Keep coming back; more content promised

I've been a bit jammed up lately.

My partner has a trial on Monday, so I've been getting lots of just-in-time bits and pieces of preparation (jury instructions, etc.)

This morning I sat as the attorney member of a 3-person panel to arbitrate a fee dispute for the Bar Association of Metropolitan St. Louis. Went nonstop from 9:00 - 2:00. Difficult case with lots of issues to untangle.

We've made a decision; now I have to write an opinion. Though it's a volunteer job, the issues are extremely important to the lawyers and clients involved, so when I do these I really try to write a thorough well-reasoned opinion. In this case that could take many hours (days?).

So . . . I may not be posting for a few days. Don't give up. I've got some good stuff backlogged and it will be forthcoming. Meanwhile, peruse some of the blogs on my blogroll, visit my sponsors ( :-) ), read my archives (sorry the categories are current only through Oct.) Maybe even post a comment or respond to my survey.

Continued . . .

Connecticut Supreme Court rejects cause of action for "compelled self-publication defamation"

In Cweklinsky v. Mobil Chemical Co., no. SC 16846 (01/06/04) full text available to Lawyers Weekly subscribers here, the Connecticut Supreme Court held that Connecticut law does not -- and for valid public policy reasons should not -- recognize a cause of action for defamation brought by an employee complaining that he or she was forced to repeat to a prospective employer a false and defamatory statement the prior employer made about reasons for termination.

The issue arises out of the traditional common-law requirement that defamation (libel and slander) actions require "publication" to a third-party by the defendant. That is, it is normally insufficient that the defendant defamed the plaintiff in a private conversation between the two parties -- the defendant must have made the defamatory statement to someone else.

Some courts, however, have allowed employees to pursue defamation claims where they allege they were "compelled" -- in order to honestly answer job interview questions -- to repeat to prospective employers defamatory reasons for termination given them by their former employers.

The Connecticut high court declined to get on his bandwagon, noting first that most jurisdictions have either not yet recognized such an action or have expressly rejected it.

Legal researchers note: the case references a law review article on point and in a footnote lists those courts which have adopted such a cause of action.

The following public policy reasons were cited as supporting the Connecticut court's rejection of the cause of action: 1) its acceptance would have a chilling effect on communication in the workplace, discouraging employers from stating their reasons for terminating employees and creating a perpetual "culture of silence"; 2) it would give employees too much control over the cause of action, discouraging them from mitigating damages and encouraging them to repeatedly republish the defamatory statements in order to increase damages; 3) it would allow manipulation of the statute of limitations, as each repetition would extend the deadline for filing suit; and 4) it would undermine the doctrine of employment at will.

The court said the fear of chilling communication was not merely hypothetical, as there was evidence that in states where the cause of action was recognized, employers were being advised to provide little or no information on reasons for termination to employees, in order to avoid potential liability.

The decision certainly makes some sense. But it does leave an employee terminated for what they believe to be a false reason a difficult choice.

They can outright lie about it (e.g. stating they quit voluntarily or were laid off due to lack of work), knowing that if this dishonesty is discovered it may destroy their chances of being hired.

Or they can admit the termination and attempt to explain it away, knowing that despite their best efforts this may also destroy their chances of being hired.

It seems the better calculated risk (though morally repugnant and difficult for persons with good character for honesty) is to lie (refusing to repeat what the employee believes is false anyway). If the prospective employer then checks references and hears the defamatory reason from the prior employer, resulting in a decision not to hire, now there is a defamatory publication, resulting damages, and basis for a lawsuit. If not, the opportunity to get hired is not impacted.

Regardless of the state of the law in a given jurisdiction on this issue, there are good reasons to eschew a policy of complete silence on reasons for termination. Such silence causes employees to suspect the worst, and sets them up to be able to claim whatever reason is later given was a pretext for some form of discrimination (else why was it not given originally?) On the other hand, obviously one's words should be chosen very carefully when communicating a termination, usually put in writing and carefully scripted if communicated orally. One should also avoid saying too much.

Continued . . .

California grocery strike updates

In the Washington Post a few days ago, Kimberly Edds wrote: "No End in Sight for California Grocery Workers' Strike"

The Southern California grocery workers' strike, which has 70,000 workers on the street, continues to drag on with seemingly no end in sight. Four days of secret talks between the two sides broke up Jan. 11 with only "limited progress" being made . . . .

As the strike lengthens, it has become an important battle for organized labor, which is struggling to remain relevant in one of the few remaining industries in which workers with limited education can earn a respectable living with medical benefits. . . .

The striking and locked-out workers -- mostly women and minorities -- say they can't give up the fight. Giving in means saying goodbye to the middle-class existence that the grocery industry has provided to workers across the country for decades.

"If we don't get what we're fighting for, the whole health care for American workers is going to go down," strike captain Sue Beauregard said as she shifted her picket sign from one shoulder to another outside the Vons on Santa Monica Boulevard. . . .

A federal mediator hopes to bring the two sides back to the table by the end of the month, Maynard said. Repeated calls to negotiators for the supermarket chains were not returned. . . .

As the standoff continues, workers aren't the only ones feeling the pinch -- losses at more than 800 grocery stores across Southern California are mounting. With many customers unwilling to cross picket lines, fruit and vegetables are rotting on the shelves. Loaves of bread are going stale. And T-bone steaks and fresh fish can be had for a fraction of their normal price as managers try to hustle them out the door before their expiration date.

