


The legislation is modeled after a 2006 New Hampshire law known as “Michelle’s Law,” which was named for Michelle Morse, a Manchester, New Hampshire college student who continued her studies while battling cancer to maintain health insurance coverage. Morse died in 2005.


The New Hampshire law applies only to fully insured policies offered by commercial insurers and health maintenance organizations because of federal pre-emption of state laws that relate to employee benefit plans. The federal legislation, though, would apply to both insured and self-insured plans.


President Bush is expected to sign the measure.


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

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Xerium Technologies Freezes Pension Plan, Cuts Retiree Health Care Benefits

Youngsville, North Carolina-based Xerium Technologies Inc., a manufacturer of products used in the production of paper, is freezing its defined-benefit pension plan for U.S. salaried and non-union hourly employees, enhancing its 401(k) plan and terminating its retiree health care benefits plan.


Effective January 1, 2009, employees no longer will earn benefits under the defined-benefit plan. However, Xerium will enhance its 401(k) plan, matching 100 percent of employees salary deferrals up to 6 percent of pay. The company now matches 100 percent of deferrals on the first 4 percent of pay.


Xerium says it is freezing its defined-benefit program because of “increasingly stringent pension regulations (that are) expected over the next several years to lead to prohibitively expensive costs of maintaining defined-benefit plans,” according to a filing with the Securities and Exchange Commission.


In the filing, Xerium, which reported a loss of $150.2 million on 2007 revenue of $615.4 million, attributed the termination of retiree health care coverage to the increased cost of medical insurance and claims.


As a result of the freezing of its pension program and the elimination of retiree health care coverage, Xerium expects to reduce those liabilities by about $35 million.


Xerium’s pension program at year-end 2007 had $132.7 million in liabilities and $69.5 million in assets. Its retiree health care benefits program is unfunded.


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


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Federal Health Plan Costs to Increase

Following private industry trends, health insurance premiums will increase by an average of 7 percent next year in the health insurance program covering federal employees and retirees, according to the Office of Personnel Management, the administrator of the program.


The 7 percent increase for the Federal Employee Health Benefits Program, which covers about 8 million people, is roughly in line with rate increases that industry experts expect private-sector employers to be hit with next year. For example, Hewitt Associates Inc. is projecting that 2009 premium increases will average 6.4 percent.


Still, the federal program’s 7 percent average premium increase for 2009 is sharply higher than for this year, when premium increases averaged just more than 2 percent.


Government officials attribute next year’s cost increase in large part to greater demand for medical services, higher prescription drug costs and an aging workforce.


In all, 269 health plans will be offered in the federal program next year, though many plans are available in only certain parts of the country.


Federal employees, on average, pay 30 percent of the premium for health care coverage, with the federal government paying the remaining 70 percent.


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


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Failed Bailout Demonstrates Support for Executive Compensation Reform

Congressional frustration with soaring Wall Street pay surfaced in a massive legislative package that narrowly failed in the House, 228-206, on Monday, September 29.


The 110-page bill would have authorized $700 billion for federal purchase of toxic mortgage-based securities that threaten the survival of financial firms. In an effort to build political support for its passage, several executive compensation provisions were included.


But even as proponents of the legislation warned that a failure on Wall Street could quickly dry up credit for auto, student and business loans across the country, they couldn’t assuage skeptics concerned about the biggest federal intervention in the markets since the Great Depression.


Congressional leaders worked all weekend to cobble together a bipartisan compromise following a blowup between the principal negotiators at a White House meeting on September 25. With partisan recriminations flying after the House vote setback, it’s not clear what the next step will be.


Any legislation that emerges in the future likely will contain executive compensation reform because of its bipartisan popularity.


Under the failed bill, a firm would be prohibited from offering multimillion-dollar golden-parachute severance packages to newly hired executives in its top five positions if it sold more than $300 million in securities to the government in a public auction. The company would not be allowed tax deductions for executive compensation over $500,000 and would be penalized for giving golden parachutes to fired executives.


A company that sells securities directly to the government would be barred from using golden parachutes and would be compelled to “exclude incentives for executive officers … to take unnecessary and excessive risks.” It also would have to recover bonuses or incentive compensation paid to a senior executive based on performance measures that later proved inaccurate.


One pay policy that did not make it into the final bill was a mandatory shareholder vote on executive compensation. Executive pay experts were relieved that the regulations contained in the bill did not go further.


But Don Lindner, executive compensation practice leader at WorldatWork, said that the bill would have handcuffed hiring at faltering companies by limiting pay latitude.


