Archive for December, 2010

5 HR and Benefit Changes Starting in 2011

With the new year nearly upon us, so too are changes in HR and benefits that will go into effect. Here’s a quick rundown of 5 to watch out for:

  1. Starting Jan. 1, 2011, flexible spending accounts will no longer be able to reimburse participants for expenditures on over-the-counter medications and items such as bandages and aspirin.
  2. Also on the health care front, insurance plans with a Jan. 1, 2011 plan year date will have to allow parents to keep a child on their policy until the child’s 26th birthday. This provision of the health care reform law took effect on Sept. 23 of this year, but now becomes a requirement for the 2011 plan year starting tomorrow. (Separately, employers may voluntarily report the value of health benefits they provide on 2011 W-2s; they will have to starting in 2012. The amount reported is not considered taxable income).
  3. Starting on Jan. 1, the standard mileage rate for the use of a car, van or pickup will be 51 cents per mile for business miles driven, up from 50 cents in 2010.
  4. Effective January 1, 2011, Colorado’s minimum wage will increase to $7.36 per hour, up from the 2010 rate of $7.24 per hour. Also, the tipped employee wage will rise to $4.34 per hour, up from the current $4.22 per hour.
  5. Starting in 2011, employers in California will begin filing Unemployment Insurance, Employment Training Tax, State Disability Insurance contributions, and Personal Income Tax withholdings quarterly on the DE 9 instead of annually on the Annual Reconciliation Statement (DE 7). Find out more at the Employment Development Department website.

Happy 2011!

To the Cloud, HR?

The phrase “to the cloud” pops up in all sorts of places now, especially television commercials. So it perhaps is no great surprise that many businesses have caught on to cloud computing, which saves them money compared to paying software licensing fees.

Might cloud computing work to HR’s and benefits’ advantage, too?

Wikipedia describes cloud computing thusly. Cloud computing is Internet-based computing, whereby shared servers provide resources, software, and data to computers and other devices on demand, as with the electricity grid. Cloud computing is a natural evolution of the widespread adoption of virtualization, service-oriented architecture and utility computing. Details are abstracted from consumers, who no longer have need for expertise in, or control over, the technology infrastructure “in the cloud” that supports them.

According to an article in today’s Wall St. Journal, half of small firms that use the cloud report it has improved their bottom line. That’s according to a survey Microsoft Corp. conducted this fall.

“Cloud software is inexpensive upfront and can cut costs by streamlining processes,” the article notes. “For example, accounting software helps business owners manage finances. But when that software is in the cloud, the business owner’s accountant may also access it. By seeing those finances in real time, the accountant can trouble-shoot cash-flow issues before they arise and can more easily file tax returns.”

Seems to me that HR and benefits departments could make similar use of cloud computing in their areas of responsibility.

Perhaps you know of examples where they have and would like to share them.

Former Lehman Employees Want to Hold Board of Directors Liable for Investing in Company Stock Right Before Bankruptcy

Should a company’s board of directors be held liable for investing employees’ retirement savings in company stock knowing that the company is about to file for bankruptcy? That’s the question that former employees of Lehman Brothers Holdings, Inc. have put before a U.S. Bankruptcy Court in Manhattan.

The employees are trying to revive a suit against Lehman’s directors, including former Chief Executive Richard Fuld, for investing their retirement savings in Lehman stock at the same time the company was using an accounting trick to disguise its financial condition.

The employees argue that new revelations about accounting irregularities and Lehman’s exposure to subprime mortgages support their claim that the investment bank should not have purchased its own stock for an employee retirement fund in the time between Bear Stearns’s collapse in March 2008 and Lehman’s Chapter 11 filing in September 2008.

Lehman’s board had an obligation to “prevent the plan’s catastrophic losses before the company filed for bankruptcy and hundreds of millions of dollars of employees’ retirement savings vanished,” the employees charged in recently filed court papers.

Mergers and Acquisitions Could Cost Workers

The number of corporate mergers and acquisitions is increasing, which could spell trouble for the workers of these companies. The volume of global mergers rose 19 percent in 2010, according to Dealogic, the first increase since 2007.

