February 25, 2006
The Current Status of Employer Spending on Benefits vs. Wages
I have mentioned in previous posts the increasing percentage of compensation that employee benefits represent. Some put the number as high as 40%.
It now appears that the cost of benefits is continuing to rise at a faster pace than wages, but not as fast as some (including me) might have thought. In Employer Spending on Benefits Has Grown Faster Than Wages, Due Largely to Rising Costs for Health Insurance and Retirement Benefits. [GAO-06-285], the Government Accounting Office reports that while real wages rose only 10 percent from 1991-2005, benefits costs, adjusted for inflation, rose 18 percent during the same period.
Interestingly, and as Fuguerre of the P & B Blog points out, most of the differential between wages and benefits has occurred during the last three years of this period, seeming to suggest that wages and benefits cost rose at about the same rate during the previous 11 years (1991-2002).
But the P&B Blog is skeptical about the GAO's numbers, partly because "the element seemingly on steroids - pensions, for which the GAO estimated inflation-adjusted growth at 47 percent during the period - may instead have been viewed somewhat through an amusement park’s funhouse mirror."
After a doing a thorough analysis of the GAO's number and its analysis, Fuguerre concludes:
[T]he [GAO] report’s title message has to be very heavily qualified, almost to the point of characterizing it as not actually so.
And let me get more blunt: pull data that follows something other than contributions, reported costs, or service costs, something that purports to represent the real underlying compensation cost for retirement benefits, and when balanced by the long-term move that has been taking place toward defined contribution plans, then I would not be seeing the graphs that the GAO is drawing.
Very interesting and thought-provoking stuff. Read all of Fuguerre's post on the GAO report here.
Supreme Court Public Employee Free Speech Reargument Schedule
As I explained in a previous post, although argument was heard last October in this public employee free speech case concerning what constitutes "a matter of public concern," the Court agreed to hear reargument after Justice Alito's ascension to the bench.
The need for reargument points to a closely divided court and, in agreement with the SCOTUS Blog, I believe this portends an employer friendly decision, with Justice Alito perhaps casting the deciding vote.
Should be interesting.
Should Public Schools Fire School Teachers Based on Parental Preferences?
Update: Good for the School District!
Putting on my education law hat for a moment, I want to discuss a story on 365Gay.com, which reports:
The Eagleswood School District will meet Monday to hear a parent's demand that a transgendered substitute teacher be either fired or parents allowed to have their children taught by someone else.
Lily B. McBeth became a substitute teacher after retiring from her job as a medical marketing executive. At age 70 she says she knows something about kids. Before transitioning last year she fathered and raised three of her own.
The school district says that her teaching record is among the best in the state.
But none of that is good enough for parent Mark Schnepp.
Schnepp has two children attending school in district. He says that the idea of someone who had a sex change teaching his children is an affront to his convictions.
"It violates my religious beliefs," the 39-year-old told the Asbury Park Press.
These types of disputes over school districts allegedly violating parents' religious beliefs by engaging in certain practices, including selecting or not selecting certain curriculum, not permitting prayer in school, or hiring unpopular or controversial school teachers, are not uncommon at all.
In th vast majority of these cases, schools do not bow to the pressure of individual's religious beliefs for both practical and legal reasons. From a practicial standpoint, school districts would be unable to operate if they were held hostage to every single parental preference.
From a legal standpoint, there would be significant Establishment Clause issues if the school distict, as a state actor, was seen to be endorsing a particular religious view, or any religion at all. Famous cases involving prayer in school and evolution set a fairly high bar against permittng religion in the public school classroom, Also, in school teacher cases like this one, to the extent that the individual is a part of a statutorily protected class, there would be potential anti-discrimination law liability.
Indeed, in this particular case, the state in question, New Jersey, has a state anti-discrimination statute which protects against sexual orientation discrimination, so it is likely tha Ms. McBeth would be protected by the statute. Nevertheless, advocates for the transgendered community would like to see more specific language referring to them so that there will be little doubt as to their protected status among the state employers.
Here's hoping the Eagleswood School District does not bow to the intolerance of individual parents. If they do, they might as well start calculating the extent of their legal liability right now.