And when the strike does finally end, the supermarkets are going to have to come to grips with the fact that some customers might not come back -- having gotten used to shopping at specialty grocery and warehouse stores during the strike as a show of support for the striking and locked-out workers. . . .

And then the LA Times wrote: "AFL-CIO throws muscle into dispute; Fight with grocers ratcheting up a bit" (from Houston Chronicle):

The AFL-CIO is taking control of national strategy for the California supermarket strike and lockout, assigning two veterans of labor wars to turn around a battle in which employers seem to have gained the upper hand.

The campaign will be led by Richard Trumka, who played a pivotal role in resolving the West Coast port lockout, and Ron Judd, who orchestrated AFL-CIO protests at the turbulent World Trade Organization meeting in Seattle.

(Hmm. . . I don't seem to recall those two episodes as being particularly fruitful for anyone involved. . . .)

The plan is to pressure the supermarket companies by hounding executives and directors with phone calls and visits, staging demonstrations across the United States — including a pray-in outside the Northern California home of the chief executive of Safeway — and persuading major investors in grocery stocks, such as pension funds, to take stands in the union's favor.

"We have our work cut out for us," Trumka, the national labor federation's secretary-treasurer, said in an interview this week, "but I predict that three months from now there will be a whole different attitude out there."

Rich, buddy, that's a long time to ask these workers to hold out!

On Tuesday, AFL-CIO leaders called for a national boycott of Safeway-owned markets.

United Food and Commercial Workers union officials said they welcomed the AFL-CIO's heightened participation on the tactical side, characterizing the federation's plan as an expansion of a strategy the grocery workers union had already set in motion. . . .

The AFL-CIO's intercession comes after two failed attempts by the United Food and Commercial Workers to get contract negotiations back on track. As the strike and lockout in Central and Southern California moved into its fourth month with no resolution in sight, tensions among leaders of the seven grocery union locals involved have become increasingly apparent.

Observers were not convinced that the AFL-CIO's aggressive tactics would bring about a labor-friendly conclusion.

I'd be one of those observers. Whatever the conclusion, this strike seems to be well past the point at which a win-win settlement is possible. No way any improvements in contract terms the workers gain can make up for their lost pay; no way any more reasonable terms the stores gain (compared to pre-strike union demands) can make up for their lost profits. So it's going to be lose-lose, and just a question of who is the bigger loser. Very unfortunate situation. I'm happy it was resolved more quickly here in St. Louis.

Continued . . .

Researchers note: nice summaries of state employment laws

Check out these charts on various state employment law topics from the National Conference of State Legislatures.

Depending on the state, in addition to providing basic information, the charts are hyperlinked directly to the state statutes.

Updating through conventional research methods is recommended.

Continued . . .

Watch out for overly-accommodating and patronizing management behavior

In the January issue of Workforce Management magazine (subscribe here), Sondra Thiederman writes "Guerrillas in Your Midst" (based on her book "Making Diversity Work"):

Gretchen, marketing director at a large U.S.-based pharmaceutical company, listened as the new Cambodian supervisor explained his design idea. She then nodded respectfully and said she'd think about it. But she returned to her desk with little understanding of what the man had said. "Saru's accent was so heavy I just gave up," Gretchen recalls. "I'm sure that his ideas were fine. I didn't want to discourage him, so I gave him permission to go ahead with the project."

(Note this language barrier issue. I will soon be discussing it in connection with "English-only" policies and multilingualism.)

Poor Gretchen. She thinks of herself as a "nice" person who would never harbor a bias against anyone. Trouble is, she and other well-intentioned managers are, in fact, carriers of a particularly dangerous strain of prejudice I call "guerrilla bias."

The guerrilla bias is a dangerous prejudice for two reasons. First, . . . guerrilla bias is concealed behind good intentions, kind words and even thoughtful acts. Second, it is based on the perverse premise that all . . . those who are outside the so-called "majority" population are to some degree fragile, quick to explode or in need of special treatment.

The behavior is manifested in ways such as reluctance to coach a female employee for fear of hurting her feelings, or excessive accommodation for cultural differences such as varying standards of punctuality. There are many examples of the bias interfering with effectiveness in the workplace. Gretchen's decision not to confront Saru about his communication skills is one. At issue is her inability or unwillingness to honestly discuss the problem or to provide effective coaching.

How often do managers fail to tell the truth to members of emerging groups for fear of hurting their feelings, getting slapped with a lawsuit or being labeled prejudiced? All of these feelings are based on the underlying premise of guerrilla bias: that members of emerging groups just don't have what it takes to hear the truth. The result is an employee who is never taught how to excel at the job and, therefore, isn't able to move up in the organization.

A woman once approached me after a diversity workshop. She was utterly confused about how to handle what seemed to be a straightforward management issue. Her confusion surprised me because she had appeared so bright and experienced during the workshop. The conversation went something like this:

"I just don't know what to do. I have several Native American employees who are late to work every day. I know they all have reliable transportation, so there's really no reason for them to be so lax. All I can figure out is that it must have to do with their culture, so I decided to give them some leeway and let them come in anytime up to half an hour after everybody else. Now my problem is that the other employees are complaining and want the same flexibility. In my industry, that just isn't going to work. What do I do now?"