“Already, after cutting big deals this year, executives have announced thousands of job cuts or hinted that layoffs are on their way,” the Washington Post reported today.

Companies that have already announced reductions in force due to a merger or acquisition, or expect to in 2011, include:

  • United Airlines and Continental Airlines, whose shareholders in September approved a merger between the two companies that would form the world’s biggest airline;
  • Abbott Laboratories, which announced in September it would cut 3 percent of its workforce, or 3,000 jobs, after its $6 billion purchase of Solvay’s pharmaceutical division;
  • Oracle, which indicated in regulatory filings in June that it needs to spend more money than expected on workers’ severance payments, between $550 and $650 million, associated with the purchase.

HR may not be able to prevent layoffs, but do be aware of the legal pitfalls involved. Companies must not discriminate against workers in a protected class, and if older workers are involved, they must follow the requirements of the Older Workers Benefit Protection Act in obtaining waivers. Also, the Worker Adjustment and Retraining Notification (WARN) Act prior notification of plant closings to affected employees.

“Make Talent Development” a Corporate Obsession, Management Guru Advises

Not that HR doesn’t have enough to worry about these days, but according to a leading management guru, key talent will start leaving companies as more companies hire unless their current employers make “talent development your obsession.”

Employers risk losing their best talent as the economy improves unless they act now to prevent them from leaving, a leading management advisor told the Wall St. Journal recently. And to prevent that from happening, they must “make talent development” their obsession, said Ram Charan.

Charan, who has written or co-authored 17 management books — mostly about strategy and leadership — lamented that CEOs pay too little attention to retention.

Charan estimates that in actual practice, fewer than 25 percent of Fortune 500 companies make retention a priority. Companies should conduct quarterly reviews of key players, “the way they do quarterly review of [growth] numbers.”

In addition, Charan listed these biggest corporate talent-management mistakes:

  1. Leaders not held accountable for development talent;
  2. Performance assessments without candor or focus on developmental needs;
  3. Failure to drill deep enough to know best staffers well and put them in jobs that stretch their abilities;
  4. Top management’s serious lack of time commitment and energy; and
  5. Placing loners in leadership positions.

So here is HR’s opportunity to step back and look at the big picture at their companies and find ways to cultivate and nurture top talent before they take their expertise and experience elsewhere.

Mismatch Between Experience and Jobs Available May Be Keeping Unemployment Rate High

One reason the unemployment rate remains stubbornly high has less to do with the number of job openings than with the number of workers qualified to fill them. That’s what online job data recently compiled by the Wall St. Journal suggest.

The number of online job openings now stands at 4.7 million and of these many require specialized experience, the data from Indeed, Inc. show. For example, accounting and consulting giants Deloitte and PriceWaterhouseCoopers LLC are adding to staff as more employers are seeking their services. The most needed professionals at PwC will have six to eight years experience. Deloitte meanwhile, needs experts in areas such as mergers and acquisitions, health care and information technology. 

AT&T “is scouring for highly technical workers and retail sales people, ” in such areas as network engineering and cloud computing, while also looking to fill retail jobs at its 2,300 U.S. stores selling cell phones and other gadgets.

WellPoint, Inc., an Indianopolis-based health insurer, needs IT specialists, registered nurses, actuaries, insurance-policy underwriters, sales people and call-center employees, while Science Applications International Corp. of McLean, Va., has openings for intelligence analysts, including translaters and data analysts, engineers; cyber-security experts, and project managers. Many of these require at least a 4-year college degree and U.S. government security clearance.

And so on.

Until we better match available openings with qualifications, we’ll either continue to have an abnormally high unemployment rate or employers may have to compromise and hire workers who may not have all the experience they want but who can be trained and mentored to acquire the experience while on the job.

More Employers Cut Mental Health, Substance Abuse Benefits

Employees counting on their employers to provide them with mental health benefits to go along with their mental health benefits might want to look outside the workplace for help.

