New health savings accounts -- government issues guidance, sparking interest and discussion

When the new Medicare bill was first passed, very little was said about its health savings account provision, which essentially had nothing to do with the senior prescription drug coverage, but was an add-on to the bill for political reasons. Now I am seeing some interesting and useful information on these provisions:

Here's the IRS guidance for those wanting all the details

Here's a summary from the Employee Benefits Institute of America (for those really interested in the subject, this organization offers a tele-seminar January 15).

Here's a Department of Labor explanation of three methods of setting up employee consumer-driven health-care accounts predating this latest legislation: 1) flexible spending accounts; 2) medical savings accounts; and 3 ) health reimbursement arrangements.

Here's a story from Dallas Morning News/ Knight-Ridder / Tribune Business News (brought to my attention by Catherine at sonria.org, whose additional thoughtful commentary is here) It discusses pros and cons and possible future implications of the new health savings accounts, including:

Some say they will push more people into high-deductible policies, where they'll pay more attention to their spending. . . .

"We're opposed to the concept of it," says Edwin Park, senior health policy analyst at the Center on Budget and Policy Priorities in Washington, which studies the effects of government programs and policies on low- and moderate-income people. . . .

Experts predict that accounts such as HSAs will dominate the health insurance market in less than five years . . . .

The accounts could undermine comprehensive health insurance offered by employers, the budget and policy priorities center says.

"Healthy, affluent workers would have a strong incentive to opt out of comprehensive health insurance plans in favor of the new accounts," it says.

"They would receive a large tax break, and they would not be much affected by switching to a high-deductible health policy, since they generally use fewer health services."

If large numbers of those healthy workers pull out of comprehensive plans, the pool of workers left would be older and sicker, causing their premiums to rise significantly . . . .

"We think they're bad policy on the health care side," he says. "They are going to undermine the traditional employer-based health care system."

[Like it's healthy as a horse?

Here's the other perspective:]

"Expanding HSAs will dramatically improve health care by reducing the need for managed care rationing, allowing workers to save for health needs in retirement, containing medical inflation by giving consumers incentive to forgo unneeded care, and eliminating waste and bureaucracy by giving patients a stake in the savings."

Finally, from the great liberal state of Oregon comes this piece characterizing all this as nothing more than a tax shelter for "the rich."

Continued . . .

Weird college campus affirmative-action story

Findlaw (AP -- Melanthia Mitchell) reports: "College Bake Sales Spark Conflict."

Campus bake sales by conservatives who oppose affirmative-action are cooking up discord - and complaints about restrictions on free speech.

Organizers charge white students $1 for a cookie, while blacks and other minorities pay 25 to 95 cents. Doughnuts are available for 50 cents to everyone except Asian Americans and whites, who cannot purchase them.

Unfair? So is affirmative action, organizers contend.

"It's a good example of what affirmative action does, judging people based on race," said Jason Chambers, president of the University of Washington College Republicans, which held a sale in October that shut down when some students began attacking the booth.

"People were upset. People did feel offended," said Anthony Rose, president of the UW Black Student Union. "You see something like that, you feel itemized."

In September, Southern Methodist University shut down a similar event by the Young Conservatives of Texas.

Similar bake sales have been held since February at the University of California-Berkeley, the University of Texas at Austin, Texas A&M University, Northwestern University near Chicago, the University of Michigan and Indiana University.

A conservative watchdog group in Philadelphia contends some universities are violating students' constitutional freedoms by restricting the protests.

"They cannot defend in public what they have done to the First Amendment at the University of Washington," said Thor Halvorssen, CEO of the Foundation for Individual Rights in Education (FIRE). "There is no question that the administration would never censor a group of students holding a peaceful protest in favor of affirmative action."

Here's the FIRE web site statement on the issue.

Chambers said students engaged in a couple hours of good, heated discussion, until some began yelling and tearing down signs, even throwing cookies at members of the conservative group.

"I really thought that everyone on campus could maintain their composure and have a civil discussion without getting violent. I was really surprised that it went that far," Chambers said.

UW spokesman Robert Roseth said the administration had nothing to do with the shutdown. The group's members dismantled the booth voluntarily after the office of student affairs asked them if they wished to take it down, he said.

So the administration asked them to take it down, yet it had nothing to do with the shutdown? What despicable doublespeak!

Rose, a 20-year-old junior majoring in American Ethnic Studies, backs up the university's account.

"It was for their own safety," Rose said. "They shut themselves down."

Apparently students of "American Ethnic Studies" are not schooled in civil discussion and debate, but violence and coercion.

In a letter responding to the melee, Board of Regents President Jerry Grinstein expressed disappointment with the sale.

"The statements of the UW College Republicans in putting on a bake sale about affirmative action were tasteless, divisive and hurtful to many members of the university community," he wrote.

In the incident at Southern Methodist University, organizers described the event as a bake sale - not an anti-affirmative-action protest - in their application for event space, said Jim Caswell, vice president for student affairs.

Had the university known it was a demonstration, a more appropriate location would have been chosen, Caswell said. A staff member thought the friction was likely to escalate, and stopped the event, he said.

"I think it's important to note that freedom of expression was not the issue, it was the hostile environment created by the Young Conservatives' failure to fully disclose their intentions," Caswell said.

No -- the hostile environment was created by people with no sense of humor and no ability to deal with the rather apt,thought-provoking analogy presented by the "bake sale." After all, perhaps white students generally do have more cash on hand and it is not unreasonable to charge them more for that reason. Why wouldn't that argument appeal to liberals who favor the more drastic forms of affirmative action?

Continued . . .

Mixed outlook on pension funding

Compare this from Reuters -- "Pension Gap Widens Despite Rising Stocks" with this from the Boston Globe -- "As stock market rallies, pension deficits at major US corporations begin to ease."

Apparently market returns have helped reduce underfunding of some major corporate pension funds but, as even more optimistic Boston Globe piece admits, "Companies aren't out of the woods yet."

Companies which have substantial pension obligations under defined benefit plans theoretically offer employees more retirement security -- a defined-benefit -- compared to those offering only defined contribution retirement plans (e.g. 401(k) accounts). With the latter, the employee bears the investment risk, as the ultimate retirement benefit is not defined, but depends on level of contributions and investment performance. But companies which made generous defined benefit commitments have major headaches when investment performance is below expectations, as these articles suggest.

Continued . . .

Reasonable dress code -- 3 earrings per lobe max?

Findlaw (AP)reports: "Fla. Workers Allowed 3 Earrings Per Lobe."

Adding that seventh earring before going to work for the county could get you into piercing trouble.

Administrators have decided that three earrings per earlobe is the maximum amount of "facial jewelry" employees will be allowed to wear in Orange County offices, and that all other facial piercing will be forbidden.

Loops through eyebrows, nose rings and studs through tongues will have no future place for county employees.

"They can't even speak well when they have their tongues pierced," said Commissioner Mary I. Johnson, 70.

That and it's disgusting . . .

Even the earring policy comes with a caveat: none of the three rings are to be worn on the top half of the ear, according to the county's "Dress Code and Appearance Policy."

"It's our belief that facial jewelry does not present the professional appearance we want our employees to have when dealing with the public," said Deputy County Administrator Sharon Donoghue, who helped develop the new rules.

The lone holdout among commissioners was Homer Hartage, who was overruled.

"Occasionally there will be employees who are good workers, but they see the world a little bit differently than the rest of us," he said.

This seems to be a pretty reasonable policy for employees with public contact. Those who "see the world a little bit differently" when it comes to facial jewelry probably see it too differently to work well with the public for other reasons as well (spoken like a true member of the over-40 generation).

No doubt somebody could come up with a legal basis for challenging the policy, but I'm not sure what it would be and doubt it would be successful.

Anyway, that some employers have such policies is an additional additional reason for me to draw the line on three per ear for my 15-year-old daughter, who has already reached this limit.

Continued . . .

Help-wanted ads show positive employment trend

CNN/Money (Reuters) reports: "Help-wanted ads show modest gain in November"

Help-wanted ads in U.S. newspapers rose in November, suggesting the nation's employment situation is improving modestly but steadily, a report showed Monday.

The Conference Board said its employment barometer climbed to 39 in November from 37 in October. A year earlier, the index stood at 40.

"The labor market is finally sparking to life," said Ken Goldstein, an economist at the private economic research group.

The Conference Board compiles its index by surveying help-wanted ad volume at 51 newspapers across the country each month.

Read the Conference Board Press Release

Continued . . .

Paternity leave on the rise?

Julie Shields writes for Workforce Management: "When Men Take Paternity Leave, True Equality Begins."

After describing her personal experience with maternity and paternity leave, the author opines:

Equality between men and women will not occur until men start taking paternity leave and agitating for it, and employers encourage men to make time for family from the first months of life all the way to retirement. The pay gap between men and women will disappear only when dads make the same accommodations that moms do for children.

The Family and Medical Leave Act took a big step toward establishing a maternity- and paternity-leave system in the United States. But it has had little effect on most American employees; only about half are eligible for the FMLA. The utilization rate is just 6.5 percent (up from 3 percent eight years ago) because the leave is unpaid. Few fathers take FMLA leave when their children are born. They do not want to lose income, and they are also deterred by old societal norms and fear of retribution.

The fear of lost income and the stigma of a man taking leave play less of a role in dads’ decisions when the leave is paid and when employers get behind paternity leave, as KPMG recently discovered. In 2003, the second year of its new policy--which allows two weeks of paid paternity leave--87 percent of eligible employees at KPMG took paternity leave. That’s a huge difference: 6.5 percent versus 87 percent. Once the first man breaks through the nursery wall to take paternity leave and emerges happy and with his career unharmed, others follow. KPMG and other forward-looking companies such as IBM, Deloitte & Touche and Microsoft are changing family dynamics and, in ripples, the workplace and society at large.

The payoff

Employers get behind paternity leave for a variety of reasons, but ultimately because it makes them money. KPMG has gotten great publicity over the last two months in The Boston Globe, The Chicago Tribune and Working Mother because of its paternity-leave policy. Such recognition pays off in gains in recruiting, retention and productivity. KPMG estimates that so far, its paternity-leave policy has strengthened recruiting and retention by 10 to 25 percent. Of the companies on Working Mother’s 2003 list of the best employers, 39 percent offer paid paternity leave, as opposed to 12 percent nationwide.

Paternity leave and flexible hours change the way we think about work and management. Study after study shows that most jobs can be done with modified start-and-stop times, job sharing and other flexible arrangements. It costs less to support a parental leave than to replace an employee who leaves.

Many employers view those who work flexibly as at least as productive as and often more productive than those who work traditional schedules.

Read more

Continued . . .

Transitional duty helps control workers comp costs

Garry Kranz reports in Workforce Management: "Transitional Duty Pays Off For Everyone; Companies find that giving workers modified duties beats a long stay on workers' comp, even if it means having them take jobs at local nonprofits."

The article starts with the example of Dannon Yogurt:

Dannon Yogurt knows that the best-laid plans for workplace safety can’t prevent every injury. The Fort Worth, Texas, food-products giant emphasizes safety precautions as the greatest preventive measure. But Dannon also has a transitional-duty program, which aims at getting injured employees back on the job as soon as possible for their own physical and mental well-being, and for the fiscal health of the company.

Working with medical doctors, Dannon officials modify an injured employee’s existing job whenever possible. Sometimes, however, an injury is so severe that even modified duty is impossible. On those occasions, the Volunteer Center of North Texas tries to match Dannon employees with local nonprofits in need of additional short-term staff.

Lending out employees as local volunteers, with the approval of their doctors, has had a big impact on Dannon’s bottom line. The company has reduced lost workdays by about 30 percent. Medical costs dropped between 32 and 35 percent. Recovery time has been slashed 27 percent. "The program reinforces the habit of going to work each day, which is a very strong trait. The quicker employees get back to doing work, the quicker their healing," says Joe Baldwin, Dannon’s workplace safety manager. JPS Health Network, a Fort Worth hospital, has been a chief beneficiary. One Dannon employee puts in a 40-hour workweek at the hospital’s gift shop, and another night-shift employee mans the information desk for five hours each evening. "Volunteers are getting harder and harder to find. That’s why Dannon’s program appealed to us," says Traci Day, the hospital’s director of volunteer services.

Dannon pays a portion of the employees’ wages while they work for nonprofits. Baldwin says the payoff comes in the form of reduced insurance premiums. Plus, getting workers healthy quicker helps reduce the length of time that replacement workers are on the payroll.

Improving the odds

It’s not hard to figure out why companies like Dannon want creative strategies to rein in the runaway costs of medically related absences. The likelihood that a person will return to work decreases with each passing day, from 90 percent at four weeks to a mere 2 percent after 52 weeks, according to a joint study by Intracorp, the Washington Business Group on Health and the Journal of Workers Compensation. The same study found that employers could save $3 to $10 for every $1 invested in a return-to-work program. Employers benefit by potentially reducing premiums for workers’ compensation.

Read More

Continued . . .

Last week's news on jobless claims

The day before Christmas, Reuters reported: "Jobless claims hold steady in latest week."

First-time applications for state unemployment insurance . . . fell a mere 1,000 to 353,000 in the week ended Dec. 20 from a revised 354,000 in the prior week. . . .

Claims have been below the 400,000 level economists see as a divide between improving and deteriorating labor markets for 12 consecutive weeks -- the longest stretch since a run that ended in April 2001.

A more reliable barometer of employment market trends, the closely watched four-week moving average of initial claims, fell for the second straight week to 361,750 from 362,000 in the previous week.

[T]he number of unemployed workers who continued to draw benefits fell 38,000 to 3.27 million in the week ended Dec. 13, the latest week for which that figure is available. That is the lowest level since shortly after the Sept. 11, 2001, attacks.

Continued . . .

Temp firms consolidating through mergers

Reuters (Anupama Chandrasekaran) reports: "Merger Pace Picks Up for Temp Firms."

Buoyed by an improving economy and their rising stock prices, the biggest U.S. staffing companies are back in the takeover game . . . .

For the acquisitive, there's plenty of choice. There were nearly 7,000 temporary help firms in the United States in 2002, the last year for which figures are available, according to the American Staffing Association. . . .

In 2003, about 110 acquisitions were completed. This is just one-fourth of the deals done in 1998, when mergers and acquisitions in the staffing sector burgeoned, and about half the number of transactions completed in 2000.

But with investors anticipating a revival in the U.S. job market, the stock prices of companies such as Manpower Inc. . . . and Kforce Inc. . . . have jumped to 52-week highs in the last few months.