“They’re not going to get the best talent. They’re going to get the talent that’s willing to take the job under those conditions,” Lindner said.


As Congress continues to address the financial crisis, it should hew to the executive pay formula that it put in the failed bill, according to Mark Poerio, co-chair of the global executive compensation and employee benefits group at the law firm Paul Hastings.


“They’ve whittled them down to items that make sense,” Poerio said, citing the so-called clawback provision and limits rewarding risky behavior.


Before returning to executive pay reform, Lindner urges Congress to take a step back. Recent Securities and Exchange Commission regulations require more comprehensive and transparent disclosure about executive compensation.


“We’re not giving them a chance to work,” Lindner said.


The congressional appetite for a crackdown on exorbitant Wall Street pay was apparent at a Capitol Hill news conference on Sunday, September 28, celebrating the bailout agreement.


“The party is over,” House Speaker Nancy Pelosi, D-California, said. “The era of golden parachutes for highflying Wall Street operators is over.”


Rep. Barney Frank, D-Massachusetts and chairman of the House Financial Services Committee, hailed the curbs on C-suite remuneration.


“This will be the first time anything has been done by Congress to curtail excessive CEO compensation,” Frank said.


Poerio warned, however, that going too far with pay parameters would make the U.S. a less attractive market for high-powered executives.


“It plays on Main Street, but it still has to make sense in a global market,” Poerio said. “It’s not to say we don’t need regulations. We need to be judicious about them.”


—Mark Schoeff Jr.


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U.S. Economic Slowdown Affecting Hiring in India

Rising inflation and the downturn in the U.S. economy are forcing Indian employers to slow hiring, freeze wages and fire underperformers to maintain profit margins.


“Efficiency and output delivery will be the core mantras at play,” said brand consultant Harish Bijoor.


The slowdown is tangible, as the number of information technology and business process outsourcing deals dropped to 78 in the first quarter of 2008 from 109 in the first quarter of 2007, according to India-based research firm Value Notes. By the second quarter of 2008, according to Value Notes CEO Arun Jethmalani, the number of deals slid to 58, down from 101 a year earlier.


With inflation that climbed to a 16-year high of 12.63 percent in August, employers are trimming their workforces amid rising costs. Human resource outsourcing company Convergys laid off nearly 400 people after it closed one of its Mumbai centers in August.


Companies like Patni, Fidelity and 24/7 are shedding low performers and will continue to cut staff and freeze hiring, said Avinash Vashistha, chairman and CEO of Bangalore-based investment advisory firm Tholons.


“As companies expand their operations, they will have less and less people,” Bijoor said. “Added to this, companies will recruit fewer people until there is stability on the inflation front.”


With Nasscom predicting that revenue growth for the nation’s IT and BPO industries will slow to rate of 21 to 24 percent this year, companies have realized that they need to better manage their bench—a surplus of workers that employers can call on if they need to boost a project’s manpower, said Sudhin Apte, senior analyst and country head for Forrester Research in India.


Genpact, the country’s largest BPO firm, is experimenting with a work-from-home initiative for employees in its finance, legal and HR divisions to cut overhead and maximize productivity. The company is also outsourcing employee education to Indian training institute NIIT, which it says can train as many as 10,000 people next year.


“It will bring down the cost of training for us, and NIIT is more efficient at training people than we are,” said Genpact president and CEO Pramod Bhasin.


In a recent study of high attrition rates in the BPO industry, the Hay Group said employers should consider combining short- and long-term incentives, such as performance and retention bonuses and employee stock option plans.


Bangalore-based Tata Consultancy Services, India’s largest software services provider, believes it can survive by focusing on hiring strategies. Last year, 60 percent of TCS’ new hires were experienced professionals.


Now, however, to reduce salary, including bonuses and promotions for those with more than two years’ experience, the company has flipped its hiring practices, says Ajoyendra Mukherjee, vice president and head of global HR at TCS. This year, 60 percent of TCS’ new hires are trainees, while 40 percent are experienced professionals.


Indian retailers, meanwhile, are looking at how their HR management practices can become more efficient. Pantaloon India Ltd., the country’s largest publicly traded retailer, has merged the human resources and information technology systems of various business units into a common platform. With one HR and IT team, the company says it has reduced overhead by $37 million a year.


But not everyone is scrambling for ways to trim costs. Infosys Technologies believes that in an economic downturn, IT outsourcing companies that provide cost savings will need to maintain a readiness of highly qualified employees. While other companies are trimming employees, Infosys is bulking up.