United Airlines Flight Attendants Approve Defined Contribution Plan
In its efforts to return to a profitable existence, United Airlines, like many other airlines, has sought to have its employees switch from a traditional defined benefit plan to a defined contribution plan.
The United flight attendants' union has now voted overwhelmingly to approve the new defined contribution arrangment:
United Airlines' flight attendants have overwhelmingly ratified an agreement for a defined-contribution retirement plan, their union said Friday in an announcement signaling the end of the union's rancorous battle against the company over pensions.
The union said more than 79 percent of flight attendants who cast ballots voted to approve the new pension plan, which replaces defined-benefit pensions terminated by the airline as part of its three-year bankruptcy restructuring.
In order to make the new pension arrangement more desirable for the flight attendants:
The new plan, which is retroactive to Jan. 1, includes company direct and matching contributions beginning at 5 percent and escalating to 6 percent of a flight attendant's earnings within two years.
This type of defined contribution plan with a significant employer matching contribution appears to be the future for many employees of large companies.
February 24, 2006
The Seattle District Office of the DOL’s Employee Benefits Security Administration is holding free workshops discussing the final COBRA notice and disclosure regulations and common COBRA mistakes. Workshops will be held March 14 in Las Vegas, NV and April 12 in Spokane, WA.
Getman to Speak on Labor Law
Julius G. Getman (Texas) will speak on The Decline of Unions: Is Labor Law to Blame? when he delivers Case Western Reserve's annual Rush McKnight Labor Law Lecture. The event will take place Wednesday, March 8. It is free and open to the public and will be webcast live on the Internet.
On Tour Now: Sweatshop Workers
"It would take half our salary to buy one of the sweat shirts we produce," Josefina Hernandez Ponce told students at the University of Virginia on Wednesday night. The classroom was packed to capacity with students in every seat and squeezed in on the floor.
A flyer passed around showed where the $39.99 paid for a UVA sweatshirt goes ($2.40 in royalties to the university, $0.20 in pay to the workers who made it).
And yet these are comparatively lucky international workers! "They work in factories in Mexico and El Salvador that have unionized and won worker rights and higher pay and benefits with help from the activism of US students."
Let's Try Democracy describes a thank you and informational tour put together by United Students Against Sweatshops to spread the word that activism by US students does matter in the world of international workers' rights and that such activism has improved the plight of some former sweat-shop workers.
Yet there is still much work to do on this front:
But those victories, combined with the shifting requirements of "free trade" agreements, are driving business to more abusive factories and nations. These workers are asking students and other Americans to help them stay employed.
United Students Against Sweatshops has organized a tour of college campuses for the workers. Some of the colleges they're visiting are on the list of 151 that have joined the Workers Rights Consortium http://www.workersrights.org – an independent non-profit that monitors working conditions in factories.
It is good to know that in these somewhat complacent times that there are students that are still willing to take activist stands on important issues like this.
To read more about United Students Against Sweatshops and the plight of these specific workers, you can read the rest of the story here.
Wal-Mart Takes Health Insurance Matters Into Its Own Hands
Wal-Mart Stores, facing a raft of state legislation that would require it to increase spending on employee health insurance, will lift several of its long-standing — and most-criticized — restrictions on eligibility over the next year, the giant retailer said this morning.
Wal-Mart insures less than half of its 1.3 million employees in the United States and has come under growing criticism for skimping on benefits and shifting the cost of health care to state governments. In the past two months, the Maryland Legislature passed a law that would force Wal-Mart to improve its benefits and legislatures in a dozen more states, including California, Washington and Rhode Island, are considering similar bills.
The new eligibility rules at Wal-Mart are intended to increase the number of employees who can access the company's insurance plan, but it was unclear how significant the impact would be because Wal-Mart released little detailed information.
Although this appears to be a start in the right direction, Wal-Mart, with its billion dollars of profits on a yearly basis, still seems hesitant to do what is right for all its employees on all accounts.
Wal-Mart would still require workers, whose average pay is less than $20,000 a year, to pay hefty annual deductibles and monthly premiums.
In other words, Wal-Mart is still forcing some of its most needy workers on to the Medicaid rolls. Expect states, like Maryland, to be generally unimpressed with this new initiative and demand more. Of course, whether they can demand more, given ERISA preemption, is another question all together.