The higher the stock price, the cheaper it is for staffing companies to buy other employment firms since they can do the deal for fewer shares. Sure enough, Kforce and Manpower didn't wait to make their moves.

On Dec. 2, Kforce announced the acquisition of Hall, Kinion & Associates Inc. . . . , a California-based provider of staffing to information technology companies. . . .

Quick on its heels, Manpower, the world's No. 2 staffing company, said it entered into an agreement to buy Right Management Consultants Inc. . . . , an outplacement services provider. . . .

For the survivors, pricing will remain a double-edged sword. The business is so competitive that employment firms can't charge their clients higher fees to find people to fill their jobs, though operating costs -- like health insurance, utilities and other overhead items -- keep rising.

Continued . . .

Comments on flexible spending debit cards

Catherine over at sonria.org has some comments based on my recent post on debit cards.

She seems to have the type of insider's HR knowledge of the nuts and bolts that I, as an ivory tower lawyer, sometimes sorely lack.

Continued . . .

Back to work (and to blawg)

Apologies to regular readers for the week of silence. I spent time in Indiana with family and friends, returning Saturday.

Unfortunately, last night my home computer went totally on the fritz.

I will resume blogging tonight from work as time permits, while trying to log some good billable hours this week to finish off the year.

Continued . . .

Debit cards for employee-directed benefit spending

Workforce Management has this article by Rachael King on an interesting benefits trend: "Employers Give Workers Debit Cards to Access Benefit Dollars."

Diana Andersen wanted to eliminate the shoebox effect. Employees at Zions Bancorporation would collect their receipts for visits to the doctor’s office or for their children’s day care in shoeboxes to submit for reimbursement from their flexible spending accounts. Andersen, the company’s vice president and director of corporate benefits, worried that the inefficient and cumbersome process for reimbursement dissuaded employees from using flexible spending accounts.

Three years ago, Zions began offering employees debit cards so they could pay for medical or child-care expenses directly from their flexible spending accounts. The first year, enrollment went up 75 percent, Andersen says. Currently, 40 percent of Zions Bank’s 8,500 employees are enrolled in flexible spending accounts, way ahead of the average 15 percent participation among companies nationwide. About 1,200 employees use FSAs for child-care expenses, and 3,000 use them to pay for trips to the doctor or pharmaceutical meds.

Zions Bank uses debit cards from a company called MBI, based in Waltham, Massachusetts. MBI offered the first Flex Convenience debit card in partnership with MasterCard in 1998. These are limited-access cards that work only with pre-approved merchants, so, for example, an employee would not be able to use an FSA debit card at a restaurant. Two other companies, Evolution Benefits Inc. and SmartFlex LLC, also offer debit cards for benefits programs.

Companies are giving employees debit cards to access funds for flexible spending accounts, health reimbursement arrangements, transportation reimbursement plans and educational assistance programs. Currently, 350,000 employees use MBI’s cards--mostly for flexible spending accounts--but that number is expected to increase to more than a million by the first quarter of 2004.

Why the trend

Several forces are converging to create this projected increase in debit card usage. First, the IRS issued a ruling in May that officially sanctioned using debit cards for FSAs. Second, the IRS issued a ruling in September that allows employees to use funds from flexible spending accounts for over-the-counter medications. Third, the use of health reimbursement arrangements is increasing as conventional health plans become more expensive to fund.

This type of arrangement works perfectly with the trend towards consumer-directed healthcare plans. Expect it to grow tremendously.

Continued . . .

Latest on Calif. grocery strike -- talks collapse

Yahoo News (Reuters) reports: "Calif. Grocery Strike Talks Collapse."

Talks between supermarket chains and striking employees collapsed shortly after they resumed late Friday as store owners rejected labor's first broad proposal to end a 10-week-old dispute that has idled 70,000 California workers.

Owners balked at a proposal by the United Food & Commercial Workers International union that would have cut employer funding of worker benefits by between $350 million and $500 million over a three-year contract.

Safeway Inc., Albertsons Inc. and Kroger Co., the chains affected by the strike, had been looking for about $1 billion in cuts. . . .

The breakdown in talks came after an 11-day hiatus, during which Federal Mediation and Conciliation Service director Peter Hurtgen met with the sides separately. It also comes after the union announced it would begin removing pickets from Southern California distribution centers beginning on Monday as a show of good faith.

Continued . . .

Survey on internet use at work

The following graphs from an Information Week survey, as reported by Parry Aftab may be of interest:

The article says:

While the statistics are enlightening, the comments given to us by respondents are even more enlightening.

Several respondents commented that taking the survey on company time was violating their acceptable-use policies. Most, however, agreed that as long as the work gets done and Internet use isn't abused, it should be allowed in moderation.

"I believe that as long as the use is reasonable and doesn't detract from what the employee is expected to get done each week, it should be allowed," said one survey-taker.

Many were concerned about inappropriate surfing (to hate, porn, and dating sites, for instance) and felt that should be prohibited. Some believed it was no different from smoking breaks or trips to the water cooler. According to one respondent, "It's just like taking a smoke break or reading the newspaper. As long as your work gets done on time, I don't see why it should be prohibited."

Rather than being a waste of time, many respondents felt personal use of the Internet makes employees more productive. "It actually keeps people at their desk rather than taking time off, or getting on the phone, or wasting time." "It saves time in some cases, but if the company would rather I waste time on the phone being kept on hold, fine, it's their time I'm wasting," said another respondent.

The most interesting responses, however, were those who defended personal use because of changes in the workplace. "Work and personal time have merged in the modern workplace," said one respondent. Some saw it as a quid pro quo for the personal time they give up to work, given the fluidity of the workplace and telecommuting. "For me," replied one survey-taker, "it's the best use of time. I work during times that should be 'off' to take care of various time-sensitive projects. It's a trade off."

It is certainly desirable to have internet use policies in place. Yet it may be unrealistic, especially in a white-collar position where high speed internet access is just a click away all day long, to prohibit all personal use. The categories listed in these graphs may provide some guidance in crafting a policy differentiating legitimate and illegitimate personal uses.

Continued . . .

Interesting studies on gender pay equity issues

Employment Policy Foundation (EPF) has this: "Women in the Workplace Make Large Gains over the Last Decade."

Highlights include:

The real earnings of women in full-time, year round jobs increased 19.1 percent from 1991 to 2001, and the number of women earning over $80,000 per year in real (2001) terms increased from 624,000 to 1.7 million—a 166 percent increase.

The rate of growth of the number of women in high paying jobs (over $80,000 per year) was 2.8 times the 58 percent growth of the number of men in such jobs.

Over the past decade entered high-paying managerial and professional occupations in record numbers. The number of women with annual work experience in managerial and professional occupations increased by 7.0 million—a 44 percent increase, compared to an increase of 5.0 million in the number of men.

In 2001, work experience data showed that women comprised 51 percent of all persons who worked in the managerial and professional occupations group.

Women also shifted significantly from part-time part-year work to full-time year-round work, a change with important implications for career advancement and future earnings gains. The number of women working full-time, year-round in managerial and professional occupations increased 53 percent to 15.5 million.

Article is based on a GAO study of pay differences between men and women that found factors including work experience and working hours, industry, occupation, education, marital status, age, and presence of young children in the household accounted for over half of the difference between earnings of women and men. EPF took it further and looked at other factors, claiming that if these were added to the analysis conducted by GAO, they "would reduce the unexplained earnings differences even further—to no more than 5 percent."

I remember the old slogan about women only making 60 cents for every dollar earned by men. Always thought it failed to account for some significant reasons other than outright discrimination. Now it seems that gap has closed significantly, and much of what remains is accounted for legitimately.

Continued . . .

Big healthcare mystery: what do particular procedures really cost?

See this AP article by Patrick Howe in the Washington Post: "Unknown Prices Hamper Health Care."

Almost nobody, from the doctor to the patient, knows what a given procedure really costs.

And that's a real problem for would-be reformers who favor a system that counts on consumers to hold down health care costs, by putting them in charge of their own spending. . . .

All hospitals have official price lists for procedures but most are reluctant to give them out for fear of damaging their negotiating power with health insurers. Even if they did, they would be of little use to consumers because the system is built on discounts to HMOs and government programs that buy in bulk.

Several Minnesota companies are leading a movement toward so-called consumer-directed health plans. The plans are premised on people getting a certain amount of money from their employers, say $1,000, to spend how they please on health care in a given year. Money they don't spend can stay in their account for the next year. If the money is exhausted, the person has to meet a fairly high deductible before insurance kicks in.

Some tout those plans as a solution to many of the health care system's woes. The theory is if people are more in control of their health care spending, they'll make rational decisions about which doctors to see and which tests to have, and as a result will save the system money overall.

The new Medicare law gives the idea a boost by creating health savings accounts, tax-free accounts similar to IRAs that individuals can use to pay medical expenses. But the system crumbles if people can't actually get information about what things cost.

(See my post immediately below regarding health savings accounts)

"We need information and it simply doesn't exist," said Carolyn Pare, CEO of the Buyer's Health Care Action Group, a coalition of large employers dedicated to changing the health care system. . . .

Executives with several of the companies that offer the health plans said the "value" question is key. They say, for example, if you try to price medical services only by procedure - an X-ray, say - some of the best hospitals look expensive. But if they're priced instead by the overall cost of treating a given illness, hospital systems such as Rochester's Mayo Clinic come out as the best deals.

Bruce Reuben, president of the Minnesota Hospitals Association, agrees that consumer-friendly information isn't available. But he said that hospitals and clinics recognize the need and are already working to provide it.

He said, however, that they're determined not to have the information be simply about costs.

"That's not enough," he said. "You have to look at a combination of cost and outcomes and, some would argue, patient satisfaction."

An industry representative says the cost-information problem will solve itself. "Once you have the means to do something about it, markets will provide the information," said Greg Scandlen, director of the Center for Consumer-Driven Health Care. "But it won't be overcome until the consumer has the money in hand." . . .

While it's attracting growing interest from employers and policy makers, the consumer-driven model is opposed by many, particularly those who see a Canadian-style system as the best answer to the system's woes.

Putting too much decision-making responsibility on the backs of consumers could be outright dangerous, said Elaine Cunningham of Children's Defense Fund of Minnesota. A person with a broken leg, she says, may not be in a good position to know if they need a costly MRI or not.

"It's not even a good goal because we don't know what we are buying and I don't know how we're supposed to know," she said.

Critics also say the policies, with their high deductibles, could actually drive up costs if people decline to spend money to go to the doctor for procedures that could keep a medical problem from getting much worse.

"Underuse is as widespread a problem or more so than overuse," said Kip Sullivan, a health system analyst who supports adoption of a universal health care system.

The provision of information for consumer-driven health care therefore needs to involve three types of information: cost, quality, and how to determine when paying for services now will prevent having to pay much more later (and, in contrast, when it's OK to skip the trip to the doctor and the antibiotics, etc.).
On a personal note, the last few days I've been having some upper respiratory symptoms and fearing it was the dreaded flu. None of my family got flu shots -- not to save money but due to neglect.

This morning, my 10 year old woke up with classic flu symptoms. Having heard about the antiviral treatments available, we made a quick run to the pediatrician, who made the diagnosis and wrote the scrip. It cost $50 for the med plus $25 office visit copay, a good deal more than a flu shot, I believe.

On the other hand, I took the opportunity to get a free consult with the doctor, asking her some questions about my symptoms (she agreed--not flu, at least not yet) and about over-the counter and home remedy treatments. $25 saved there. I'd have otherwise been inclined to tough it out, but I wonder how many people with my symptoms (I could barely talk yesterday) would have gone to a doctor, and not thought to take advantage of a captive young doctor in the exam room to pump for free advice.

Continued . . .

Medicare precription coverage law also includes exciting new health savings account for more consumer-driven healthcare options

See this article in BNA Tax Management Insights & Commentary: "Health Savings Accounts: Medicare Reform Reshapes the Landscape for Active Employee Health Coverage."

It's well worth reading in full.

Highlights include:

List of attractive features of the new Health Savings Accounts (HSAs)

Outline of HSA provisions

Comparison to medical savings accounts, health fexible spending accounts, and health reimbursement arrangements.

This is an option I will be considering for myself. It puts some of the risk -- and opportunity for profit -- back on the individual, instead of an insurance company, as the individual pays for expenses below a relatively high deductible, and can save money tax free if it's not used for such expenses.

Continued . . .

Lawyers complain about too many cases being settled

ABA Journal e-report has this by Stephanie Francis Ward: "VANISHING TRIALS’ ISSUE WON’T GO AWAY."

Case filings are up, and parties spend more money on pretrial work. Yet fewer actions actually go to trial–and all of this is troubling many litigators.

Because this is not in the best interests of parties or because it means trial lawyers don't get to do as much of the really exciting work they thought they would be doing when they went into litigation?

The situation was discussed in detail last weekend at a San Francisco symposium sponsored by the ABA’s Litigation Section and its Vanishing Trials Project.

If fewer cases get tried, less attorneys get actual court experience, say many conference participants. Also, there’s a concern that the research may indicate that parties are not getting their day in court.

Going through intensive discovery and motion practice, as well as quite possibly ADR (mediation) can be viewed as about as much of a day in court as most clients can stomach -- and not just financially.

I wonder how much this is a function of growing reliance on mediation. A good mediation can serve the functions of a day in court, without either party facing the risk of a drastic outcome -- defense verdict or massive plaintiff's verdict.

(More speculation): This phenomenon is only a bad thing if it results in substantial settlements for truly frivolous cases. This occurs only if judges are not adequately vigilant and aggressive in ruling on pretrial motions and/or if lawyers give bad advice regarding settlement value and strategy or fail to aggressively defend such cases.

Continued . . .

Latest jobs, economic data good

Reuters reports: "Jobless Down, Some Manufacturing Soars."

Good news on the U.S. economy piled up on Thursday with a quartet of reports showing a fall in claims for jobless benefits and a surprise surge in regional manufacturing that bodes well for the entire nation.

First-time claims for state unemployment insurance, a rough guide to the pace of layoffs, plunged 22,000 to 353,000 last week from a revised 375,000 in the prior week, the Labor Department said.

The unexpectedly steep drop brought claims back to the 2-3/4 year low they hit in early November. Wall Street economists had expected claims to slip to 365,000 from the 378,000 originally reported for the Dec. 6 week.

"The jobless claims numbers show the labor markets are improving and that increases the likelihood that the economy will remain strong," said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis.