My response to this woman was simple. "Why? Why would you allow the Native Americans to come in late when everybody else isn't granted the same privilege?" . . . After I had talked with her for a while, it became clear that cultural differences were not the problem, her bias was. She was another "nice" person guilty of guerrilla bias. . . . [H]er attitude harmed her ability to build harmonious teams. It demeaned the Native Americans by implying that they were not able to measure up to the same standard as other employees. It diminished productivity by throwing off the early-morning work schedule. And it created tension among team members and, she says, caused the non-Native Americans to look down on their colleagues.

The law of unintended consequences strikes again. Concern over "rights" and lawsuits and "diversity" and "respect for cultural differences" can perversely have an adverse effect on equal opportunity. Opponents of affirmative action say the same about it.

A related issue is that bending over backwards for minorities can bite back if there is ultimately a decision to crack down. Here's the question you don't want to have to answer in your deposition as a management witness: "So, Mr./Ms. Manager, if Employee X's attendance/performance was so unacceptable, why'd the company accept it for over 5 years before you came in as the new supervisor and suddenly fired him/her for it?"

Continued . . .

More good reading on the healthcare benefits crisis

From Atlantic Information Services, Inc. come these "15 Big Predictions for '04 . . . CDH [Consumer-directed health care] Trends for the New Year"

The top 15 predictions:

(1) New partnerships between insurers and financial institutions: The anticipated HSA boom will give insurers and third-party administrators (TPAs) an opportunity to develop and sell new products. It also will provide financial institutions with a way to enter the health insurance market. Few insurers and TPAs, however, will want to deal with tracking account rollovers, and financial institutions won't want to deal directly with claims. That will clear the way for partnerships between the two groups . . . .

(2) CDH adoption will grow most significantly in 2006: CDH plan enrollment will balloon in 2004 to almost 1.2 million, from a base of about 500,000 in 2003 . . . . Enrollment, he says, will grow most significantly in 2006 when increased product availability - spurred by HSAs [health savings accounts, created by the new Medicare law] - meets growing demand from mid-size and small employers that typically lag behind jumbo firms in benefits innovation.

(3) HSAs will improve acceptance of CDH, but adoption will remain low . . . . Employees who have grown accustomed to 100% coverage and low copays will be reluctant to accept a high-deductible CDH plan.

Yeah . . . but who has that kind of coverage anymore?

(4) HSAs will be favored by small employers . . . .

(5) HRA [health reimbursement account]-based CDH plans will be seen as more effective than HSAs . . . .

(6) The industry will develop new CDH flavors: Driven by a perceived market demand, insurers will develop specialty CDH products - such as Rx only, vision only and dental only . . . .

(7) CDH successes will breed lackluster imitators: CDH will move closer to the mainstream in '04, but a new wave of products marketed as "consumer-driven" will fail to offer necessary consumer support tools. Giving employees financial responsibility without information, tools or support to help them make decisions is a recipe for disaster . . . . "Lackluster product offerings will turn some against the [CDH] concept merely because the specific implementation of CDH that they experienced was sub-par." Bad experiences among consumers in such plans could poison the CDH movement. . . .

(8) CDH vendors and insurers will be forced to address shortcomings: Although managed care organizations - through their captive health provider networks - can offer deep discounts, few of them have developed robust decision-support tools . . . CDH vendors, by contrast, tend to offer more sophisticated, user-friendly systems and member-support tools, but rely on limited "rental network" discounts. . . .

(9) Hospitals will face more pressure to compete on price and quality . . . .

(10) Employer-employee tension will prompt future CDH growth: Another year of double-digit health insurance rate hikes, coupled with increased cost sharing, will lead to more tension between employers and employees. That tension will inspire more employers to examine CDH as a new option for 2005 . . . .

(11) Employees will grumble about increased financial responsibility: There will be a learning curve associated with CDH plans that require employees to wait for reimbursement from their HRAs or HSAs . . . .

We've had plenty of tension and grumbling this year (Exhibit A: the grocery strikes). Better IMHO for employees accept the fact the problem is not the fault of greedy employers, and for employers and employees to shoulder the responsibility and explore CDH options together -- with candid discussion of the true costs and risks of various options -- than for the whole country to get suckered into some mammoth one-size-fits-all government healthcare entitlement program we can't afford that just encourages costs to keep ballooning since Uncle Sam is the only responsible party.

(12) Information-starved consumers will spawn a new industry: As employees take on more fiscal responsibility over their health care decisions, they will want to learn all they can about medical conditions and treatment options, physician selection, and pharmaceutical costs and effects. . . .

(13) Positive results will help CDH pick up steam . . .

(14) Enrollment in optional CDH plans will increase substantially: When offered as an option alongside traditional managed care plans, enrollment in CDH plans this year will hover between 30% and 50% - significantly higher than the single-digit enrollment numbers seen in recent years . . . .

(15) Restricted access will be more palatable to consumers: Although restricting access to providers successfully held down costs for HMOs, it caused consumers to bristle. With consumers now in the driver's seat, however, the concept that led to a backlash against traditional managed care might be embraced by CDH enrollees . . . .