February 23, 2006
28th Annual Kenneth M. Piper Lecture at Chicago-Kent
Kenneth G. Dau-Schmidt (Indiana-Bloomington) will deliver a lecture on: "The Future of Collective Bargaining." Allison Beck (General Counsel, IAM), Nicholas W. Clark (Assoc. Gen. Counsel, UFCW), and Michael A. Rodriquez (Senior VP-Labor Relations, AT&T) will provide commentary on Prof. Dau-Schmidt's lecture.
The lecture is free and open to the public and no registration is required. For further information, you can call (312) 906-5090 or visit www.kentlaw.com.
Thomas on the Unconstitutionality of Summary Judgment
A little bit of civil procedure on the blog today. Suja Thomas (Cincinnati) writes to say that she has just posted her provocative piece, "Why Summary Judgment is Unconstitutional" on SSRN (link here).
Suja explains that her article directly concerns employment discrimination law as summary judgment is ordered in a lot of employment discrimination cases. She further explains her article this way:
In the piece, I argue that scholars and the Supreme Court incorrectly have assumed that the Court decided the question [of the constitutionality of summary judgment] a century ago in the Fidelity & Deposit case. The question is governed by the Seventh Amendment, which requires adherence to the English common law.
I show that summary judgment did not exist under the English common law nor does it comport with the substance of the common law. As a result I conclude that summary judgment is unconstitutional. (The Seventh Amendment is interesting in that it is the only part of the Constitution that specifically refers to the "common law," and thus the only part of the Constitution that textually requires adherence to the common law.) In the article, I also respond to the likely arguments against my thesis.
Sounds highly interesting. Give it a read!
From PlanSponsor.com this morning:
New York Attorney General Eliot Spitzer announced that Federal Express Corporation has agreed to a settlement in a case involving several former employees who were fired for refusing to cut their dreadlocks.
According to the press release on Spitzer's Web site, the employees wore their hair in dreadlocks as an expression of their religious beliefs, but were fired for a violation of the company’s Personal Appearance Policy. During the course of discovery, Spitzer’s office learned that FedEx had voluntarily addressed many of the concerns underlying the lawsuit.
Several Recent Articles from Dick Kaplan
- Who's Afraid of Personal Responsibility? Health Savings Accounts and the Future of American Health Care.
- The Security of Social Security and the President's Proposal.
- Enron, Pension Policy, and Social Security Privatization.
February 22, 2006
More Odd Bedfellows: Fired, Single Pregnant Schoolteacher and Anti-Abortion Group
According to ABC News, Michelle McCusker found assistance from an unusual source after she was fired as a preschool teacher at a private Catholic School in the Bronx for being a pregnant, unwed mother. Specifically, she was fired because, "[t]he teachers' handbook clearly states that teachers 'must convey the teachings of the Catholic faith by his or her words and actions,' . . . and by having out-of-wedlock sex McCusker was not conveying the teachings of the faith."
To her assistance, and I can only imagine to her astonishment, came the anti-abortion group, Feminists For Life.
"Serrin Foster, president of Feminists for Life, talks about McCusker at anti-abortion rallies, saying taking away a woman's job and income for being pregnant is anti-life. If you take away the resources, you could unintentionally drive a woman to having an abortion," said Foster."
So not only is McCusker being represented in a pregnancy discrimination action against the school by the New York Civil Liberties Union, but she is also been supported by a pro-life group who believes the Catholic school's policies might cause the greatest harm if women like McCusker without means of support end up having an abortion.
Strange bedfellows indeed. And it appears this Catholic School might have it's work cut out for it in the Title VII case since it appears it applied the unwed sex policy to women, but not to men, and the rTitle VII religious exemptions should be of little help if what can be proven is out and out gender discrimination.
A broader question that potentially lurks in the background is whether Title VII would be unconstitutional if it were so interpreted to substantially burden the free exercise rights of the Catholic school in abiding by its Catholic tenets. My consitutional law readers should weigh in and let me know whether the very recent Supreme Court RFRA case Gonzalez might have anything new to say on this issue.