Another report showed manufacturing in the mid-Atlantic region jumped in December from an already strong level, despite forecasts of a slight decline. New orders hit a 23-year high.

Continued . . .

Business Week is bullish on the job market

Business Week online has this good economic analysis: "U.S.: The Job Market Is Stronger Than It Looks."

Read this excellent story in full.

One of the most fascinating parts to me is the divergence between the employment statistics resulting from the payroll survey and those resulting from the household survey:

the Labor Dept.'s other survey of employment, taken by canvassing households instead of businesses as with the payroll data, shows sharply greater job growth in 2003 than the more widely followed survey of company payrolls. So far this year, the household survey, on which Labor's calculation of the unemployment rate is based, shows employment has grown by 2.2 million workers. The payroll survey says jobs are down by 24,000 (chart).

One difference in the coverage is that the household survey counts people who say they are self-employed, while the payroll data do not. Contrary to popular notions, however, this is not the major difference in the two accountings. True, the count of self-employed workers is up substantially -- by more than 330,000 this year, and by nearly 700,000 since the recovery began two years ago. But even excluding the self-employed, the household survey shows 2003 job growth of more than 1.8 million, possibly because that survey better captures the hiring at small companies, which sometimes falls through the cracks of the business survey.

Here's the chart referred to:

Continued . . .

law.com - Article

Law.com has this by Richmond Eustis from the Fulton County Daily Report: "Day Trader Firms Ruled Not Liable for Rampage."

The day trading firms where Mark O. Barton worked before embarking on a shooting rampage are not liable for the victims' injuries and deaths, Georgia's court of appeals has ruled.

The case had its origins in the worst shooting incident in Georgia history. On the afternoon of July 29, 1999, Barton went to Momentum's offices, dressed in Bermuda shorts and a polo shirt, and carrying a Colt .45 and a Glock 9mm handgun. He shot a manager and several day traders before crossing the street and opening fire in All-Tech's offices. Again, he shot several managers, and fired on several day traders as he left the building.

An appeals court panel ruled that the victims of Barton's killing spree and their survivors failed to show their damages were a foreseeable result of day trading firm practices. . . . .

"We find this case is one in which the issue of proximate cause is so plain, palpable and indisputable as to demand summary judgment for the defendants," Judge John J. Ellington wrote for the unanimous panel . . . .

Six of those who survived being shot, and the survivors of seven of those who perished in the shooting, filed suit against the day trading firms, alleging that it was the firms' negligence that caused Barton to go berserk and start shooting people.

Plaintiffs' lawyers Michael Weinstock, of Weinstock & Shave, and David M. Zachs and Raymond G. Chadwick of Kilpatrick Stockton, argued that the firms triggered Barton's madness by failing to screen him adequately as a trader, and by making it very easy for Barton to lose far more money than he could afford. Doing so, they noted, earned the firms commissions on each trade. Zacks said his clients might consider asking for reconsideration, and, if necessary, an appeal.

"The victims are important, and that's why we want to pursue all of our options," he said.

Including the "option" of attempting to shake-down the defendants by pursuing expensive litigation based on entirely meritless legal theories? This one belongs in overlawyered.com (oops, it's already there).

[T]he plaintiffs faced some serious legal obstacles. According to Ellington's opinion, the defendants had to show that the trading firms had a duty to protect them from "unreasonable risk of harm," that the firms' conduct was the immediate cause of the plaintiffs' injuries, and that the firms' failure to do their duty caused the plaintiffs' injuries.

However, under Georgia law, a third-party criminal act breaks the chain of connection between one party's action and another's injury. The only exception is if the plaintiffs can show that the intervening criminal act was foreseeable, that the defendant triggered the act, and that the act was enough on its own to injure the plaintiffs.

"The appellants conceded, as they must, that Barton's deadly assaults constitute intervening criminal acts of a third party between the trading firms' conduct and the appellants' injuries," Ellington wrote.

In an effort to get around that concession, however, the appellants called Barton's burst of violence an "intervening consequence" of the firms' business practices. Had it not been for the firms' practices, they argued, Barton never would have cracked. . . .

The defendants, claimed the appellants, should have known that the heavy losses attendant on day trading would drive some people to violence. Heavy economic losses, they argued, spark violence, and the firms knew it -- or should have known it. Both the trial and appeals court discarded that argument. "The entire thrust of this case is that there is foreseeability of this kind of behavior," Zacks said.

And in a footnote, Ellington states that legal recognition of such a connection could have serious repercussions.

"We are … troubled by the implication that the list of defendants potentially liable for any person's violence, if sparked by economic misfortune, would be limited only by the number of stock brokers, investment advisers, lawyers, business partners, lottery ticket sellers, etc., whom the assailant blamed for his financial losses," he wrote.

Ellington also noted that it had to be foreseeable that if the firms didn't monitor Barton, he would turn violent and might harm people in the workplace. However, there never had been a prior crime at All-Tech of any kind. And nobody had any idea that Barton was a potential mass-murderer. "It is undisputed that before Barton pulled out his weapon, no employee of All-Tech or Momentum had any reason to believe Barton in particular could be dangerous," Ellington wrote.

Continued . . .

EEOC announces recruiting and hiring settlement

In a case involving Palm Management Corporation, operator of The Palm Restaurants, EEOC has announced a pre-litigation agreement ending a nationwide investigation focusing on past recruitment and hiring practices, specifically, allegations that The Palm discriminatorily failed to recruit and hire women into service worker positions.

Here's the EEOC press release.

The agreement's terms include The Palm's already extensive diversity program with mandatory EEO training for managers and employees, and the establishment of a class fund in the amount of $500,000. "[B]eginning in 2000, the Palm had implemented changes in its employment practices, which included providing mandatory training to supervisors concerning the avoidance of discrimination in hiring, and more effective applicant tracking and record-keeping systems."

The dollars may have been less had the training, applicant tracking and record-keeping been in place earlier.

Diversity training programs are always helpful in defending unemployment claims, if not preventing them entirely.

Hiring cases are relatively rare, but obviously difficult to defend if the paper trail is inadequate. At the same time, it is not practical to keep every résumé or application forever.

A carefully designed record-keeping and record retention program is required.

Continued . . .

Good analysis of causes of healthcare cost increases

David R. Francis writes in the Christian Science Monitor:"Healthcare costs are up. Here are the culprits."

It is no secret to Americans that healthcare costs are soaring. But some of the causes of this escalation are startling. For example:

• Drug companies spend roughly as much on advertising and promotion - $20 billion a year - as they do on research and development of new drugs.

• Overall, American pharmaceutical firms employ one sales person for every physician in the country. They also pick up the tab for doctors to attend seminars promoting their products, which happen to take place in desirable locations, such as Florida and the Caribbean.

• New technology - from diagnostic devices to surgical techniques - accounts for more than half the rise in total healthcare spending in the past three years. . . .

• Despite rising costs, profit margins on healthcare products and services, including health insurance, have been going up - rapidly - rather than down. . . . [M]ergers have increased providers' pricing power.

"[Soaring US costs] just can't go on much longer," says Paul Ginsburg, president of the Center for Studying Health System Change (HSC) in Washington, D.C. "Things will happen."

The latest cost numbers indicate the growing economic challenge.

Already the nation is spending about $1.65 trillion a year on healthcare. That represents 15 percent of gross domestic product, the total output of goods and services. It consumes one-fourth of the federal budget, more than defense.

By comparison, Canada spends about 10 percent of GDP on a universal, government-run healthcare system. Further, Canadians live a bit longer on average than Americans. That suggests lower costs haven't damaged the health of Canadians. . . .

The cost of bringing a single new drug to market has risen to about $1.7 billion, calculates Bain & Co., a Boston consulting firm. That's up from $1.1 billion from 1995 to 2000. These totals involve commercialization costs, such as preparing marketing materials. . . .

What's to be done about rising medical costs? Here are some suggestions by experts, not all politically easy to obtain:

• Provide more information to consumers on what drug works, what procedures are best, which hospitals and physicians have good records. Insurance, for instance, shouldn't cover extra costs if a patient uses a brand-name drug when a cheaper generic does the job.

• Cut off expensive treatment if it extends someone's life only a few days or months.

• Spend more on prevention of disease by encouraging better lifestyles, improved nutrition, and other steps.

• Ban or control the advertising of prescription drugs to consumers. The "hype" in the ads that pepper the evening news and other programs has swelled drug sales and taken up physicians' time, suggests Mr. Caplan. But there is little indication that the extra drug consumption has improved health by much.

• Cap malpractice awards so doctors need not prescribe so many tests and other defensive practices.

• Let HMOs and other healthcare providers return to tighter management of costs, procedures that worked in the 1990s but were abandoned after severe criticism by customers and the press.

Thanks to Catherine Collingwood at sonria.org for tipping me off to this article.

Here's an illuminating graph from the story:

Continued . . .

News on jobs statistics in tech sector

CNN reports: "Tech firms recovering, government says."

The U.S. technology industry is showing healthy growth for the first time since parts of the Internet sector collapsed two years ago, but jobs and wages still are down, the Bush administration says in a new report on the digital economy. . . .

In the report, released Tuesday, the government predicted steady but moderate growth among technology companies and said technology investments are helping fuel growth in other areas. Manufacturing plants with computer networks, for example, are more productive than those without, even taking other factors into account.

But the report also said technology employment is recovering slowly. It said the number of technology workers dropped by 11.2 percent since 2000 to 4.8 million employees -- compared with a decline of less than 2 percent in all private industries.

Average annual wages among technology employees dropped in 2002 to $67,440 -- down 1.3 percent from $68,330 the previous year -- even though average wages for all private-sector workers increased by 1 percent to $36,520.

The loss of employment is very unfortunate, of course. With the offshoring phenomenon proceeding apace, it is difficult to see substantial jobs improvement even as the industry rebounds.

The wage gap is revealing. Technology workers were making almost twice as much as others. In part, this was a function of supply and demand during the technology boom years.

Now, demand is down, and supply probably up, as so many people have been encouraged to train or retrain for technology jobs.

I would expect to see a narrowing of this wage gap, as well as a narrowing of the wage gap between American and foreign technology workers.

Continued . . .

Laid-off execs increasingly become own bosses

A small "sidebar" piece in Newsweek by Jonathan Adams entitled "How the elite are dealing with jobless recovery; The Company of One (December 22 edition on page E-4) cites some interesting statistics from the outplacement firm Challenger, Gray and Christmas:

15.1% of unemployed individuals previously making $100,000 or more started new businesses in the third quarter

11.3% of such person started new businesses in the 2nd quarter

Such persons are 94% more likely to start businesses than their less-highly-paid counterparts.

Unemployment fell this year among workers 55 and older, while rising for those 25-44.

I noticed on the Challenger site they have a nice piece with suggestions for job seekers (some contrary to conventional wisdom). Worth reading if you are among the millions looking for work.

Continued . . .

Interesting blog comments on Abercrombie & Fitch "appearance discrimination"

A blog entitled "Banterist" has this post: "In Pursuit of Victimhood"

(thanks to overlawyered.com for the link)

Referring to a 60 Minutes segment (which I did not see), this blogger says:

The segment touched on Abercrombie & Fitch’s complicity in the whorification of America. Just like Britney and Christina have opted to sell albums using their pubic region, Abercrombie & Fitch has decided to sell pants using unclothed, apparently unparented adolescents lounging about in streams, fingering one another. It’s about as classy as Larry Flynt in a tuxedo.

That the company has made the decision to take their good name and significant history and tarnish it pandering to horny teens and pedophiles is a shame. It would be just as unfortunate if Tiffany & Co. decided to sell sterling dildos and dress the staff like Courtney Love. But, base marketing and name-tarnishing was not what the segment was about.

What was being called into question was how they hire people to sell their clothes. In particular, how they seem to prefer using pretty people to execute their All American Boy & Girl marketing plan. Another trauma some feel worthy of a class action suit. Amidst much boo-hoo-hoo-ing and quotes in the neighborhood of "This is not what America is about," the aggrieved parties, who were allegedly judged not pretty enough or not "All American" enough by the retailer, want to force their accommodation. Sadly, that is what America is about. A few minutes perusing overlawyered.com will remove any doubts.

There is no reason Abercrombie should be obliged to change their policies (dubbed “lookism”) to accommodate people who don’t fit in their plan any more than racially polarized networks like UPN should be forced to have more Asian-themed shows. FUBU is a black clothing line, and as such there should not be controversy over the lack of Cherokee Indians on the payroll. It’s doubtful Katz’s Deli has a wealth of Pentecostal Christians in the management hierarchy. . . .

This goes a bit too far -- there are reasons we have discrimination laws and these examples very well might violate them. What about reversing the deli example: an Irish pub that refuses to hire Jewish accountants or lawyers? Customer preference has never been considered a valid justification for discrimination. That said, there are reasons why only certain types of discrimination are prohibited, and ugliness is not a protected category. (Unfortunately for Abercrombie, as discussed in previous posts in this blawg, they are also accused of race discrimination because of this image thing)

He continues:

Litigation has taken the place of common sense. Once you could have suggested seven foot tall guys were among the better basketball players. Now you run the risk of being called heightist by the vertically challenged. Even worse, if you were a four foot tall blind kid with a club foot who wanted to play on the varsity team, there are lawyers who would take your call. For some legal professionals, no cross is too cumbersome to bear. . . .

Trial lawyers, scourge of many things decent, have fought long and hard to grant us the Freedom To Litigate Everything That Bothers Us. They’ve created such a sense of entitlement that everyone is undoubtedly a victim of something. We’ve all been wronged. It’s why "I’m not what Abercrombie is looking for" has turned into "I had better be what Abercrombie is looking for."

When a telemarketer who lacked several teeth was laid off because people could not understand what he was saying he didn’t look for a new job, he looked for a lawyer. People no longer play the cards they’re dealt. They instead ask that the cards be reshuffled and re-dealt. If that doesn’t work out, they ask for a new deck. If that doesn’t work, they sue the casino. Alarm bells should have sounded when illegal immigrants started suing for the right to drive. How far is too far? Can someone let the rest of us know?

It’s high time the trial lawyers suffered some setbacks to their unabashed greed and cynical shortsightedness so that we can all go back to the Freedom To Deal With It. Just because some of us lost our moms doesn’t mean we should strike Mother’s Day from the calendar. . . .

From private golf clubs that only want male members to clothing stores that only want a certain look, perhaps it’s time to realize that not everything is a battle that needs to be fought, much less won. I know that as a man I will never wait tables at Hooters. I know I’m too tall to be an astronaut. I know that I can not walk in to Nobu and be seated immediately because I’m not famous. Most of us know these things are not cause for grief, much less litigation, no matter how many lawyers are cheering us on. Perhaps we should tell the others.