Meanwhile, in contrast to this movement towards a market-based approach in which consumer choice and responsibility is viewed as key, rumblings favoring universal (i.e. government-provided) health care grow.

CNN reports: Panel urges universal health insurance by 2010 See also a similar and somewhat more detailed story in the Washington Post. Both articles report on a study by the Institute of Medicine entitled "Insuring America's Health: Principles and Recommendations"

CNN summarizes the study as advocating that "In addition to covering everyone, health insurance should be continuous, affordable for individuals and families and sustainable for society."

Ok . . . who can argue with that? And we all want love, world peace, prosperity, and justice for all, too . . . . BUT HOW? Here's the answer:

The report does not endorse a specific proposal, noting three approaches that it said would result in insurance for nearly every American:

Requiring employers to provide health insurance, with the government providing coverage for those not covered in the workplace.

Requiring individuals to obtain coverage and providing tax credits to help them pay for it.

Establishing a single-payer system administered by the federal government that would eliminate insurance premiums and enrollment qualifications but require increased taxes.

OK, but none of these "proposals" addresses the problem of COST. How do any of these options provide incentives to restrain the cost increases?

The Post said:

Although some criticized the report for a lack of specificity and for not urging quicker action, overall it drew praise from across the political spectrum.

Stuart M. Butler of the conservative Heritage Foundation called it "pretty much on the mark," though he wondered what the committee meant by language calling for minimum coverage, and about costs. Ron Pollack of left-leaning Families USA called the report "very significant" and said he hoped it would "catapult this issue to the top of the agenda."

A White House spokesman said Bush, who has proposed new tax credits to help the uninsured buy coverage, is committed to making health care insurance available to more Americans. "The president is working toward making health care affordable and accessible to as many Americans who desire to have it through . . . a host of measures, without creating a government-run health care system that rations and may ultimately be counterproductive to the high quality of care that Americans enjoy today," said spokesman Trent Duffy.

Senate Majority Leader Bill Frist (R-Tenn.) praised the report but said he was "concerned that the report may not focus enough on the reasons why health care costs continue to rise and how to pay for any reform."

Indeed, look at the portion of the report that discusses costs -- a nice exposition of the problem; no meaningful solutions.

Continued . . .

Kind mention of this blawg

Michael Fox of Jottings by an Employer's Lawyer made this complimentary (and complementary) reference to my MLK day thoughts.

If you like my blawg, be sure to blogroll his as well.

Continued . . .

Levi's claims vindication in dismissal of lawsuit after holding out while others settled for millions

Jenny Strasburg wrote for San Francisco Chronicle 1/8/04 (yep, I'm running a back-blog again!): "Levi's lawsuit dropped; Saipan workers' case dismissed in victory for clothier":

Levi Strauss & Co. has won the dismissal of a lawsuit over alleged sweatshop abuses on the U.S. commonwealth island of Saipan, effectively closing a 5-year-old case that involved more than two dozen of the nation's largest clothing retailers.

The dismissal -- agreed upon by Levi's and lawyers representing an estimated 30,000 current and former Saipan factory workers -- was a long- sought outcome for the San Francisco jeansmaker.

In April, Levi's was the lone holdout in a landmark $20 million settlement involving 27 garment manufacturers and 27 retailers including San Francisco's Gap Inc. and Burlingame's Gymboree Corp. The settling parties admitted to no wrongdoing but agreed to pay about $6.4 million to factory workers employed on Saipan at various times since 1989, along with other settlement provisions.

Uh. . . let's see . . . that would be about $13.6 million (68% of total settlement) to the lawyers? Or did some money go somewhere other than to workers and their lawyers? Champions of the poor workers, those lawyers, aren't they?

"I think it's a strong vindication. We were the only defendant in the suit to get dismissed without having to make any kind of payment,'' Albert Moreno, a senior vice president and chief counsel for Levi's, said in an interview Wednesday.

Since January 1999, when the lawsuit was filed, Levi's has denied any wrongdoing, arguing that it was the first major U.S. clothing maker to adopt a far-reaching factory-monitoring program and that it has maintained a manufacturing code of conduct that's among the most stringent in the industry. . . .

Here's what the Levi's website says about their "Socially Responsible Worldwide Sourcing"

Here are the Global Sourcing and Operating Guidelines from the site.

Michael Rubin, a lead attorney for the plaintiffs and a partner at Altshuler Berzon Nussbaum Rubin & Demain in San Francisco, said Wednesday that plaintiffs' attorneys agreed to the voluntary dismissal of the case against Levi's because the larger battle already was won.

"It was no longer worth the expense to pursue the litigation against this remaining defendant," Rubin said. "That Levi Strauss sought to distinguish itself as the one settlement holdout says nothing about the merits of the lawsuit. We are delighted with the terms of the settlement and thrilled that the workers are receiving sizable back-payments." . . .

Retailers that settled included Sears, Roebuck & Co., Nordstrom, Tommy Hilfiger, Calvin Klein, Target, Abercrombie & Fitch, Talbots Inc., J.C. Penney and Polo Ralph Lauren. The retailers repeatedly denied the allegations, and the settlement does not include admission of wrongdoing.

For Levi's, however, settlement was never a satisfactory option, Moreno said.