Should be an interesting case to follow.
A Coming Compromise on Health Savings Accounts and Minimum Wage?
On the one had, consumer-driven, tax-advantaged health savings account (HSA) are being lauded by the Bush Adminsitration as an efficient way to deliver health care services to employees without breaking the bank. Critics of HSAs see them as too expensive for rank-and-file workers who must meet a higher deductible before the benefits of the new scheme really kick in.
On the other hand, minimum wage is what it has always been about, which is to raise to the minimum rate of pay beyond the working poverty level and use it in a manner such that a higher benchmark will cause a ripple effect leading to higher wages at all levels of the pay scale. Critics of raising the minimum wage fear that such mandatory legislation would force small business to close down and cause large corporations to let go employees in order to manage the increase costs of labor. Frustrated with the Bush Administration's intransigence over the minimum wage issue, Democrats in many state are now seeking to place the minimum wage issue on individual state ballots for this upcoming election cycle. Democrats view the minimum wage as a possible wedge issue for them like gay marriage was for Republicans in 2004. See my previous posts on this movement here and here.
However, according to a report by Paul Bedard in U.S. News & World Report:
Two deeply partisan issues, the president's expansion of tax-advantaged health savings accounts and Democrats' wishes to boost the minimum wage, could merge into a summer compromise, according to sources on both sides. While there is no public endorsement of any deal, administration and congressional Democratic officials said they might be open to discussing a deal in which the president would win much of what he wants in return for an increase in the minimum wage.
To be frank, I don't see such a compromise happening for at least three reasons. First, the Democrats can get much more traction on the minimum wage debate at the state level where popular ballot initiatives could be the difference for close elections in those states and Democrats are likely to be able to get higher minimum wage raises at the state level through ballots than through a compromise with the White House on the federal level. In short, this popular wedge issue cannot simply be passed over.
Second, and as far as the health savings account debate, it is not as if the White House or Democrats can set into motion a mechanism which would overnight lead to a vast number of companies adopting HSAs and high deductible health plans (HDHPs), and even if they could, there is some reason to believe that employees on the lower end of the pay scale would use them less anyway because of their expensive, high deductible price tags and complicated workings. Plus, there is a sense among many workers that the HSA really favors the investment managers on Wall Street, who will likely get the greatest benefits through increased investment fees.
Finally, the hard to undertand HSA is not likely to have the same resonance with the American public that the easier to relate to, and increasingly popular, minimum wage raise does.
In short, the signs point to no compromise and the Democrats pushing the minimum wage issue through the 2006 elections and beyond.
John Langbein to Speak on Death of Private Pension Plan
UFW May Face Federal and State Investigations
More trouble for the United Farm Workers:
Two government agencies, one state and one federal, are reviewing operations of the United Farm Workers and the union's related charities to determine whether the tax-exempt organizations' transactions warrant investigation.
Officials with the U.S. Department of Labor, which charters and regulates labor unions, and the California attorney general's office, which regulates charities, said their agencies initiated reviews after a four-part series published in The Times last month detailed the charities' interlocking finances and certain transactions that benefited people connected to the organizations.
The articles also raised questions about the accuracy of information reported on state forms and federal tax returns. The misstatements included routinely providing incorrect answers to questions such as the number of employees — the charities answered none — to reporting that they received no government funding.
"There were issues raised in the series that merit attention, and we are reviewing them," said Teresa Schilling, a spokeswoman for state Atty. Gen. Bill Lockyer.
Schilling said the review would determine whether the office launches a formal investigation, in which case it would inform the charities but would not comment publicly, even to confirm the existence of the inquiry.
The rest of the LA Times story is here.
Resume Fraud at the Highest Level
Do people who engage in resume fraud think they will be able to fool most of the people most of the time or do they come to believe, delusionally, that they actually achieved the accomplishments written on their resume? And does it even matter if your company doesn't take the whole thing too seriously?
Case in point: The former CEO of Radio Shack.
Former RadioShack Corp. Chief Executive Dave Edmondson, who resigned Monday following questions about his resume's accuracy, will receive a cash payout worth at least $1.03 million, the company said Tuesday in a regulatory filing.