Well-said, if a tad extreme.

Continued . . .

Good story on offshoring

The Economist as this story:"Relocating the back office: the shift of service jobs to low-cost countries has only just begun. It promises huge benefits to consumers everywhere."

This story is available only to subscribers or for a per-article fee of $2.95. I am a subscriber, have read it and highly recommend it to anyone interested in or concerned about this issue (which should be all of us).

Continued . . .

Interesting disconnect on jobs outlook

Reuters has this by Bill Rigby: "CEOs See Hotter Sales, Tepid Job Growth."

Leading U.S. chief executives overwhelmingly expect their companies to post higher sales in the first half of next year, but only a minority see higher capital spending or more jobs created by their companies, according to a survey by the Business Roundtable released on Wednesday. . . .

According to the survey, 93 percent of the CEOs polled expect higher sales for their companies over the next six months, but only 35 percent expect higher U.S. capital spending.

Only 25 percent expect to hire more workers in the next six months, while 50 percent see no change and 25 percent expect to shed jobs. . . .

As a result of the survey, the Business Roundtable said its CEO Economic Outlook Index rose to 89.6 for December, up from 67.7 in October. A reading of 50 indicates no change in conditions is expected. . . .

Chief financial officers are more optimistic on spending and jobs, another survey released on Wednesday showed.

The CFO Outlook Survey, conducted by Financial Executives International and Duke University's Fuqua School of Business, showed that 63 percent of CFOs polled expect an increase in capital spending in 2004.

Two-thirds of the 236 surveyed companies plan to increase their number of employees in 2004, and only 14 percent expect to cut jobs, the survey showed.

Wonder why the disconnect (25% vs. 66% predicting more hiring)? Are CEO's just generally more cautious? Or do they know something the CFO's don't know?

Continued . . .

California UFCW starts to crumble as grocery strike drags on

Frank Green of the San Diego Union-Tribune reports:
"Plans to cut strike pay thins ranks of pickets."

The decision by the grocery workers union to slash strike pay in San Diego County has sent many of its members scrambling to find secondary jobs and a small number across picket lines and back to work.

[F]our workers [at a particular Von's store] decided yesterday to cross the United Food and Commercial Workers Union's picket line and return to their jobs, the first group at the store to do so. . . .

Last week, the . . . Union . . . said beginning Dec. 26 it would cut strike benefits to $100 for those who march at least 20 hours a week, down from a maximum of $300 for full-time pickets.

Merry Christmas, from your Union Brothers!

Several of the six other union locals in the 65-day-long labor dispute with the three major supermarket chains have discussed similar action, union officials said.

The news of dwindling strike benefits comes as the union and the grocers are set to begin another round of negotiations Friday under the supervision of Peter Hurtgen, director of the Federal Mediation and Conciliation Service.

Negotiators for the UFCW and Albertson's Inc., Ralphs parent, The Kroger Co. and Vons operator Safeway Inc. were last at the bargaining table Dec. 7. . . .

UFCW spokeswoman Ellen Anreder said the number of union members who have crossed picket lines was minuscule compared with the number of people still walking the lines.

"These numbers are inconsequential," Anreder said. "Our members still have their eyes very much on the goal."

However, analysts said yesterday that the cuts in strike pay, even if restricted to one union local, will hardly strengthen the workers cause at the negotiating table.

"It will lessen their resolve and, more and more, they will start crossing over," said Mark Hugh Sam, an analyst who covers the supermarket industry for Morningstar. "I am surprised that (the union) has been able to hold out this long. The union underestimated the resolve of the companies."

And perhaps vice versa?

Continued . . .

More IT jobs headed overseas

FindLaw (Reuters) reports: "IBM Said to Export Programer Jobs to Asia."

[IBM] . . . will move the work of as many of 4,730 U.S. software programers to India, China and elsewhere, the Wall Street Journal reported on Sunday.

The unannounced plan, which the newspaper said it viewed in company documents, would replace thousands of workers at IBM facilities in Southbury, Connecticut, Poughkeepsie in New York, Raleigh, North Carolina, Dallas, Boulder in Colorado, and elsewhere in the United States. . . .

IBM did not immediately return calls for comment on the report.

Continued . . .

Casinos, sex discrimination, makeup, and corporate dress codes

Law.com led me to this AP article from the Las Vegas Sun: "Former Harrah's Reno bartender's lawsuit heard in appeals court."

A former Harrah's Reno bartender fired for refusing to wear makeup has taken her sex-discrimination lawsuit to a federal appeals court. . .
Senior U.S. District Judge Edward Reed ruled against her last year, concluding the casino's appearance standards are evenly applied to both sexes.

[She] was fired in August 2000 from Harrah's, where she had worked for 21 years. She maintained that wearing makeup should be a personal choice and had nothing to do with her job performance.

The appearance standards were put in place at 20 of the company's casinos nationwide in 2000.

"Women are very capable without makeup," Jespersen told the Reno Gazette-Journal. "We shouldn't be considered little tokens or dolls. We shouldn't have to put on masks."

But Harrah's spokesman Gary Thompson said he thinks the appeals court will toss her lawsuit.

"The main position is that the court has upheld an employer's right to impose reasonable grooming and cleanliness standards, particularly for employees who are serving the public," Thompson said.

Harrah's policy requires female employees to wear makeup and lipstick. Male workers are forbidden to wear makeup, ponytails or hair below the top of their shirt collar. . . .

"My career as a casino bartender is over," she said. "But it would have been degrading to do what they wanted me to do. We have civil rights and laws to protect us."

The policy can be viewed and stated as gender-neutral -- employees are expected to dress and groom in accordance with normal societal expectations for their respective genders and positions. However, stating it in this way also makes it clear that it does involve different expectations for different genders. It will be interesting to read the opinion, although it's a shame the federal courts have to waste their time on such trivialities. If you really can't stand the dress code, go work somewhere else (apparently that is what she did).

Continued . . .

Good commentary on tort reform, inspired by recent Newsweek article

On Findlaw, commentator Anthony J. Sebok, Professor of Law at Brooklyn Law School, writes: "The Corrosive Effect of the Politicization of Tort Reform."

Somewhat along the lines of my comments in this recent post, Sebok says:

[T]he real problem with our tort system . . . is not that too many culpable defendants escape liability, as the pro-plaintiff groups would have you believe. Nor is it that too many undeserving plaintiffs win lawsuits, as the pro-business groups would have you believe. Rather, it is that the tort system has become so expensive that we rarely get a chance to find out whether a tort has actually occurred.

Put another way, the real problem with our tort system is that it is, for most litigants, a myth: It is so expensive to litigate that few deserving victims sue, and many blameless defendants settle just so they can escape the expense and uncertainty of the civil justice system. In this sense, our system is both anti-deserving plaintiffs, and anti-innocent defendants. . . .

The tort system promises each person "their day in court" but that promise is an illusion. The Newsweek article should have focused not on the cost of (increasingly rare) jury verdicts, but on the costs of (entirely typical) settlements.

Furthermore, it should have asked the hard question that no one seems to want to ask: What good is a tort system in which the vast majority of disputes are handled outside of trial? Do plaintiffs feel satisfaction at the end of a process that is essentially bureaucratic? Do culpable defendants come away feeling chastised, and deterred? Do defendants who did nothing wrong feel vindicated? Common sense tells us the answer to all of these questions, sadly, is no.

Continued . . .

Yahoo! News - More Firms to Add Staff; Cuts Planned Too

YahooNews has this Reuters story:"More Firms to Add Staff; Cuts Planned Too."

Staffing company Manpower Inc. said employers in nine of the 10 sectors surveyed expect to offer more jobs in the first quarter of 2004 than in the final period of 2003.

But the uptick could be tempered as the number of companies expecting to reduce payrolls is up as well. . . .

The seasonally adjusted net employment outlook for January to March, calculated by subtracting the percentage of employers intending to reduce their work force from the percentage of employers planning to add staff, rose to 13 percent from 10 percent in the fourth quarter of 2003. . . .

Manpower said 20 percent of employers interviewed planned to recruit more staff in the first three months of 2004 compared with 22 percent in the fourth quarter of 2003, before seasonal adjustments.

According to the survey, 61 percent of employers surveyed plan to leave current staff levels steady, down slightly from 62 percent in the fourth quarter.

But more employers planned to cut jobs in the first quarter of 2004 (13 percent) than in both the fourth quarter (11 percent) and the first quarter of 2003 (12 percent). . . .

[E]mployers in sectors such as construction, finance and manufacturing said they intend to hire more people in the first quarter. Public administration was the only sector where employers were planning to add fewer jobs than the fourth quarter.

Job prospects in the construction sector were brighter than both the fourth quarter and the year-earlier period. Hiring intentions in the education sector rose for the second consecutive quarter but were not as strong as a year ago, Manpower said.

Recruitment plans in the finance, insurance and real estate industries are expected to be stable. Hiring is expected to be steady in the wholesale and retail trade sector too. But the percentage of employers in this sector planning to reduce their work force rose to 19 percent from 17 percent a year earlier.

Continued . . .

Tough luck on diversity jurisdiction

Today's ABA Journal e-report has this story by Stephanie Francis Ward: "A Ruling Like a Ruler on the Hands; Appellate Judge Takes Attorneys to Task for Jurisdiction Error."

Ruling on an appeal, 7th Circuit Judge Frank H. Easterbrook concluded a lawsuit tried before a jury should never have been in the federal courts at all.

"Defendant’s brief asserts that plaintiffs’ jurisdictional summary is ‘complete and correct,’ " Easterbrook said. "It is, however, transparently incomplete and incorrect." Belleville Catering Co. v. Champaign Market Place, No. 02-3975.

The case came to the federal courts by way of diversity jurisdiction. In such suits, Easterbrook said through his secretary, he checks each party’s incorporation to ensure they are from different states. . . .

Two Illinois lawyers learned that lesson the hard way. Their case involved a rent dispute, resulting in a $220,000 jury award. It was filed in federal court because the landlord was a Delaware limited liability company with Illinois as its principal place of business, and the renter claimed it was incorporated in Missouri.

Easterbrook’s research showed otherwise. Belleville Catering, which claimed Missouri incorporation, was actually incorporated in Illinois. Easterbrook found a second problem as well. The lawyers had incorrectly assumed that a limited liability corporation is a citizen of the state of its organization. Wrong, Easterbrook said. Such enterprises are akin to partnerships, which take the citizenship of every partner. And the LLC included Illinois citizens.

Easterbrook is known as a stern judge, and jurisdiction was the first issue he raised in oral arguments. Both attorneys handling the matter say they did a bit of fumbling. Belleville Catering’s lawyer, Stephen B. Evans from St. Louis, got nowhere when he told the judge he claimed Missouri as the state of incorporation for his client because it was listed on the lease.

"I’d barely said, ‘Good morning,’ when he asked for a basis of jurisdiction," Evans says. "I said we had it on the lease, and he told me I was wrong. Easterbrook really comes after you. You’ve got to be ready for that."

Jerome P. Lyke, who represents Champaign Market Place, says this was his first appearance before Easterbrook, and his worst appearance ever. The Champaign, Ill., lawyer says he was caught off guard by the judge’s assertion, since Belleville Catering’s incorporation information was apparently in the lease and confirmed by the client. "It was a total surprise to Steve, and it was a surprise to me," Lyke says. . . .

Failing to confirm a client’s incorporation can be a Rule 11 violation, Easterbrook wrote. The opinion does not compel sanctions, but instead suggests the parties should complete the case’s remaining legal work free of charge.

"The costs of a doomed foray into federal court should fall on the lawyers who failed to do their homework, not the hapless clients," the opinion states. "The best way for counsel to make the litigants whole is to perform, without additional fees, any further services that are necessary to bring this suit to a conclusion in state court, or via settlement."

At this point, Evans and Lyke believe the case will settle.

Good idea!

Diversity jurisdiction can be tempting to lawyers who for one reason or another prefer federal court. Removal to federal court based on diversity can be a very useful tactic for defendants. However, there are some potential traps, such as this one (particularly the LLC issue). Another matter that can sometimes be problematic is the jurisdictional amount requirement of $75,000 in controversy.

Continued . . .

Termination under last-chance agreement’s prohibition of off-duty alcohol use not ADA violation

After repeated relapses following substance abuse treatment, the plaintiff in Longen v. Waterous Co., (8th Cir. 10/20/03) signed a last-chance agreement with his union and employer.

It provided: "Future use of any mood altering chemicals, including alcohol or violation of working rules generally related to chemical dependency will result in immediate termination."

His employment was later terminated under this provision after he pled guilty to driving while intoxicated.

The 8th Circuit affirmed summary judgment dismissing the plaintiff’s ADA and state law disability discrimination claims.

Assuming he had established a prima facie case, the court considered the employer’s legitimate nondiscriminatory reason -- violation of the last-chance agreement.

The plaintiff argued the agreement itself violated the ADA because it subjected him to employment conditions different from other employees. However, the court said, "all retum-to-work agreements, by their nature, impose employment conditions different from those of other employees. As a result, courts have consistently found no disability discrimination in discharges pursuant to such agreements" (citing many cases).

But if the differences were imposed because of disabilities, it would be unlawful disability discrimination, wouldn’t it? Could he have been required to sign such an agreement as a condition of hiring if the reason for such requirement was a history of alcoholism?

The court said this conclusion made sense because the agreement was supported by "valuable consideration -- i.e., that he would not be terminated." The plaintiff did not allege "he was coerced or was made to sign the [agreement] under duress."

This begs the question: could he have been lawfully terminated at the time he signed the agreement? If not, wasn’t he unlawfully coerced (by being threatened with unlawful termination)?

The court distinguished a case cited by the plaintiff in which an employee was fired because her employer perceived her as being an alcoholic: "Here, [the plaintiff] was not fired because he was an alcoholic. Instead, he was fired because he violated the terms of his [agreement]."

But if he violated the agreement because he was an alcoholic, then wasn’t it the same as being fired because he was an alcoholic?

I think the answers to my questions are that employees with disabilities that cause misconduct may be disciplined or discharged for the misconduct if non-disabled employees would be. So if an employee is subject to termination for reporting to work intoxicated, a discharge offense for non-alcoholics as well as alcoholics, it is not discriminatory to allow them to continue to work subject to a last-chance agreement. Such an agreement is voluntary and may impose harsher restrictions; having agreed to it, the employee is bound by it.