"We felt from the beginning of the litigation that the allegations were simply not true," he said. "I think you have to stand behind what you believe in. You can't let people lightly accuse you of allegations that are not true with the expectation that because of the expense and the negative publicity that you're going to get, that you're going to settle."

Moreno expressed similar sentiments in a posting on the company's internal Web site dated Dec. 19 and obtained by The Chronicle.

"The dismissal of this lawsuit confirms that there was no substance to the claims," Moreno wrote to Levi's employees. "Although it would have been easier and less expensive to settle this case a year ago, we were not willing to compromise our values. There were risks to this approach but in the end, our willingness to stand up for our principles was rewarded."

Neither he nor another Levi's spokesman would disclose how much the Saipan litigation has cost the troubled company. "It was a substantial amount -- in the six figures," Moreno said.

Probably the other companies paid similar amounts in legal fees -- and then caved. Hooray for Levi's for sticking to their guns!

Costly litigation is only one threat to Levi's financial health as the $4 billion-a-year company, home to world-famous Levi's and Dockers brands, struggles to reverse seven years of declining sales and balance more than $2 billion in debt.

See related story on Levi's finances and plant closings.

The groups that initiated the class-action Saipan lawsuit -- Asian Law Caucus and Global Exchange, both of San Francisco, Sweatshop Watch of Oakland and the Union of Needletrades, Industrial and Textile Employees -- alleged far-reaching abuses of the island's garment workers.

The lawsuit claimed that thousands of workers, including many from China and the Philippines, effectively were kept in indentured servitude, forced to pay recruitment fees and give up a wide range of personal freedoms to keep their jobs and avoid reprimand.

Indentured servitude?

This article on the earlier settlement explains:

The plaintiffs say these workers are trapped in a kind of modern-day indentured servitude, in which workers are forced to pay recruitment fees of as much as $5,000 each, forced to work overtime and kept in debt with paycheck deductions for housing and food.

"If they complained, they would be fired," said Michael Rubin . . . "They would then be deported. They did whatever they were told to do, with whatever conditions existed."

The Marianas' [including Saipan] minimum wage is $3.05 per hour, far less than the $5.15 per hour minimum nationwide and $6.75 per hour in California.

Uh . . . yes, and how many times higher (factor of 10?) is this wage than those in the homelands of many of these migrant workers, who are drawn there by these wages, and freely choose to live and work there. They're forced to do this because if they don't they'll be fired and sent home. That's a choice. And they can quit. That's a choice true indentured servants didn't have. See this definition ("persons obliged by contract to work for a stated number of years").

Meanwhile, somehow as I surfed the sites of the above anti-sweatshop groups, I ran across an interesting site: Union Jeans & Apparel, selling items "union made in USA" such as men's jeans for $29.99 and men's or women's denim shirt for $27.25. Doesn't look to me like American-made is inherently that pricey. Seems people who pay designer prices (like $50 for a denim shirt or jeans) for garments foreign-made by impoverished workers -- whether they're helping the world economy and bettering the lives of those workers and their countrymen (as free traders would argue and I'd tend to agree) -- are sure lining the pockets of the American corporations that are laughing all the way to the bank at how much people will pay for a logo and brand name. [Compare shirt with cost of perhaps $20 (just a guess) sold for $29.99 to shirt with cost of perhaps $10 sold for $50.]

Continued . . .

No compensatory & punitive damages or jury trial for retaliation under ADA, 7th Circuit holds

In Kramer v. Banc of America Securities, LLC (7th Cir. 1/20/04), the Seventh Circuit held compensatory and punitive damages are not available remedies for retaliation claims under the ADA (though they are for direct ADA discrimination claims) because the Civil Rights Act of 1991 omits reference to the retaliation section of the ADA in granting a right to such damages.

This meant no right to a jury trial because the only only remedies available were equitable.

Legal researchers note: Court claims this is case of first impression in circuits; cites a number of district court decisions.

Seems a straightforward interpretation on an issue many may not have considered. Will not arise that often, as ADA retaliation claims are typically coupled with direct discrimination claims. But if summary judgment is granted on the latter, leaving only the retaliation claim, a motion to strike the compensatory and punitive damages and jury demand would be in order.

Continued . . .

Crabbed ADA interpretation of the year (month?)

Shannon P. Duffy writes in The Legal Intelligencer: "Early-Stage MS Ruled Not a Disability"

A worker who was fired soon after telling his bosses that he suffers from multiple sclerosis cannot rely on the close timing of his announcement and the firing to prove that it was the result of discrimination if the employer had already documented months of substandard job performance prior to learning of his condition, a federal judge has ruled.

In Yudkovitz v. Bell Atlantic Corp., U.S. District Judge Legrome D. Davis granted summary judgment in favor of Bell Atlantic after concluding that plaintiff Louis Yudkovitz had failed to rebut the employer's legitimate, non-discriminatory reason for firing him.

Significantly, Davis also held that Yudkovitz could not even make a prima facie case of discrimination under the Americans with Disabilities Act because a case of early-stage multiple sclerosis that causes annual "flare-ups" does not qualify as a disability under the ADA without proof that the condition substantially impaired a major life activity.

Yudkovitz also failed to prove his alternate theory that he was "perceived as" disabled, Davis found, because his disclosure of his diagnosis came after months of criticism of his work performance.