His troubles began last week after a Fort Worth Star-Telegram story identified false information on his resume.
Edmondson claimed on the resume that he had received degrees in theology and psychology from Pacific Coast Baptist College in California, which moved in 1998 to Oklahoma and renamed itself Heartland Baptist Bible College.
The school had no records of the degrees, and Edmondson acknowledged the information about the degrees was "incorrect."
I'm sorry, but this appears flat out outrageous. Would a rank-and-file Radio Shack employee been given this same kid-glove treatment if they falsified their resume?
Gimme a break.
Supreme Court: 15 Employee Title VII Threshold Not Jurisdictional
The United States Supreme Court decided today the case of Arbaugh v. Y & H Corp., 546 U.S. xx (Feb. 22, 2006).
In Justice Ginsburg's words, "[the] case concerns the distinction between two sometimes confused or conflated concepts: federal-court subject-matter jurisdiction over a controversy; and the essential ingredients of a federal claim for relief." In particular, as discussed in previous posts here and here, the issue was whether the 15-employee Title VII threshold requirement was jurisdictional such that a lack of subject matter jurisdiction claim could be brought at any time during a Title VII proceeding (See Fed. R. Civ. Proc. 12(h)(3)).
The Court found that the 15-employee requirement not to be jurisdictional:
We reject th[e jurisdictional] categorization and hold that the numerical threshold does not circumscribe federal-court subject-matter jurisdiction. Instead, the employee-numerosity requirement relates to the substantive adequacy of Arbaughs Title VII claim, and therefore could not be raised defensively late in the lawsuit, i.e., after Y&H had failed to assert the objection prior to the close of trial on the merits.
More specifically, Justice Ginsburg for the court found:
Nothing in the text of Title VII indicates that Congress intended courts, on their own
motion, to assure that the employee-numerosity requirement is met.
But neither §1331, nor Title VIIs jurisdictional provision, 42 U. S. C. §2000e5(f)(3) (authorizing jurisdiction over actions brought under Title VII), specifies any threshold ingredient akin to 28 U.S. C. §1332s monetary floor. Instead, the 15-employee threshold appears in a separate provision that does not speak in jurisdictional terms or refer in any way to the jurisdiction of the district courts.
Makes sense to me. I think.
Cool New Interactive Map of U.S. Minimum-Wage Laws
The Department of Labor / Employment Standards Administration / Wage and Hour Division publishes a state-by-state breakdown of minimum wage laws in the form of an interactive map. The map shows states with a minimum wage higher or lower than that of the federal government, states with no minimum wage law, and states with a minimum wage that equals the federal government’s. Clicking on each state provides more detailed information on that state’s minimum wage law, such as the basic minimum rate per hour, the premium pay rate after designated hours, and a schedule of future wage rate changes.
Thanks to Carol Furnish (Chase).
February 21, 2006
Mama Says Knock You Out: Supreme Court Slaps Down Eleventh Circuit's Pretext Standard
The United States Supreme Court today in the per curiam decision of Ash v. Tyson Foods, 546 U.S. xx (Feb. 21, 2006), made abundantly clear that it did not approve of the Eleventh Circuit "slap you in the face" standard for determining pretext in Title VII McDonnell Douglas cases involving superior qualifications.
The Eleventh Cicuit had previously held that: "Pretext can be established through comparing qualifications only when the disparity in qualifications is so apparent as virtually to jump off the page and slap you in the face." See Cooper v. Southern Co., 390 F. 3d 695, 732 (11th Cir. 2004).
Not so said an emphatic Supreme Court: "Under this Courts decisions, qualifications evidence
may suffice, at least in some circumstances, to show pretext."
But this is by far my favorite part of the Court's decision (love to know who wrote it):
The visual image of words jumping off the page to slap you (presumably a court) in the face is unhelpful and imprecise as an elaboration of the standard for inferring
pretext from superior qualifications.
It suffices to say here that some formulation other than the test the Court of Appeals articulated in this case would better ensure that trial courts reach consistent results.
Of equal note is the fact that the Supreme Court's decision suggests that the McDonnell Douglas pretext case is alive and well even in light of the Court's recent mixed-motive Desert Palace decision.
Hat Tip: CompanyCounselor