Such agreements are a good idea in many situations, not just substance abuse, which is where they are most common.

Continued . . .

Slight increase in jobless claims shows job growth still lagging other economic indicators

CNN/Moneyreports:"Jobless claims rise again."

Here are the numbers:

378,000 new unemployment claims in latest week, compared to 365,000 prior week.

Four-week moving average of new claims up to 364,750 last week from a revised 362,500 prior week.

Continued claims rose 11,000 to 3.34 million for week ended Nov. 29, latest data available, from a revised 3.3 million the prior week.

"While jobless claims have risen for two straight weeks, they have remained below 400,000, a level that most economists consider to be an indicator of an improving labor market."

The AP story "Retail Sales, Jobless Claims Both Rise" provides more information on other economic indicators.

Continued . . .

Kroger settles West Virginia strike

Reuters has this today: "Kroger Settles West Virginia Dispute."

Kroger Co. . . said on Thursday its employees had ratified a contract covering 3,300 workers at 44 stores in the West Virginia area, ending a nearly two-month strike.

Cincinnati-based Kroger said 41 of its 44 affected stores would reopen on Monday. It is still grappling with a much larger labor dispute in Southern California involving two other grocers.

Kroger said it was not "economically feasible" to reopen the other three West Virginia stores. . . .

The West Virginia strike was spawned by, among other things, Kroger's push to cut rising health-care costs, a contentious issue that is also at the heart of the California dispute, which involves some 70,000 locked out or striking workers.

Kroger did not divulge the contents of its settlement but said it allowed it to "manage its overall costs."

Sounds a lot like what the companies said when they settled here in St. Louis. See my coverage of that strike, including this post and this one, illustrating how both sides were able to declare victory, with the employers basically just shifting money around, not increasing the total cost of package.

Continued . . .

Trampling at Wal-Mart and frequent filer syndrome

In Findlaw, Columbia University law professor Michael C. Dorf writes: "How Should Courts Handle Frequent Filers? Trampling Incident at a Florida Wal-Mart Highlights a Dilemma."

The trampled shopper?

Referring to the widely-reported incident in which "Patricia VanLester, who was first in line for a $29 DVD player at a Florida Wal-Mart, was [allegedly] trampled by other eager shoppers," Professor Dorf starts by observing that "Ms. VanLester has a knack for suffering--or feigning--injuries at retail establishments. She has made numerous injury claims, including nine prior claims against Wal-Mart. Ms. VanLester may be incredibly unlucky, and entirely truthful in her claims. Or she may be what lawyers sardonically call a 'frequent filer.'"

He continues with an insightful discussion of this dilemma:

"[T]here is a temptation to punish frequent filers by limiting their access to the courts. On the other hand, even frequent filers can be the victims of invasions of their legal rights. (As the adage goes, just because you're paranoid, doesn't mean they're not out to get you.) The courthouse doors cannot remain permanently closed to anybody, and sorting between frequent frivolous filers and everyone else is itself a costly enterprise."

Professor Dorf points out the difficulties presented when this distinction turns on questions of fact rather than of law: "a judge can dismiss a legally inadequate claim early in the proceedings, before expensive and time-consuming discovery has occurred. To determine that a claim lacks factual support requires much more time and effort."

His conclusions include the following observations:

1) "[T]hat someone is bringing her tenth claim against the same retailer would count against her credibility with a jury, but again, questions of credibility are within the province of the jury."

2) [A] litigant might bring a factually, as opposed to a legally, frivolous claim [because] even if the plaintiff expects to lose at trial, the nuisance value of the claim--how much it costs to mount a successful trial defense--may lead the defendant to settle even a meritless claim."

3) "[T]he frequent filing of factually false claims is ultimately a self-defeating strategy. Eventually, the frequency of filing itself comes to undermine the complainant's credibility, and at that point, defendants balk at settling for a case's nuisance value--for such a settlement would only encourage further nuisance suits."

4) "[O]ur legal system tolerates the possibility of some number of factually baseless lawsuits as part of the price we pay to ensure that people who have in fact been wronged can have their day in court."

An unfortunate corollary is that the greater the number of legally frivolous and/or factually baseless lawsuits filed, the more our legal system is forced to adopt, implicitly or expressly, practices and procedures which also result in denying some people who have in fact been wronged their day in court. Professor Dorf acknowledges this possibility in discussing pro se cases generally, and prisoner cases in particular.

In connection with the professor's comments on the credibility of "frequent filers," it is not obvious (I haven't researched this) to what extent judges would find evidence of such prior conduct admissible. I fear many would preclude such evidence from coming before the jury. On the other hand, it may influence a judge to try harder to find a sustainable legal basis for granting summary judgment, preventing the case from going to a jury.

A very good article, though hardly anything any reflective lawyer would not have realized.

Continued . . .

High-rolling big-firm partners drew big bucks to the end

Law. com has this: "Brobeck's Books: Top partners continued to enjoy big paydays as firm faced tough times, records show."

"Top partners at [the now-defunct] Brobeck, Phleger & Harrison were continuing to enjoy million dollar-plus paydays even as the firm rapidly lost steam in the wake of the dot-com bust, partner compensation records show.

And in some cases, rainmakers pocketed $200,000 or more in bonuses in the months before the firm's January announcement that it would close its doors.

The partner compensation records -- which recently came to light as part of the firm's bankruptcy -- provide a detailed look into the financial life of Brobeck as it struggled through its final year."

Brobeck's partnership compensation pyramid consisted of 12 separate levels. Only one partner -- "Tower Snow Jr., a securities litigation rainmaker and former firm chairman" was at the top level, and he "took home an estimated $1.4 million, not counting bonuses."

"The firm's liquidation committee also recently filed documents with the U.S. Bankruptcy Court for the Northern District of California that reveal Brobeck has a current debt level of $47.1 million."

Four former partners have remained quite nicely employed in handling this mess. The four members of the liquidation committee "received $1.4 million through the end of September in base compensation and bonuses."

I guess some big law firms and their "CEO's" act just like some of their big corporate clients and their CEO's. No doubt they understand each other well that way; perhaps they even deserve each other.

Continued . . .

Postal Service disability discrimination settlement

Wired News has this AP story: "Judge Approves Postal Service Settlement."

"A federal judge approved the settlement of a class-action lawsuit accusing the Postal Service of discriminating against injured employees -- a deal that will cost the government millions of dollars . . . .

An estimated 25,000 postal employees who have been hurt on the job and reassigned since 1992 are eligible . . . . for up to $25,000 each if they can show they were discriminated against because of their rehabilitation status."

"The lawsuit was filed in 1992 by Chandler Glover, now 65, who said he was denied advancement opportunities by postal officials in Denver after he was injured on the job in 1991.

I got to keep the same salary, but I was denied any promotions, any transfers or anything of that nature," said Glover . . . ."

These details are pretty sparse. But enough to highlight a few points.

First, handling the leave and subsequent return to work of employees injured on the job requires careful attention. Potentially applicable laws include workers compensation, prohibitions against retaliation for exercise of workers compensation rights, Family and Medical Leave Act (FMLA), and federal and state disability discrimination laws.

Second, in navigating this legal minefield, good communications and documentation, involving both the employee and medical professionals, is essential.

Third, decisions should be based on solid evidence, not on stereotypes or assumptions as to what the employee can or cannot do physically. It is entirely possible that many or most of the Postal Service employees in the class benefiting from this decision were reassigned for valid reasons, whether related to their injury or not. But although technically the burden of proof is on a discrimination plaintiff, as a practical matter, the Service would have to prove this.

Continued . . .

Grocery strike update

Findlaw (AP) has this: "Kroger Supermarkets, Union Reach Deal."

Kroger Co. and UFCW Local 400 tentatively agreed to a contract Monday. Employees in West Virginia, Ohio and Kentucky will vote on it Thursday.

No details have been disclosed pending the vote, but the union says that "health care concerns - the primary sticking point - had been addressed."

Kroger had closed 44 supermarkets in the three states.

This store-closing strategy is interesting -- and different. Here in St. Louis the stores did their best to remain open using management and temporary replacements. I believe the same is going on in California. Kroger has plenty of other stores elsewhere -- 2,488 foods stores in 32 states, according to corporate documents. So presumably they calculated overall profitability would be better with the stores closed than running them inefficiently during a strike.

Continued . . .

Different perspective on outsourcing: "insourcing"

The Boston Globe has this story by Robert Weisman: "'Insourcing': Concentrating on what we do best."

"Management consultant Rudy Puryear [of Bain & Co.] has spent much of the past 15 years helping clients devise "outsourcing" strategies -- figuring out which parts of their far-flung operations should be located in which parts of the globe. Often that has meant advising companies to move work out of the United States to lower-cost sites overseas.

Lately, though, Puryear has been doing some thinking about a new concept he calls 'insourcing.' Specifically, he is seeking to identify the core competencies around which the United States should refocus its workforce over the next 25 to 30 years to attract investment, customers, and even jobs from other countries.

Many of these are in 'high-value' arenas where US leadership already is apparent: Education, management training, pharmaceutical and biomedical research, aerospace, defense contracting, and movie-making are some of the examples he cites."

"Puryear said the response of the US economy should be to build up its high-skill, high-value industries -- and export American expertise. By implementing technology, American universities will be able to educate foreign students, and American consultants to train foreign managers, in their own countries, he suggested.

'Generally, in all these jobs, there's a high degree of innovation,' Puryear said. "These are areas where we can be the distinctive leader -- high-quality talent at a reasonable cost.' "

I like this approach; it's nice to see someone influential thinking about this. (But except for Hollywood, he failed to mention exporting American pop culture!)

He has also recently had this to say about outsourcing and its pitfalls in a story in USA Today by Barbara Hagenbaugh entitled "Many U.S. companies find foreign plants less desirable":

"Most companies believe it's going to be easier (to shift work)," says Rudy Puryear of Bain and Co., who has consulted with clients on setting up operations abroad. He says he's seen some firms pull back two or three years after shifting to foreign workers or suppliers. "It is a buyer beware situation."

This is a good story detailing many pitfalls of outsourcing work overseas, including Culture and language barriers, lack of expertise abroad, and shipping and supply problems.

Continued . . .

Uncorroborated plaintiff's affidavit sufficient to create pretext fact question precluding summary judgment

In Kenney v. Swift Transportation, Inc. (8th Cir. 10/17/03), the 8th Circuit reversed summary judgment for the employer on a claim of race discrimination in hiring because the district court had disregarded the plaintiff’s affidavit and had thereby made a credibility determination impermissible on summary judgment.

The dispute concerned whether a representative of the employer had told the plaintiff not to bother filling out the entire 10-year employment history called for on the application. The plaintiff attested to this in his affidavit; the employer denied it and said it refused to hire the plaintiff because of the incompleteness of his application.

If the plaintiff’s version was correct, it would have been evidence the employer’s stated reason for not hiring him -- failure to fully complete the application -- was a pretext. It also would have directly contradicted the instructions on the application, which warned: "ANSWER ALL QUESTIONS. . . THIS APPLICATION WILL NOT BE CONSIDERED UNLESS COMPLETE."

The court said: "While there is no other evidence supporting his version of the conversation, and his assertion is contrary to the statement in the application saying the ten years' employment history was required, [the plaintiff’s] testimony is sufficient for a jury to find that [the employer’s] proffered nondiscriminatory reason for not hiring him is pretextual."

Employers and their attorneys must try to use more ingenuity in rebutting such self-serving assertions by plaintiffs.

At some point, courts should (and do) in effect weigh the evidence in ruling on summary judgment. While the Supreme Court has said that "[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, [when she or] he is ruling on a motion for summary judgment. . . ." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 255 (1986), it has also said that summary judgment is proper if a reasonable jury could not find in favor of the non-moving party. If the evidence is overwhelmingly against the non-moving party, such that his or her self-serving testimony is only a "scintilla" of evidence against a mountain of contrary proof, the motion should be granted.

In a case like this, an effort could be made to present more evidence in favor of the employer’s position. For example, it would have been helpful if there was evidence the individual who allegedly said the application did not have to be complete had rejected other applicants for failure to provide complete employment histories.

Another approach is side-stepping the factual dispute by arguing it is not material because other evidence is determinative.

For example, perhaps that person did not make the decision, or it could be said that even if the application had been complete (or its incompleteness disregarded), the plaintiff would not have been hired because of his felony conviction (which was why he didn't want to give 10 years' history -- he spent 6 of them in prison for receiving stolen property, a crime not entirely irrelevant to hiring a trucker).

Continued . . .

Strikers denied unemployment

My hometown paper, the St. Louis Post-Dispatch, has this today: "Workers are denied unemployment benefits."

"The state of Missouri has denied unemployment pay to about 6,000 workers involved in a labor dispute in October at three supermarket chains.

But the matter isn't closed. United Food and Commercial Workers Local 655 plans to fight the decision."

"The decision comes a week after the Illinois Department of Employment Security denied unemployment payment claims from seven grocery workers who live in that state."

"[A] spokeswoman for the [Missouri] Labor and Industrial Relations Department . . . said there was a "significant" loss of business to the three supermarket chains."

The strike is over, and the macho posturing so important for bargaining disappears when the company goes to the unemployment hearing. In many states, whether strikers are denied unemployment depends on how successful the strike is in affecting the employer's business.

In Missouri, this is because the strike exception to unemployment eligibility requires "a substantial diminution of the activities, production or services."

So the company finds itself, as I have as a company attorney, arguing that it really was hurt badly by the strike it had pretended was not having much impact on business. And the union finds itself arguing the strike had minimal impact -- due to the use of "scabs," etc.

In Missouri, the applicable law is at RSMo 288.040 (scroll down to .6).

Matters were complicated somewhat by the fact there was a lockout as well as a strike. But the statutory term is "a stoppage of work which exists because of a labor dispute," which would seem broad enough to cover lockouts.

Continued . . .

Misleading headline on healthcare costs?

Reporting on the same Mercer Human Resource Consulting survey I covered yesterday, USATODAY.com has this: "Workers bear brunt of rising health care in '03."

Read into the story, and find this: "Jon Gabel, an economist who provides a study to the Kaiser Family Foundation, says the Mercer numbers seem low, although he agrees many employers did shift costs to workers. Without such changes, Gabel says, his figures show employers would have averaged a 17% increase this year. As it was, they saw about a 14% rise, according to his analysis."

So how are workers bearing the brunt, when employers are sucking up 14%, and only saved 3% by shifting more to employees?

Continued . . .