The Wall St. Journal reported yesterday that more employers and insurers are dropping mental health and substance abuse benefits alltogether. That allows them to circumvent the requirements of the 2008 Mental Health Parity and Addiction Equity Act, which prohibits large health plans from setting higher copayments or limiting doctors visits for mental-health care, among other things.

The law’s requirements are only now going into effect, starting with the 2011 benefit plan year, for which many employers are now holding open enrollments.

The article cited the results of the Kaiser Famiy Foundation’s 2010 Employer Health Benefits survey, finding that about one-third of employers with more than 50 workers said they made changes in the benefits they offer in response to the law; 5 percent of those said they had dropped mental-health coverage.

Eighty nine percent of employers surveyed by the National Business Group on Health reported making some changes to their plans to comply with the law and 18 percent have increased deductibles to cover new costs.

One industry particularly hard hit by the elimination of mental health and substance abuse benefits: The Entertainment industry.

Not surprising, since it ranks in the top 3 business segments in rates of illicit drug use and heavy alcohol use, according to the U.S. Substance Abuse and Mental Health Services Administration. Yet the Screen Actors Guild recently informed its 12,000 members that they will lose access to treatment for mental health and substance abuse issues starting in January.

So if you see more strung-out actors in 2011, know that they’re not getting help from their employers in solving their addictions.

Insurers Will Have To Justify Large Premium Increases Under New HHS Rule

Health insurance companies will have to justify any increase in rates exceeding 10 percent to federal and state officials, under a proposed rule the U.S. Department of Health and Human Services issued this week.

The rule implements a key provision of the health care reform law, also known as the Patient Protection and Affordable Care Act.

State officials would analyze the data to determine whether the increase is “unreasonable.” If federal officials judge that a state does not regulate information often enough to be able to conduct such a review, HHS would conduct the review.

Several dozen states already their industry officials to empower their insurance officials to reject unjustified rate increases. The health care reform law does not give federal officials that authority. Nor does it require that states that do not require approval of rate increases begin doing so. It does provide grant money to help states strengthen their insurance oversight.

Under the proposed rule, if a rate increase were found to be unreasonable, that conclusion would be posted on the HHS web site and that of the carrier along with the company’s financial disclosures.

The proposed rule will be kept open for public comment until February 22, 2011. You can read the rule at

Credit History Use Hurt African Americans, EEOC Lawsuit Alleges

A leading test preparation company violated Title VII of the 1964 Civil Rights Act by refusing to hire applicants with poor credit histories, a practice that discriminates against African Americans and is not justified by business necessity, the Equal Employment Opportunity Commission alleged in a lawsuit filed in the federal district court in Washington, D.C. yesterday.

The defendant, the Washington Post Company’s Kaplan Higher Education unit, responded that it uses credit histories for positions involving financial matters, such as advising students on financial aid and that lots of companies also do credit checks in making personnel decisions.

The use of credit histories was the topic at a public meeting the EEOC held this past October.

This lawsuit is further proof that EEOC frowns on the practice of using credit histories to make personnel decisions and will haul employers into court if necessary to put an end to it.

Anticipating Workforce Growth, Companies Hire More Recruiters

More employers are adding to their recruitment staffs because they expect to hire more employees over the next year, a development that holds both opportunities and risks.

Recruiters are in great demand as employers make plans to hire more workers over the coming year, the Wall St. Journal reported yesterday.

More employers are adding recruiters to their staff in preparation to do more hiring. In the past four months, for example, Sodexo USA has added three recruiters to its staff of 55 and currently has openings for two more.

A survey conducted this past summer by CLC Recruiting found that about half of employers planned to increase their recruiting staffs, compared with 19 percent that expect to shrink them through 2011.

Another baramoter: In November, the number of U.S. job postings with recruiter in the title rose 20 percent from June to 5,306 on, which aggregates job postings from thousands of company websites and job boards.

In-house recruiters can, if they engage in discriminatory hiring practices, make their employers liable under employment discrimination laws. Similiarly, outside or third-party recruiters can be held liable for discriminations as “agents” of employers on whose behalf they recruit. See george’s employment blawg for more information.