"There is nothing in the record to suggest that Yudkovitz's condition played any role in Verizon's criticism of his performance or its decision to terminate his employment. To the contrary, the record demonstrates that Yudkovitz's managers perceived his work to be deficient and were critical of Yudkovitz's performance beginning at least nine months before his termination," Davis wrote.

Davis found that Bell Atlantic managers were complaining about Yudkovitz's poor performance "long before they knew he had MS" and that Yudkovitz did not disclose the diagnosis until April 2000 -- more than one month after he was placed on a performance improvement plan. . . .

But long before that, they knew he had a neurological disorder and qualified for short term disability because of it (see below), facts the judge recites but seems not to find significant. (Admittedly, my assessment here is based on the article, not the opinion itself.)

According to court papers, Yudkovitz suffers from "relapsing-remitting multiple sclerosis" and to date suffers "flare-ups" about once a year that last from one week to one month during which he gets dizzy, loses control over his left side and has difficulty climbing steps.

When his MS is in remission, Yudkovitz testified, he still experiences problems in his left leg and left arm, and therefore walks slower, has difficulty climbing steps, lacks the mobility he had in his youth and is unable to lift or move things around the house.
Yudkovitz also testified that, while working for Verizon, his MS never affected his job performance. . . .

In November 1999, Yudkovitz was hospitalized after suffering an MS flare-up while walking through a shopping mall. He testified that he called his immediate supervisor to inform her that he would be out sick because his "neurological disorder ha[d] flared up."

Yudkovitz was referred to CORE Inc., a third-party company that provides Verizon with employee disability management. CORE later told Verizon that Yudkovitz qualified for short-term disability, but it did not share with Verizon any information about the nature of Yudkovitz's condition.

After he returned to work in December 1999, managers began complaining that Yudkovitz's work was late and disorganized and that they were concerned about its accuracy and about his ability to react to feedback. . . .

On April 18, 2000, Yudkovitz asked if there would be any consequences if he missed any more time from work and was told that it would probably cost him his job. At that point, Davis found, Yudkovitz disclosed for the first time that he had MS.

In late April, managers decided that Yudkovitz should be fired . . . .

EARLY-STAGE MS

Davis . . . found that Yudkovitz could not make a prima facie case of discrimination under the ADA because he could not show that his early-stage MS substantially affected a major life activity.

Yudkovitz's lawyer, Andrew Abramson, argued that "MS greatly affects the left side of his body in general and greatly restricts his left leg, causing [him] to have trouble with his balance, great difficulty in walking and prevents him from carrying heavy objects."

But Davis found that when Yudkovitz was questioned in his deposition about his limitations, he testified that he "walks slower, has difficulty climbing steps, uses a quad-based cane as needed, and is unable to carry things in his left hand."

A doctor also testified that Yudkovitz experiences left-sided weakness, fatigue and an altered gait.

That evidence, Davis found, fell short of establishing a disability.

"Yudkovitz ... presented no evidence that the restriction on his ability to walk is more than moderate. ...

I'm sorry, judge, but it sure don't sound like no picnic. Apparently this judge thinks you have to be in a wheelchair or comatose to be disabled. I bet if he had this condition he'd feel substantially limited.

Davis also rejected Yudkovitz's claim that he was "perceived as" disabled.

"The mere fact that an employer is aware of an employee's impairment, however, does not demonstrate that the employer regarded the employee as disabled. ... That Verizon noticed Yudkovitz walked with a 'slight limp' or knew of his physical impairment does not demonstrate that it perceived Yudkovitz as being disabled," Davis wrote. . . .

As an employers' attorney, I like being able to win ADA cases on summary judgment by arguing a plaintiff is not really disabled, and sometimes that's a sensible approach for the judge to take, but when a person really has a serious illness like this, which has marked impact on mobility and continuity of work availability, it would appear better for the judge to acknowledge the disability and rule on the merits.

Here the judge wanted to protect himself on appeal with this alternative rationale, in case his holding on the intentional discrimination issue was overruled. But he may have just invited appeal by going too far on the disability issue.

Continued . . .

Martin Luther King Day

What did you do to observe Martin Luther King Day? I went to work as usual, but suspect many of my readers had the day off. Did you take time to reflect on the meaning of this holiday?

I would suggest taking the time to listen to the "I have a dream" speech. Maybe you think you've heard it so often there's no point in listening, but you may not have heard the entire speech, which is available in RealPlayer audio from the History Channel. If you haven't the patience, here are some very brief clips (the Cliff's notes version) to get you in the mood. Or if you prefer text, here you go.

The dignity and power of the voice; the poetic use of language; the black minister's oratorical timing and inflection; and the moment in history -- all combine to make this one incredible speech.

Reflecting on my role in the continuing struggle for civil rights, I must consider the fact that in defending employers against employment discrimination charges I may at times be defending the guilty and thereby indirectly facilitating discrimination.

I must say that I have found this to very rarely be the case; unfortunately, the employment discrimination laws are all too often used for purposes other than remedying true acts of discrimination.

Of course, in many cases people may honestly believe there was discrimination where in fact there was none. In others, they just believe they were not treated fairly and have no other basis for a legal remedy.

And of course, even in the case of outright discrimination, I am participating in the adversarial system through which there is enforcement of the laws established as a direct result of the civil rights movement, and helping this system provide due process to all parties -- in this respect a role no different than that of a criminal defense lawyer defending a guilty criminal.