Overview of labor market trends: the big picture

Workforce.com has this by Samuel Greengard: "What's in Store for 2004."

"The issues for the new year include a changing labor market, dwindling talent, knowledge drains and heightened demand for workforce-management metrics. 'Any organization that isn't worried about the state of the workplace should be,' one expert says."

Some of the most interesting points (to me):

"It certainly isn’t grandpa’s workforce. The growing use of temps, independent contractors, consultants, part-time employees and outsourced labor is changing the way both employers and employees think about jobs, loyalty and the pursuit of goals. It’s putting greater pressure on human resources to manage diverse groups of workers--often with wildly divergent values and attitudes. Factor in a sluggish economy, ongoing layoffs, a skilled-labor shortage and clampdowns on H-1B visas, and many companies are reeling."

"Although the economy is expected to display a pulse in 2004, underlying fiscal trends remain painfully intact. First, baby boomers are aging, and there aren’t enough young workers to plug into the labor force. Second, a shortage of engineers, computer programmers and technical specialists has left many U.S. companies feeling like a sports car that can’t get the high-octane fuel it needs. Finally, a recent study conducted by Teradata Corp., a division of NCR, shows that average employee tenure is now at an all-time low of 3.6 years.

Those in the trenches are well aware of these problems. John Malenic, director of human resources at NVIDIA, a Santa Clara, California, firm that manufactures high-end graphics chips and boards for the computer industry, is among those struggling to keep performance revved up. In fiscal 2003, the 1,500-employee company bucked a general downturn in the technology sector and racked up a sales growth of nearly 40 percent, approaching $2 billion in sales. It is adding employees at an annual clip of more than 30 percent. 'Because of the downturn in the economy, it has been possible to find talent, but when things pick up, all bets are off,' he says.

Like many other tech executives, Malenic is irked at the federal government’s move to slash the number of H-1B visas to levels of the pre-dot-com era--approximately half of peak levels. He says that it is increasingly difficult to find the engineers and technical experts needed to build sophisticated semiconductors. What’s more, companies face limits on the number of visas for workers from particular countries, further reducing flexibility. Although such cutbacks fall under the guise of homeland security, he and others believe that old-fashioned protectionism is also a key factor. 'There’s still a fear that we’re hurting American interests by giving high-end jobs to foreigners rather than U.S. citizens,' he says.

Ironically, the employment crunch is prompting some companies to outsource IT, computer programming and entire design functions to India, China and other countries. Nearly 5 percent of human resources jobs have moved offshore in the past year, and the figure is expected to climb to 15 percent by 2007. By 2015, 3.3 million U.S. high-tech and service-industry jobs will be overseas, according to Forrester Research. That’s 2 percent of the entire workforce, and $136 billion in U.S. wages. So far, the Bush administration has adopted a hands-off approach--though it’s anyone’s guess how things will play out in the months ahead."

C'mon, lets adopt a reasonable approach on immigration so American companies have a choice besides shipping the jobs away. This would be a good issue for the Democrats, except they're likely to let big labor and other traditional liberal constituents talk them into a protectionist approach.

Continued . . .

Online auction for scheduling employee shifts and setting pay?

Findlaw (AP) reports: "Nurses Use Web to Choose Shifts and Pay."

The marketplace efficiencies of an e-bay-like bidding system for nurses are described.

"Traditionally, hospitals have trouble filling overnight and weekend slots and rely on traveling nurses or those from temporary agencies to fill the gap. Through bidding, hospitals save labor costs by using fewer outside nurses while letting their own nurses control when they work and how much they earn."

"Last year, Spartanburg Regional Healthcare System in South Carolina created a bidding site after learning about St. Peter's success. The system's three hospitals currently allow RNs and licensed practical nurses to bid and will expand to other staff in the coming months.

Spartanburg Regional Medical Center, the system's largest hospital with 588 beds, saw its nurse vacancy rate plummet from 20 percent to 7 percent since it went online. The hospital also cut the number of outside nurses by more than 90 percent, saving between $10,000 and $20,000 a week, and will phase out using agency nurses altogether by the end of the year."

Here's the Spartanburg auction's main page.

Check it out. I think it's way cool.

Continued . . .

Court rules NLRB properly attributed pre-election threats to employer, requiring election rerun; prohibiting union use of bulletin board not unlawful

Fleming Companies, Inc. v. NLRB (7th Cir. 11/18/03) deals with several recurring unfair labor practice issues.

First, the court affirmed the Board’s holding that the employer committed an unfair labor practice "by threatening employees that it would impose more stringent working conditions and would start enforcing company rules because of union organizing activity."

The company rules, restricting early clocking-in and excessive breaks, were reasonable and had been in effect prior to the organizing drive. But they had apparently had not been strictly enforced, and the timing and context of the threats to strictly enforce them supported the Board’s conclusion of unlawful coercion.

One more reason to follow this maxim: don’t establish policies and then fail to enforce them consistently (you never know when you might really want to enforce them and find it problematic because of prior laxity).

Second, the court rejected the employer’s argument that the person who threatened the stricter enforcement was not functioning as its agent at the time. The applicable law is that "[t]o hold an employer liable, the individual who made the statement must act as an agent of the employer."

The court found such agency based on the doctrine of "apparent authority": "An agent has apparent authority when an employer takes steps that would reasonably lead third persons to believe that the designated employee was authorized to take certain actions on behalf of the employer."

Substantial evidence supported the Board's finding of apparent authority because the person in question had been described to the employees as a "supervisor" and a "Team Leader," the employees testified they "reported to" him and took orders from him, he directed other employees' work, investigated employee conduct, and gave written reports of disciplinary incidents to higher management. Furthermore, the Board found the conversation in question was done "at the direction of higher management."

It’s extremely tough to disavow conduct of anyone cloaked with supervisory authority. Such people must be made highly aware that anything they do or say can be used against the company.

Third, the court upheld the NLRB’s finding of an unfair labor practice based on evidence that at a mandatory meeting the day before the election the president of the division warned a group of about 100 employees that if they voted for the union, the company would be financially damaged and the warehouse might close down.

The court simply cited the rule that: "A threat of plant closure is a per se violation." The court didn’t dwell on the difference between the two witnesses as to whether the speech said the facility "would" close or "could" close if the union won.

This is an example of deference by the courts to NLRB credibility findings, which makes it tough to reverse NLRB decisions. The Administrative Law Judge credited the testimony of two employees (out of the 100 present) over the denials of the division president, as to what was said in the speech.

Finally, the court reversed the NLRB’s conclusion that the employer unlawfully removed union flyers from the bulletin board in the break room.

The employer argued it had a valid, pre-existing policy prohibiting unapproved bulletin board postings. Indeed, the employee handbook had a rule restricting the bulletin boards to company use and prohibiting employees from posting personal announcements. However, contrary to this policy, the employer permitted employees to post personal items such as notices of weddings or births. Unlike the NLRB, the court held this discrepancy did not preclude enforcement of the rule in the context of union postings.

The applicable principle is that "[a]n employer has the right to restrict access to its bulletin boards, [but] cannot discriminate against a union's posted material by disparately applying its posting policy to hinder the union's efforts."

There was no such discrimination, according to the court, because the employer consistently barred all "notice[s] expressing ideas and designed to induce action by employees as a group, such as an investment club, travel club, sports club, religious club, political club, or any similar club or committee."

The NLRB had reached a contrary conclusion applying NLRB precedent; the 7th Cir. reversed, applying its own precedent.

Unfortunately, it is not unusual to find discrepancies between NLRB decisions and court decisions. While one might assume federal court decisions take precedence, the NLRB often will continue to apply its rulings except in the circuit(s) that issued the contrary decision(s). Here, I would pay more attention to the contrary NLRB decision and would research other cases before applying this decision -- elsewhere than the 7th Cir.

Continued . . .

California UFCW strikers head into Christmas voluntarily jobless

Reuters reports: "Labor Talks Off in Calif. Grocery Strike."

"LOS ANGELES (Reuters) - Talks between three major U.S. supermarket chains and a union representing picketing workers in Southern California have broken off and no new talks are scheduled, representatives of both sides said on Monday.

After six days of talks, the latest round of labor negotiations broke off on Sunday evening at the suggestion of a federal mediator.

The strike has been widely watched both as a sign of the wider debate on U.S. employee health care coverage and for its potential to cut operating costs for the grocery chains."

"The union and the grocery chains said they remained far apart on the key issue of how future health care insurance costs will be paid. Both sides blamed the other for the collapse in negotiations.

'We've reached a point where I believe a recess will help the process. I will ask the parties to return to the table when I determine that it might be fruitful to resume face-to-face discussions,' federal mediator Peter Hurtgen said in a statement."

Like, it might be fruitful when the strikers' kids don't find much under the tree at Christmas? How sad. (Not that I blame the employers of course, but being short cash at Christmas in America is a big bummer.)

Continued . . .

Survey on employer health care costs and trends

The Wall Street Journal's Marketplace section today, in an article by Vanessa Fuhrmans entitled "Shifting Burden Helps Employers Cut Health Costs," summarizes the results of the latest study on the subject by Mercer Human Resources Consulting, the press release version of which is found here.

Interesting press release, with some helpful charts and graphs. Some points I found interesting:

"Employee contributions, especially for family coverage, rose sharply in 2003. Over the past three years, many employers had shielded employees from steep health plan rate hikes by passing on only a portion of the increase. While the dollar amount deducted from employees' paychecks rose, their share of cost as a percent of premium actually fell from 1999 to 2002.

In 2003, employers took back the lost ground. . . . In HMOs, the average employee-only contribution rose from 31% of premium (or the premium equivalent) to 35%, and the family contribution rose from 50% to 57%. In PPOs, the family contribution jumped from 53% to 58%. With pay increasing by only about 3% on average, for some employees higher premium contributions wiped out increases in total compensation."

"If employers are to beat the 13% increase predicted for 2004, another wave of cost-shifting will be required."

"Over a third of all employers (39%) say that "promoting health care consumerism," defined as informed and responsible health care spending by employees, is part of their health benefit strategy. At the far end of the consumerism spectrum are account-based consumer-directed health plans (CDHPs), under which employees spend money from their own employer-funded account to pay for routine health care expenses, but are covered for serious illness or injury by a high-deductible (or catastrophic) insurance plan. Just 1% of all employers currently offer an account-based CDHP; however, among the nation’s largest employers (20,000 or more employees), 9% offer a CDHP, up from 7% in 2002."

"Facing a fourth year of double-digit cost increases, employers – smaller employers in particular – are looking to the federal government for help. Nearly three-fourths (74%) of small employers (those with fewer than 500 employees) say they believe the US health care system is in need of significant government reform, and nearly one-fourth (22%) say they have considered terminating employee medical benefits because of recent cost increases. While a majority of large employers (63%) also believe government reform is necessary, only 5% have considered terminating their health benefits program."

Continued . . .

More mixed news on jobs, economy; impact of grocery strike on statistics

Reuters reports: "Payrolls Disappoint, Factory Orders Jump."

First the bad news (only bad relative to projections, not in absolute terms)

"The number of workers on U.S. payrolls outside the farm sector last month edged up by 57,000, the Labor Department said, far lower than economists' forecasts of a 150,000-job gain and well below an upwardly revised climb of 137,000 in October.

And now the good news

A separate report from the Commerce Department showed orders for goods from factories climbed 2.2 percent in October, the fastest pace in more than a year, helped along by strong demand for transportation equipment."

"In one encouraging sign, the unemployment rate, taken from a survey of households that is separate from the payrolls survey, edged down to 5.9 percent last month, the lowest level since March, from 6.0 percent in October.

The report showed that a large portion of the job gains came from a 64,000 increase in service employment.

The manufacturing sector cut 17,000 jobs, fewer than had been seen earlier in the year, but disappointing given signs of revival at factories."

"In a positive sign for job-seekers, the number of hours worked per week increased to 33.9 from 33.8 in October. Companies often increase the hours worked by their current staff when they are poised to boost hiring."

Now here's a Reuters story on how the jobs data relate to the grocery strike: "Grocery Strikes Skew Employment Picture."

"Grocery strikes skewed U.S. employment data in recent months, as payrolls were first boosted by temporary hires and then depleted when strikers joined the ranks of the unemployed, the Labor Department said on Friday.

The disputes, including the strike or lockout of 70,000 workers in California, added as many as 20,000 jobs in October, pushing overall payroll gains to 137,000. The healthy increase pleased President Bush, for whom lagging job growth has been a concern ahead of the 2004 election.

But the work stoppages then took a bite out of November payrolls, cutting overall job gains by up to 30,800. As a result, employment increased by only 57,000 -- a disappointment for Wall Street, which had expected stronger hiring.

An economist at the Bureau of Labor Statistics said the see-saw strike impact is due to the timing of the government's survey of employers, which managed to count both soon-to-be strikers and their replacements in the first week of the California work stoppage in October."

Interesting how this was completely an artifact of the way the statistics are prepared. How many other measurement peculiarities impact these numbers that we pay so much attention to?

Continued . . .

Good article on preventing discrimination claims

Workforce.com has this article by attorney Michelle T. Johnson "The Car Wreck You Can Stop" (referring to discrimination claims).

Her perspective is an illuminating one: "For several years, I was an employment attorney working for law firms hired to defend the interests of corporations and businesses against lawsuits and complaints brought by employees. I am also an African-American woman, and even when a case doesn’t involve race or gender, I find that I can frequently detect from the facts just the point at which an EEOC complaint or lawsuit was inevitable. Events and statements that may be seen as merely ignorance or insensitivity by a manager of one race, for example, may be viewed as full-fledged illegal discrimination by an employee of another."

The title is derived from this analogy: "[M]onitoring potential employment problems that might blossom into discrimination claims is not like waiting to see if people will get in a car wreck. In a car accident, two total strangers can collide in a split second without having been in each other’s universe just 10 minutes before. In the average case involving employment relationships, complaints and lawsuits are the result of repeated interactions, each affected by the one before it."

One useful suggestion mentioned in the hypothetical example she discusses is the exit interview. This is a fantastic practice. For example, if someone claims constructive discharge due to sexual harassment, but in the exit interview said she quit because she wanted to go into a more challenging line of work -- and when asked what she liked about the job said "the pleasant atmosphere and friendly employees," you've got a winner (don't laugh, I've seen something similar).

Continued . . .

Two corporations treated as one for overtime purposes: "enterprise" and "joint employer" standards applied applied

A little knowledge is a dangerous thing. Less sophisticated employers who know about using the corporate form of doing business to limit liability often assume separate corporations are separate for all legal purposes. Particularly in labor and employment law, this is often a dangerously incorrect assumption.