The Bangalore-based company says it has not changed its recruiting and training strategy. In fact, it expects to hire 25,000 employees in 2009 and maintain current levels of employees on its bench.
 
“The employees on the bench are maintained to ensure we do not miss out on growth opportunities,” said Somnath Baishya, head of global entry-level hiring and campus relations at Infosys. “Our aim has been to build a flexible business model that helps us focus on growth at all times.”


—Zahid H. Javali, reporting from Bangalore, India


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A Culture of Colleague Support

Being able to support colleagues is an essential attribute for Accenture employees, since so many of them work in teams that are spread out around the world. The culture of people helping one another, despite being thousands of miles away, is often a hard concept to grasp for new hires, says Janet Hoffman, managing director of Accenture’s global retail practice.

    “This was something I wondered about when I started,” she says.


“People genuinely want to help each other out.”
—Janet Hoffman,
Accenture’s global retail practice

    Hoffman recalls that on one of her first assignments, she was sent to Lyon, France, to help a client implement a software program. She had to explain aspects of the software program to an array of executives who were in five countries.


    “I didn’t know how I could get them all looking at the same software at the same time,” she says. “I just didn’t know what capabilities Accenture had to do this.”


    Hoffman sent an e-mail to a colleague, who then e-mailed a few more consultants. Within 24 hours, six people had gotten back to Hoffman with answers on how to present the software virtually. “People genuinely want to help each other out because we have all found ourselves in a position where we need help,” she says.


Workforce Management, September 20, 2008, p. 23 — Subscribe Now!

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Company on the Lookout for Burnout

One danger of being able to work anytime from anywhere is burn­out. Without having the traditional boundaries of home and office, many workers lose sight of the division, says Kathie Lingle, director of the Alliance for Work-Life Progress.


    To address this at Accenture, the company tries hard to address employees’ personal needs, as well as their professional ones, says Richard Westphal, director of Accenture’s U.S. Retain Talent group.


    A few years ago, when Westphal and his team began hearing that employees wanted the ability to take a sabbatical or extended vacation, executives came together to see what they could do.


    “Particularly younger employees were saying that they didn’t want to have to be here for 10 years before they could take several weeks at a time off,” he says. “So we held focus groups of employees and asked them if they would be willing to self-fund a sabbatical program.”


“[We asked employees] if they
would be willing to self-fund a sabbatical program.”
—Richard Westphal, director of Accenture’s U.S. Retain Talent group

    The answer was a resounding yes.


    In January, Accenture launched its Future Leave program. Through the program, U.S employees can arrange to have a portion of their paycheck set aside for future time off, which can be as long as three months.


    Employees who have been with the company for three consecutive years and have manager approval can apply for the program. For the first half of this year, 100 employees were participating.


    Accenture also gauges employees’ perceptions of how well work and life are balanced at the company through a personal engagement survey.


    While most employers ask employees to rate the company’s effectiveness in career or professional development, Accenture has started asking employees how well Accenture is doing in giving them a good quality of life. The company also asks them to rank quality-of-life issues compared with such elements as pay and benefits. Employees also rate Accenture’s performance in such areas as diversity and reputation, opportunities, work, competitive rewards and people. They rank these in order of personal importance as well.


    Supervisors use these personal engagement surveys with their direct reports. Career counselors use them as part of their annual midyear discussions with employees, says Jill Smart, chief human resources officer.


    “We recognize that not everyone wants the same thing, so this is a way for us to understand what employees want,” she says.


    Accenture is leading the way in bringing the personal-life discussions into performance management, Lingle says.


    “Too often companies make the discussions about employees’ personal goals as window dressing,” she says. “By having employees talk about their personal priorities for the upcoming year as well as their career goals, Accenture is really bringing together the personal and professional, which is almost unheard of today.”


Workforce Management, September 22, 2008, p. 24 — Subscribe Now!

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Indias Information Technology Outsourcing Business Shrugging Off U.S. Slowdown

So far, India’s outsourcers have suffered little from troubles in the U.S. While the mantra for most Indian outsourcers these days is “ascend the value chain,” it’s hard to move up if your best clients are headed in the opposite direction.


    Nevertheless, the impact of the U.S. slowdown on offshoring budgets is unclear. Financial firms, hammered by the subprime mess, make up the largest customer base for India’s outsourcers.