Additionally, when called upon to advise employers regarding various employment decisions, the management-side attorney typically gives quite conservative, compliance-oriented advice intended to avoid even the appearance of discrimination. In this respect, we are even more directly working for, not against, Dr. King's dream.

Additionally, my dream for my children (one of my dreams for them) is that they will judge others not by the color of their skin, but by the content of their character. That's easy to say, but I've acted upon it by: 1) choosing to live in a very integrated community and 2) sending my children to the public schools in a black-majority district, instead of (in what I tend to view as an act of implicit racism), assuming only a private school would do, without adequately investigating the very good quality education available in the public school. We feel our lives are enhanced by our contacts with the African-American community, and school and related activities is a focal point for most of these contacts.

So, I wish one and all a happy and appropriately reflective Martin Luther King Day in which you, too, consider your role in America's ongoing and incomplete mission of equal opportunity and, perhaps, resolve to do more to further it in the coming year.

Continued . . .

Survey results: biggest HR legal or regulatory obstacle?

Here are the results from a Workforce Management readership survey:

If you could make changes to one workplace-related rule or regulation, which would it be?

10%: The ADA
15%: Overtime rules
2%: Minimum-wage mandates
4%: OSHA regulations
17%:Workers' compensation
34%: Family leave laws
3%: I-9 and immigration rules
9%: Something other than the above
7%: None; I'd keep the rules as is

Total respondents: 417

Interesting -- but not surprising -- that family leave took first place. FMLA was such a proud achievement of the first Clinton term ! But it has proven unwieldy to administer and encouraged what is often perceived as unjustified absences, particularly under the guise of "intermittent leave."

I do wonder if the results would be different if the survey included sexual harassment.

Continued . . .

Iowa Supreme Court upholds grooming policy prohibiting male earrings

A male employee fired for wearing an earring could not sue for sex discrimination, even though female workers were alllowed to wear such jewelry, the Iowa Supreme Court ruled in Pecenka v. Fareway Stores, Inc. (12/17/03).

Obviously the policy discriminates on the basis of sex ! But the catch is that jewelry restrictions and other similar aspects of dress codes are not viewed as having significant enough impact on the employment experience. Not all discrimination is remediable (what a shocking thought -- how midwestern and conservative ! I love it !).

The court explained (I'm leaving the cites in for any research freaks reading this):

[T]he federal courts which have examined Title VII’s legislative history have found personal grooming codes that reflect customary modes of grooming having only an insignificant impact on employment opportunities do not constitute sex discrimination within the meaning of the Act. See, e.g., Barker v. Taft Broadcasting Co., 549 F.2d 400, 401–02 (6th Cir. 1977); Knott, 527 F.2d at 1252; Dodge, 488 F.2d at 1337.

Several federal appellate courts have considered Title VII in the context of personal grooming codes regulating hair length. Every federal appellate court which has considered personal grooming codes prohibiting men but not women from wearing long hair has found the codes to be non-discriminatory within the meaning of Title VII. See Harper v. Blockbuster Entm’t Corp., 139 F.3d 1385, 1387 (11th Cir. 1998); Tavora v. N.Y. Mercantile Exch., 101 F.3d 907, 908 (2d Cir. 1996); Barker, 549 F.2d at 401; Earwood v. Cont’l Southeastern Lines, Inc., 539 F.2d 1349, 1351 (4th Cir. 1976); Longo v. Carlisle DeCoppet & Co., 537 F.2d 685, 685 (2d Cir. 1976); Knott, 527 F.2d at 1252; Willingham v. Macon Tel. Publ’g Co., 507 F.2d 1084, 1092 (5th Cir. 1975); Baker v. Cal. Land Title Co., 507 F.2d 895, 898 (9th Cir. 1974); Dodge, 448 F.2d at 1337; Fagan v. Nat’l Cash Register Co., 481 F.2d 1115, 1126 (D.C. Cir. 1973).

We agree with these decisions and their reasoning. The sex discrimination provisions of Title VII and the ICRA were enacted to stop the perpetuation of sexist or chauvinistic attitudes in employment which significantly affect employment opportunities. Title VII and the ICRA were not meant to prohibit employers from instituting personal grooming codes which have a de minimus affect on employment.

Continued . . .

Harassment case discusses definition of supervisor, need for evidence harassment was based on gender

Affirming summary judgment for the employer in Joens v. John Morrell & Co (8th Cir. 1/14/04), the Eight Circuit Court of Appeals concluded the alleged harasser, a foreman in a different department, was not the plaintiff’s supervisor.

He had no direct authority to control the work of employees in the plaintiff's department. Like all foremen, he had authority to “write up” any hourly employee, including the plaintiff, for job performance deficiencies. However, only the HR department actually had the power to discipline, and the alleged harasser never wrote up the plaintiff or otherwise complained to management about her job performance.

The court acknowledged that two different definitions of “supervisor” have been used in harassment cases in other circuits, citing cases from the 7th and 4th Circuits requiring the power to take tangible employment action against the employee, and a 2nd Circuit case requiring only authority to direct the employee’s daily work activities. The district court opinion which the 8th Circuit affirmed in this case had chosen the former, narrower definition. The 8th Circuit did not expressly adopt this standard, apparently finding the alleged harasser not a supervisor under either standard.