Chao v. A-One Medical Services, Inc. (9th Cir. 10/06/03) illustrates this danger.

The Ninth Circuit affirmed summary judgment for the Secretary of Labor in an overtime case against two home health care businesses. A two-step analysis of the relationship between the companies was involved.

First, one of them was too small to be covered by the federal overtime law, as it did not have annual gross revenue of at least $500,000. Therefore, the court considered whether it and the other company could be viewed as a single "enterprise."

Different organizations are treated as a single enterprise if three elements are established: 1) related activities; 2) unified operation or common control; and 3) common business purpose. These are discussed in some detail in the opinion.

The court found the companies were a single enterprise due to related activities (both being in home health care business, though somewhat different aspects of it) and common control (operationally and financially run by the same person). Common business purpose followed as a consequence of these conclusions ("a common business purpose is generally found where there are related activities and common control").

The next step was determining whether to aggregate for overtime purposes the hours worked by employees who worked for both companies during the same workweeks. The court applied the following principle: "if the facts establish that the employee is employed jointly by two or more employers, i.e., that employment by one employer is not completely disassociated from employment by the other employer(s), all of the employee's work for all of the joint employers during the workweek is considered as one employment . . . ."

The court referred to separate tests depending on whether the alleged joint employment is "vertical" (e.g., where a company has contracted for workers directly employed by an intermediary company) or "“horizontal" (as in this case, involving commonly controlled and/or owned companies).

The court applied 29 C.F.R. § 791.2, concluding the companies were joint employers because they were under the common control of one person, who oversaw the work being done for both companies’ clients and managed all the employees. The same nursing supervisors and scheduler were in charge of the employees while working for either company.

This case may be a somewhat unusual situation, but the point of more general importance is to keep an eye out for possible joint employer consequences in a wide variety of vertical and horizontal related-business situations. These can arise under all the employment laws, not just for overtime purposes. This document by the EEOC discusses some such issues in connection with contingent workers under the discrimination laws it administers.

Continued . . .

Interesting take on offshoring IT jobs

Business Week Online has this fascinating story by David E. Gumpert: "U.S. Programmers at Overseas Salaries."

After my ruminations the other day, I thought some more, concluding that what I was really thinking about was the implications of a global labor market. I thought about such a market ultimately tending toward worldwide price (wage) equilibrium on basic supply and demand principles where the location of the labor is not significant due to modern communications. (Caveat: I only took a couple of undergraduate economics courses so my analysis is always simplistic -- but not necessarily wrong for that reason).

Now here comes this story suggesting what to many would be unthinkable in the labor market, although not in other markets: respond to and capitalize on the growing oversupply of domestic IT labor by seeking to pay less. According to the story, it worked. The featured employer faced a choice between paying American employees the going rate of $80,000 a year, with benefits adding an additional $5,000 to $10,000 per programmer, or paying Indian employees $40,000 per programmer. Rather than assuming no self-respecting American programmer would work for $40,000, this employer advertised the job at $45,000 "(He had decided that it was worth adding a $5,000 premium to what he'd pay the Indian workers in exchange for having the programmers on site.)"

"The result? 'We got flooded' with resumes, about 90 in total, many from highly qualified programmers having trouble finding work in the down economy . . . . His decision: 'For $5,000 it was no contest.' [The employer] went American. And the outcome? 'I think I got the best of both worlds. I got local people who came in for 10% more (than Indians). And I found really good ones.' "

The article concludes: "What if other companies begin taking the same approach -- offering Indian-style wages to American workers? On the positive site, we could begin to solve our job-creation problems. But on the negative side, America's standard of living would inevitably decline."

Disturbing news to programmers accustomed to $80,000 a year? Undoubtedly. But the bottom line is that $45,000 is not bad money, even for an American. And it beats unemployment or underemployment (in terms of performing work utilizing one's skills).

Will this be a trend? I could say it's too early to tell, but my confidence in the economic basics is sufficient that I will predict that it will continue. And remember, $45,000 in this country buys a standard of living that would be quite attractive to an Indian raised in an overcrowded, still very poor nation, so with appropriate immigration laws, the threat of immigration will place some upward pressure on Indian wages over time.

A larger lesson may be not to be afraid to offer someone less money than a previous job, assuming it will create a morale problem. There may be reasons they will be quite satisfied, not the least of which is having experienced a difficult job market.

Continued . . .

Correction and apology

I mistakenly referred to Catherine Hardee, of the sonria.org blog, as Catherine Perry.

(A Freudian slip that could be viewed as a promotion, since Catherine Perry is a U.S District Judge here in St. Louis.)

Her blog is complementary (and at times complimentary) to this one, and I cross-reference to it quite a bit.

Continued . . .

Value of HR certifications discussed

"Dear Workforce" e-newsletter (subscribe here) has this Q & A:

"Q. What are human resources certifications, and what benefits do they provide if you receive them?

A. For the most part, human resources certifications are not in the same league as other professional accreditations, such as in law or accounting. There are a lot of things you can do to prepare for a high-level, strategic role, but getting this certification isn’t necessarily one of them. There are many skills you need to serve your customers, but again, a certification isn’t necessarily one of them.
Other skills and accomplishments are more important, such as:

Communicating effectively

Treating people with integrity

Getting the most out of people, inspiring people and earning others’ trust

Understanding business in general, and your organization and industry specifically
Knowing why companies like the Container Store and SAS are successful

Having an understanding of topics such as workforce technology, employment branding, retention and workforce planning

Also, you’ll want to know as much as you can about workforce-management metrics, including which workforce-management practices have been proved to greatly increase shareholder value (such as providing training and creating an atmosphere in which employees trust management) and which practices have been shown to have a weaker link to shareholder value (such as cost-cutting).

An HR certification is like a stamp of approval. It is accreditation, awarded by professional associations, that tells prospective employers you possess a demonstrated body of knowledge. However, an informal survey of consultants suggests that certifications are viewed as “nice to have,” but not a required credential for human resources professionals. In fact, only about 5 percent of the human resources jobs posted online with Monster list certification as a preferred credential.

Despite the fact that most human resources directors don’t require certification, it offers specific benefits in certain circumstances. If you work in a very focused area or specialty, such as benefits, the certification could serve as a hallmark of your specialization. Also, consultants who have moved to the United States from other countries often find it to be a great mechanism for quickly understanding country-specific nuances. U.S.-based human resources managers, especially those with increasing global responsibilities, will be similarly interested in international certification. For this reason, it’s not surprising that the Society for Human Resource Management is developing a certification program for global professionals."

Continued . . .

Age discrimination RIF case raises waiver, forced-ranking performance evaluation issues

Findlaw (AP) reports:"Ex-Capital One Workers Allege Age Bias":

An age-discrimination lawsuit against Capital One Financial Corp., filed in U.S. District Court in Richmond, contends "a disproportionately high number of older employees were fired for purported poor performance, although they had met or exceeded expectations in previous job appraisals."

"The [five] plaintiffs are seeking $90 million in damages."

Wow, I'm impressed. $18 million apiece. They must have a great case, huh?

"A similar lawsuit, asking for more than $50 million, was settled with as many as 60 former workers for an undisclosed amount in June. AARP, the nonprofit organization for people 50 and older, was co-counsel in that lawsuit. Capital One said that it does not comment on pending litigation and that it has a strict policy against any type of discrimination."

But apparently not a strict enough policy against settling cases that might encourage further litigation.

"Four of the plaintiffs were in middle management, and one was an hourly employee. Some received separation and other benefits, plus additional pay equivalent to eight weeks' salary from Capital One if they agreed not to sue for age discrimination. The employees allege that the waivers were illegal and part of a plan to deter legal challenges."

I'd like to see why they think the waivers were illegal. There are strict requirements on these, but these requirements are not difficult to satisfy. I'd be somewhat surprised to find a major corporation like this messed up something so basic.

"The company implemented a rigorous forced-ranking employee-appraisal system that led to the firings. In a forced ranking, a certain percentage of employees must get low grades - which lead to termination. Capital One has backed off the forced-ranking system since it was implemented in fall 2001, according to the lawsuit."

Forced-ranking can certainly be controversial (and unpopular with employees), but it is a way of countering the all-to-common tendency towards "grade inflation" in performance evaluations. (Does anyone still grade students on an "Bell curve"?)

Continued . . .

Booming productivity: a reflection of overworking existing employees instead of hiring more?

Washington Post reports: Productivity Grows at 9.4 Percent Rate in Third Quarter."

"U.S. business productivity over the summer rose to heights not seen in two decades . . . , further evidence of a buoyantly rebounding economy."

Productivity -- amount produced per employee per hour -- was reported at an annualized rate of 9.4 percent, based on revised numbers.

"What is happening, many economists believe, is that businesses are watching a spurt in demand but are waiting to see if it will continue before hiring more employees. Meanwhile, they are driving their existing workforces harder to meet that demand, accounting for the productivity boost."

"'You can do that for only so long before you exhaust your workers,' said Stephen Stanley, senior market economist for RBS Greenwich Capital. 'They are going to have to start hiring. We're seeing that in the numbers' for employment already, he said."

" 'It's pretty amazing,' he said. 'When firms see an initial improvement in demand, they look at it a little skeptically. They don't want to go out and hire a lot of people if it's just a blip . . . The best of the productivity gains are behind us,' he said, 'but the positive side is that businesses will probably start hiring again.' "

It remains to be seen how much of this productivity improvement can be sustained at the individual employer level. There may be many situations where RIF's induced by economic pressures of the last few years have resulted not in overworked employees, but in the discovery that previously some employees were underworked and unproductive.

Obviously it will be a good thing for the economy if such newfound efficiency is preserved. But it will also be a good thing if truly overworked employees who have contributed to the productivity boom are given some relief through additional hiring, also giving relief to some of the unemployed.

Continued . . .

Slight uptick in jobless claims

Findlaw (Reuters) reports:"U.S. Jobless Claims Climb in Latest Week."

"Initial applications for U.S. jobless benefits logged an unexpected rise in the Thanksgiving week, the government said on Thursday in a report that still suggested the job market was regaining its health."

New unemployment claims rose to 365,000 from a revised 354,000 the prior week.

"Initial claims held below the key 400,000 watermark for the ninth straight week. This was the longest stretch below what economists regard as the dividing line between an improving and eroding job picture since an eight-week run in early 2002."

"Economists, however, were not overtly worried and a Labor Department spokesman cautioned against reading too much into the rise, saying claims figures tend to be more volatile during the holiday season."

"Recent economic data have shown the broad economy gathering steam. Last week, the government revised up third-quarter gross domestic product to a sizzling 8.2 percent pace."

"The Institute for Supply Management's manufacturing report on Monday showed activity soaring to its fastest pace since 1983, which could translate into new hiring."

Jeez, it better.

Continued . . .

CEO's rapidly joining the ranks of unemployed

I thought I had noticed a trend, and this article by David R. Francis and Seth Stern of the Christian Science Monitor seems to confirm it: "Era of shaky job security for the CEO."

"Despite an economic recovery and improving stock market, a stark reality faces America's business elite: While the perks of sitting in a corner office are great, job security isn't one of them.

The surprise departure of Boeing's chief executive officer, a sudden shakeup at Delta Airlines, and a top-level tussle at the Walt Disney Co. over the future of CEO Michael Eisner are three current examples. But the trend runs wider, reflecting a heightened corporate focus on ethics and financial performance - and on the duty of directors to keep tabs on both."

"'The professional life of a large company's chief executive increasingly resembles that of the Hobbesian man: It is nasty, brutish, and short,' notes a study by BAH, a major consulting firm."

This trend is not necessarily a good thing, although it certainly reflects a healthy concern for accountability and ethics. This job insecurity and readiness at the top corporate levels to terminate individuals for performance lapses that may not be entirely their fault -- does it trickle down through a corporation, negatively affecting morale and loyalty (what's that?)

Continued . . .

More on offshore outsourcing of IT jobs

Fast Company Now has this entry: What Happens When Your Job Is Taken By Someone in India or China?"

"If you're a white-collar professional and your job has been sent to India or China, what are your prospects today?

Not all that good. A recent study by McKinsey Global Institute found that only 36% of Americans displaced in the past two decades found jobs at the same or higher pay. The pay of one of every four displaced professionals fell by 30% or more. With offshoring increasing dramatically, those numbers will likely worsen.

In fact, a recent study by researchers at the University of California at Berkeley suggested one scenario in which displaced high-tech workers could find themselves entering a prolonged period of unemployment before being absorbed in service jobs that significant cuts in pay.

There's a terrific story on "The Rise of India" on the cover of this week's Business Week, which takes a more positive view of the trend and what it means for America."

The Business Week story is indeed good, very much in depth, and well worth reading. It points out significant deficiencies in conditions in India which could benefit from an inflow of American knowhow (e.g. governmental, legal, and infrastructure). I believe there are still sufficient advantages to living in this country that we will continue to attract many of India's "best and brightest." This will serve to drive up pay in India, as pay rates tend towards global equilibrium. Ultimately, immigrants might prefer to live here and work for less due to superior living conditions. That is, if immigration policy is not unduly restrictive.

Continued . . .

More on EEOC study of its Mediation Program

Following up on this post yesterday, I found this on the EEOC's web site: "An Investigation of the Reasons for the Lack of Employer Participation in the EEOC Mediation Program."

Interesting points: many of the employers who chose not to mediate due to their perception of the lack of merit of the charge were "well informed regarding the EEOC processes and the EEOC mediation program," "many had prior experience mediating in the program," and "the vast majority of the employers conducted their own internal investigation of the charges prior to declining to participate."

The EEOC concluded: "It is the employer’s perceived quality of the charge that dictates whether the employer goes to mediation, not the perceived quality of the mediation program."

I would concur, with this significant exception:

If a charge has very little merit and the mediator is knowledgeable and good (as is the case of one here in St. Louis), the settlement will be so inexpensive as to truly be a "nuisance settlement" which will not significantly reward the charging party (e.g., < $5,000).

On the other hand, if the charge looks like it may have some merit, or some complicating factors, mediation may work better after litigation has been commenced and there has been some formal discovery.

Continued . . .

More on Raytheon Supreme Court disability opinion

Michael Fox at Jottings by an Employer's Lawyer seems to agree with me here: "[I]t is likely that some other company with such a policy [against rehiring employees terminated for cause], who may feel much better about it today . . . may find that they have just picked up the laboring oar of proving that it does not disproportionately impact those with disabilities and/or that it is justified by business necessity."