    A report from Wachovia Capital Markets said the collapse of investment bank Bear Stearns was followed by a “sharp, several-week pause in decision-making” on offshore projects.


    But the Wachovia report also said reined-in technology budgets might not prove to be a hammer blow to IT outsourcers.


    “The very slow recovery from the credit crisis, and potential for further losses among capital markets and banking firms, is likely to keep a damper on overall IT spending growth, offset in part by a continuing shift of work to lower-cost offshore locations.”


    Gartner’s Kurt Potter, however, said in the past that economic uncertainty caused a mild decline in outsourcing activity as companies focused on immediate cost-cutting initiatives. And he added that “the perception that outsourcing growth would increase more due to economic uncertainty, thereby being countercyclical, has not proven to be entirely true.”


    Still, he says, the troubles in the U.S. have so far failed to slow the amount of work being sent offshore. “At this time, we are not seeing an impact on outsourcing due to the economic uncertainty.”


    Any effect from the tremors on Wall Street will likely be brief. After the short dip in business after the collapse of Bear Stearns, Wachovia reported, “Channel checks suggest that the pace of business is improving … within the financial services vertical, the insurance sector is indicated to be seeing the most dramatic improvement.” Potter reckons the market for IT outsourcing will still grow by $77 billion over the next five years, putting it over the $400 billion mark.

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Mixing Cash and Noncash Rewards

In the long-running battle between cash and noncash rewards, here’s a novel concept: a truce, even an accommodation between the two. That’s not to say the battle is over, but at least at two of the major players, Maritz and Visa, there’s some acknowledgement that both forms of rewards offer benefits.


     “We look at cash and noncash as part of a total rewards package,” says Paula Godar, director of brand strategy for Maritz, a top provider in the incentives and loyalty rewards industry. “It’s not ‘versus,’ it’s ‘and.’ It’s about using the best. Cash is best used for compensation or bonuses—the bigger, less frequently negotiated amounts relating to the contract between employer and employee. It’s about doing the job.”


Noncash items are best used for specific rewards and for behavior change, she says.


Maritz research shows that at least half of cash rewards typically get used for household expenses, bills, education and similar purposes. That’s not exactly what companies have in mind when they aim to reward performance or behavioral change.


Visa acknowledges that cash rewards can get lost in the noise and expenses of daily life. Its solution is the prepaid and reloadable Visa card, which can be co-branded with the employer’s name and loaded with values typically ranging from $25 to $1,000. The prepaid cards have the same incentive value as cash, but they are more discrete and visible than a reward buried in an automatic electronic paycheck deposit.


The prepaid cards come in handy for all kinds of employee recognition, including safety and performance.


“It’s a very quick way to reward employees,” says Michael Chittaro, Visa’s senior business leader of prepaid products. “You don’t have to go through ordering stuff like a toaster.”


In terms of the truce, the cards offer “seamless integration into an existing rewards and recognition program,” Chittaro says. “For a small catalog of items, prepaid cards are a great complement.” Then, as a reminder that the cash/ noncash battle isn’t entirely over, he adds, “They are a great replacement [for a catalog] too.”


If employers eliminate catalogs of noncash reward items in favor of the Visa cards, Chittaro says, they also reap administrative benefits.


“They get rid of the management and distribution of products and having to refresh them,” he says. Companies can also order cards in bulk that can be loaded on the spot for instant rewards or for any type of milestone or significant event.


Godar thinks that shining a spotlight on a specific behavior or achievement is best served by noncash rewards. She also says a noncash reward is better for enhancing performance over the long term. “Noncash is more effective because of the way our brains look at the proposition,” she says. “If you tell me I’ll get $500 for an accomplishment, I’ll be very analytical about it, evaluating whether the money is worth the effort. If you show me a home theater system, it is more appealing on an emotional level.”


Because of this emotional appeal, Godar says that noncash rewards lead to more lasting loyalty to an employer. People may not remember how they spent cash, and they can’t wave a bonus check around, but an “employee will talk about a noncash reward with family and friends. You get bragging rights with them,” she says.


Chittaro argues that Visa’s prepaid cards also create long-lasting employee loyalty because they are reloadable by the employer with rewards for different events and occasions. “The card is discrete enough so that the employee sees they’re being identified for what they’ve done individually,” he says. “It serves as a tangible reminder of these good events and memories.”


In the spirit of détente, Godar reiterates: “Noncash is not adversarial to cash. It’s a complement to it. It’s part of the whole package.”


Workforce Management, September 22, 2008, p. 28 — Subscribe Now!