Continued . . .

The virtues of writing well

Fast Company Now has this comment with which I wholeheartedly agree: "The Value of Writing."

Writing is "about thinking in a more disciplined way. When you put words on a sheet of paper, or a computer screen for that matter, you immediately impose your own analysis on what you've written."

That's why the good old-fashioned law firm practice of preparing research and strategy memoranda is worth its weight in gold (yes, it obviously is more costly in the short run than shooting from the hip). It's also why the federal courts, which tend to decide motions based on written submissions more than on oral arguments, are superior to state courts, which still too often take the opposite approach.

Continued . . .

Move to repeal California mandatory health care law

Catherine Perry, over at sonria.org, who has good coverage of healthcare issues, among other things (and happens to be one of my regular readers) has this: "More on California Senate Bill 2

Here's my original report on this law, which "will compel all firms with 200 or more employees to buy medical coverage for workers and their families by 2006. Companies with 50 to 199 employees must purchase insurance for workers by 2007."

As Catherine reports, the California Chamber of Commerce has submitted petition signatures to put the repeal of the law on the March 2 ballot.

I would assume the people who voted Davis out and the Terminator in will also vote against this law that can only further discourage business development in California. While healthcare solutions are absolutely necessary, they should not take the form of unfunded mandates on business, nor should they so obviously put one state at a disadvantage in attracting and retaining employers and jobs. Sure, employees may like it, but they will have no jobs and no benefits if employers don't like it and move elsewhere.

Continued . . .

$500,000 sexual harassment settlement

The Trucker has this story: "PJAX pays $500,000 in bias suit settlement"

"PITTSBURGH -- The PJAX Inc. trucking firm of Gibsonia, Pa., is paying more than $500,000 to settle a sex harassment lawsuit. But a company spokeswoman said that's not an admission of wrongdoing, it's an attempt to avoid a costly court case.

Even though PJAX has "steadfastly denied" the allegations and believes the company would have been successful in federal court, it made a business decision to forego the expense and "distraction" of a court case, said Roxanne Germ, PJAX director and spokeswoman."

That's a lot to pay for a "nuisance" settlement just to forego the costs of litigation!

"The lawsuit, filed in May in U.S. District Court in Pittsburgh, alleged that since May of 1999 owners and members of management had screamed 'vulgarities' at female employees, had asked female employees to pick up owners' laundry and clean owners' cars, and that one woman was asked to perform sexual favors for a company official's bookie to get a gambling debt reduced. Females also were allegedly passed over for truck driving positions and dock worker jobs."

"The settlement reportedly will be shared by the five female employees whose complaints led to the lawsuit."

Average of $100,000 apiece? I'd tolerate some abusive conduct for that kind of money. I'd certainly pick up owners' laundry and clean owners' cars-- isn't that compensable work they could hire someone to do anyway?

It's this kind of settlement getting this kind of publicity that fans the flames of sexual harassment litigation. But I guess I can't complain, its job security for me. . . .

Continued . . .

More political correctness run amuck

CNN.com has this:"Groups sue to change name of 'Jap Road.' "

"DALLAS, Texas (Reuters) -- Several civil rights groups filed a discrimination complaint on Tuesday trying to get a small community in southeast Texas to remove a racial slur from its city maps by changing the name of its 'Jap Road.'

The Anti-Defamation League, Japanese American Citizens League and others filed a discrimination complaint on behalf of two Japanese-Americans with two U.S. government agencies asking for them to suspend paying federal tax dollars to Jefferson County in Texas until the county renames Jap Road.

The three-mile stretch of road in Fannett, near Beaumont, has been around for about 100 years. It was named to honor a Japanese family who moved to the area and helped introduce the region to rice farming." "Local legend has it that when Fannett had a population of less than 100, the town pitched in to build a road to the rice farm of Yoshio Mayumi and his brother. The path was named Jap Road in 1905 to honor the family."

"'By continuing to have the street named 'Jap Road', Jefferson County gives residents and visitors to the area the impression that the county condones racial bias and discrimination against Japanese people,' the groups said in a statement."

Since when is "an impression" equivalent to actual discrimination? Sounds from the history like this town always had good folks who admired hard work and were willing to lend a hand, regardless of ethnicity.

"A similar effort to change the name of the road 10 years ago was met by stiff resistance among local residents, and even some of the descendants of the original Japanese settlers."

"George Hirasaki, president of the Houston chapter of the Japanese American Citizens League, said he does not agree with the decision to go ahead with the complaint, especially after a bruising battle over the road 10 years ago that raised animosity between Japanese-Americans and the local community."

That should tell these busybodies of political correctness something . . . buzz off and let this be dealt with as the local issue it is. Even if I agreed the name should be changed, i don't agree with wasting judicial resources over it.

Continued . . .

Updated archives by category; other holiday handiwork added; an aside about food

Archives by category (see top right column) are now complete through October. Sometime I'll catch up on November and maybe even start doing them on an as-you-go basis. This was accomplished on the laptop in my mother-in-law's living room last week, while I sort of pretended to participate in conversation.

The last case (immediately below) is the first of a series I summarized over the holiday. I'll try to add one or two a day until I've exhausted them. They had built up in my to-be-blawged folder for a while.

One of the great small-town pleasures we enjoyed last week was some good genuine immigrant cooking. I swear, there's more authentic Mexican food and pizza at this little town's only two restaurants than most places in St. Louis. I've seen this phenomenon elsewhere. If you're in a midwestern small town and see a little hole-in-the wall mexican place or pizzaria -- go for it . . . .

Continued . . .

Discrimination in RIF not proven despite early retirement offer, discriminatory remarks, and disregard of performance evaluations

In Cerutti v. BASF Corp. (7th Cir. 11/21/03), the Seventh Circuit affirmed summary judgment for the employer on age, race, and national origin discrimination claims brought by 10 of 23 employees terminated in a RIF/restructuring.

The court first handily rejected the argument that the employer’s offer of early retirement to some older workers was evidence of age discrimination, calling it "a nonstarter." It said: "truly voluntary retirements do not give rise to an inference of age discrimination." It also said the retirement program was not discriminatory or involuntary merely because some employees accepted the retirement offer "out of a fear that they would not make the grade after being assessed."

The court also found evidence of alleged discriminatory remarks irrelevant. They were not made by decisionmakers, not directly related to the employment decisions (e.g., "How's the old man doing today?"), and/or remote in time from the decision (citing 7th Cir. cases holding even 2 or 3 months too remote).

Some remarks by people involved in the decisions were not evidence of discrimination because they were involved only as members of a decisionmaking committee, and there was no "evidence from which a reasonable jury could infer that their animus influenced the selection panels' deliberations to such a degree so as to result in the plaintiffs' terminations."

For these reasons, the court held there was no proof of discrimination through direct evidence.

This portion of the opinion is pretty much standard summary judgment fare – both the dredging up by plaintiffs of alleged discriminatory remarks and the court’s strict scrutiny of the relationship between the remarks and the challenged decision.

What is noteworthy is how the employer’s decisionmaking process helped neutralize such evidence – by "dilution." By utilizing committee decisionmaking, the employer avoided the impact of the alleged remarks -- and inferred bias of the speakers -- by showing that the speakers, even if involved in the decisions, did not have a causal impact on them. Attribution of such remarks to a sole decisionmaker is much more troublesome.

As to circumstantial evidence under the McDonnell-Douglas framework, the court held the plaintiffs' proof failed at the prima facie case level because they failed to show that they were qualified to be retained and that similarly situated substantially younger employees were treated more favorably.

The court rejected a number of challenges to the methodology used to select employees for termination, thus concluding the plaintiffs were indeed less qualified under the employer’s chosen criteria, which were nondiscriminatory, and therefore not similarly situated to the retained employees.

The employer’s methodology involved use of a consultant, Development Dimensions International, to assess all employees to determine whether they possessed the "competencies" the employer found necessary to the restructuring.
The consultants used "standard assessment techniques -- i.e., problem-solving exercises, role-plays and targeted interviewing," over the telephone, without knowledge of age, race or national origin of the employees.

The results were reviewed by "selection panels" composed of the employer’s management personnel with knowledge of employee performance. If panel members disagreed with the consultant’s assessments, they were "required to identify specific instances of workplace conduct" supporting their views, followed by panel discussion, before overriding the initial assessments.

Findings of the selection panels were then reviewed by the legal department and the employer’s EEO manager, for possible adverse impact.

The court rejected the plaintiffs' argument that "their prior positive performance reviews demonstrate that they were qualified to be retained."

The restructuring process was intended to determine whether employees had the skills needed for future performance. That the employer "chose to make such determinations by utilizing a process that did not take into account the plaintiffs' prior written performance evaluations is of no import." "[T]here is certainly nothing inherently discriminatory about an employer's decision to use criteria other than past performance evaluations to determine whether its employees can meet the increased workplace expectations that often coincide with a corporate reorganization."

This performance evaluation portion of this opinion is potentially very useful to employers planning or defending RIF’s (and other terminations). An extremely common problem in such cases is overly rosy evaluations, which plaintiffs’ attorneys love to use as evidence of pretext when employers rely on alleged poor performance to justify terminations.

Here the employer may have realized it had such a problem, rendering the past evaluations useless as a selection measure, and therefore embarked on an extensive (and, it sounds, expensive) re-evaluation process.

The process adopted by the employer here is interesting in light of recommendations referenced in an earlier post in this Blawg and the two comments thereto regarding reliance on performance in RIF selections. This case shows that consideration of past performance, to the extent it is carefully reviewed and predictive of future performance, can be used successfully. Here it was used only to flesh out the competency assessments of the consultant, and was the subject of panel discussion.

The requirement that performance opinions be backed up with specific examples of conduct is an excellent one. It is all to common to hear opinions that lack such specificity, making them much less useful, and much more vulnerable to claims of pretext.

Continued . . .

More on the Supreme Court's Raytheon decision

Here's the case on Findlaw. I mentioned it yesterday, when it came down.

In part, this case involved waiver of the best argument -- disparate impact. The District Court had found that the disparate impact claim had not been timely pleaded or raised. The Supreme Court faulted the Ninth Circuit for nonetheless applying a disparate-impact analysis to the disparate-treatment claim.

The disparate impact claim may have had some legs. The employer's policy of not rehiring employees terminated for cause may have had a disparate impact on employees with disabilities, if common causes for termination like absenteeism, excessive leave, and alcohol or drug issues are more likely to impact employees with disabilities. The employer would then have had to justify the policy, which it may have been able to do.

This is a good lesson in the difference between disparate impact and disparate treatment, and in the need to properly plead and preserve all possible legal theories.

It would be a mistake to conclude substance abusing employees have no rights, or that no-rehire policies will always be immune from challenge. This decision was much narrower, which is probably why it was unanimous and Thomas got to write it.

Continued . . .

Illinois "judicial hellhole"

Overlawyered has this post linking to number of related stories:"Madison County: 'We're number one!'"

The subject is none other than Madison County, Illinois, just across the river from St. Louis, where I live and work.

Sometimes having cases in Madison and St. Clair counties of Illinois, I can attest to the fact they've earned their "judicial hellhole" moniker.

Where else do defense attorneys routinely request jury trials (and plaintiffs' attorneys do not) because the judges are even more pro-plaintiff than the (historically generous) juries?

Continued . . .

Major paper reports on increased mediation of employment cases

Thanks to the Overlawyered blog for pointing me to this Washington Post article by Kirstin Downey:"Trend Is To Mediate, Not Litigate, Bias Cases."

"Facing a gridlocked and costly judicial system and an underfunded federal watchdog, more American corporations and workers are sitting down to talk about allegations of bias instead of taking their cases to court."

The EEOC "is pushing expanded use of mediation, and held a hearing yesterday to hear from mostly satisfied customers about how the voluntary process is working."

"More than 80,000 workers go to the EEOC each year complaining that they experienced bias at work, but the agency files lawsuits in fewer than 1 percent of the cases annually. The federal courts, meanwhile, are clogged with discrimination cases, and employers and workers alike face rising legal bills. So it's not surprising that people are looking for a better way."

"In the voluntary process, the worker and employer sit down together, with a trained, neutral third party, often an EEOC official, to discuss the dispute and seek a resolution. The process is free, and both parties agree to keep it confidential."

"Claimants receive, on average, about $16,800 in mediated settlements, according to the agency. But the negotiations have also revealed that many people who feel aggrieved want recognition from their employers rather than just money, officials said, noting that about 13 to 20 percent of all mediated cases involve nonfinancial settlements."

"In one case, for example, a disabled worker was allowed to apply for disability insurance, only made available to higher-level employees at that firm, as long as he paid the premiums himself, said EEOC official Yvonne Gloria-Johnson. In another case, a woman who was fired from her job said she was so upset she delayed her wedding, and the employer, who was in the travel business, settled the claim by paying part of the costs of the woman's honeymoon."

"Not all employers are embracing the concept, however. While 84 percent of workers alleging bias agree to mediation of their claims, only 31 percent of employers do, according to the EEOC."

Mediation can work well, but there are cases in which the employer should stick to their guns.

Continued . . .

Supreme Court rules in Raytheon case, upholding no-rehire policy against ADA challenge

Reuters just reported:"Court OKs Raytheon's No-Rehire Policy."

"The U.S. Supreme Court ruled [unanimously!] on Tuesday that an employer does not violate a federal law protecting the disabled against discrimination by refusing to rehire a worker fired for illegal drug use, but who has since been rehabilitated."

More on this later, after I read the case and commentaries of others.

Here's my earlier story anticipating this ruling.

Continued . . .

Some tips on holiday workplace parties

About.com has several timely articles on workplace holiday partying:

From the Alcoholism / Substance Abuse desk:

"Planning Safe Holiday Parties"

"Due to the dangers and liabilities involved, companies and individuals alike are coming to the realization that alcohol should not be the main attraction at holiday parties, and there are ways to organize fun, yet safe, festivities that will prevent family and friends from becoming the next alcohol- or drug-related statistic."

From the Management desk:

"Surviving The Office Party: Your behavior at the office holiday party can help or kill your career"

"The annual office holiday party is more 'office' than 'party'. Your career needs you to act accordingly."

Tips on party behavior

And from the "Entertaining" desk:

"Office Parties - The Good, The Bad, and the Embarrassing: How to Avoid Making this Your Last Office Party!"

Tips on party planning.

I have always had concerns about these parties from a sexual harassment standpoint, as I have encountered numerous cases where "something happened" at the Christmas party (usually assisted by alcohol).

Continued . . .