The significance of this issue in harassment cases is that a somewhat different legal analysis applies, depending on whether the alleged harasser is the plaintiff’s supervisor, or just a coworker.

If supervisor, the company is strictly liable, unless it can prove it acted reasonably to prevent and correct harassment and the plaintiff failed to act reasonably to take advantage of complaint procedures or otherwise prevent harm.

If coworker, the employer is only liable if it knew or should have known of the harassment but failed to take appropriate remedial action.

As a practical matter, in many cases this is not that significant of a difference – if harassment is proven, the employee’s efforts to complain, or lack thereof, and the employer’s corrective action, will be dispositive of the case, whether arassment was by a supervisor or a coworker. In a close case, however, the shifted burden of proof where a supervisor is involved can be very important.

The company here was wise to retain disciplinary authority in the HR department, as this helped it downplay the authority of the foreman. Such a policy has many other advantages, such as helping ensure uniformity and fairness of discipline and insulate decisionmaking from discriminatory attitudes of lower-level supervision (see yesterday’s post on the Lockheed case).

A second reason for the decision in favor of the company was that there was no evidence the harassment was based on sex (it was not sexual in nature), and the plaintiff never complained that she felt it was so based. She was just subjected to mean, rude, and impatient conduct, including swearing and “abusive criticism,” conduct which could equally have been directed at men -- and there was no evidence it was not.

This illustrates a couple of common misconceptions about liability for "harassment."

First, some employees seem to think the law protects them against generic “harassment” such as disrespectful, rude, mean, unreasonable, pushy supervision. It does not; only if the harassment is based on a protected characteristic is there a legal remedy. (Which is not to recommend such “equal opportunity harassment” as a desirable management style; only to point out its lawfulness.)

Second, some people think sexual harassment must involve sexual topics or behavior. It need not; if the conduct is sufficiently offensive and is directed at its target because of their gender, it may be unlawful.

Third, not all mention of sexual topics is sexual harassment, even if some people are offended. Again, if it is participated in equally by men and women (and equally offensive to some of each gender) obscene remarks, sexually-oriented jokes, etc. may not be unlawful (but still should be strictly prohibited).

Continued . . .

Fascinating opinion on discrimination liability based on bias of subordinate employee who provides information affecting decision

In Hill v. Lockheed Martin Logistics Management, Inc. (4th Circuit 1/5/04), the full Fourth Circuit Court of Appeals, in a relatively rare rehearing of a Fourth Circuit panel decision, analyzed in detail (in a 39 page opinion) the impact of an employer's decision-making process on allegations of discrimination.

The plaintiff in this case, an aircraft sheet metal mechanic, claimed that a safety inspector discriminated against her because of sex and age and in retaliation for her complaints of discrimination, causing her termination.

She alleged the inspector called her a "useless old lady" who needed to be retired, a "troubled old lady," and a "damn woman" on several occasions.

This was her only evidence of discrimination. She made a number of admissions that were crucial to the ultimate decision against her, which came about on her appeal of a District Court decision granting summary judgment to the employer.

She admitted that three reprimands issued to her subjected her to termination under company standard operating procedures. She admitted she committed the infractions giving rise to the reprimands. She admitted the lead persons who issued the reprimands had no discriminatory motive in doing so, and that their superiors who made the termination decision also had no such motive.

Wisely, given these admissions, she attempted to proceed under a mixed-motive theory (which can allow at least partial recovery if discrimination was a motive, even if there were also nondiscriminatory motives). She claimed that even if the infractions and resulting reprimands were a motivating factor in the termination, the input of the inspector, who reported the facts giving rise to the second and third reprimands, meant that his discriminatory motives were also a factor.

The court discussed the importance of determining who holds "actual decisionmaking" power" or has "principal responsibility" for an employment decision. It said "it is these individuals who must possess the requisite discriminatory motivation...."

Legal researchers note: on pages 14-15, you can can find a string cite of circuit decisions from the 2nd, 3rd, 5th, 6th, 7th, 8th, 9th, 10th, 11th, and DC Circuits applying a "cat's paw" or "rubber stamp" theory to determine "employer liability for the discriminatory acts and motivations of supervisory employees who do not exercise formal decisionmaking authority."

The court agreed with the "cat's paw" or "rubber stamp" theory to the extent it prevents an employer from insulating itself from discrimination by the real decisionmakers through the use of a formal decision maker who merely rubber stamps. However, in apparent disagreement with some of the other circuits, it stated:

[W]e decline to endorse a construction of the discrimination statutes that would allow a biased subordinate who has no supervisory or disciplinary authority and who does not make the final or formal employment decision to become a decisionmaker simply because he had a substantial influence on the ultimate decision or because he has played a role, even a significant one, in the adverse employment decision. . . .

[A]n employer will be liable not for the improperly motivated person who merely influences the decision, but for the person who in reality makes the decision [whether or not formally denominated the decisionmaker]. . . .

Applying these principles to the facts of the Lockheed case, the court reviewed the facts of the two reprimands in which the safety director had been involved, concluding that he was not the actual decision maker or principally responsible because there was an independent review by the supervisor, who met repeatedly with the plaintiff to discuss the problems. Similarly, the ultimate termination decision did not follow automatically upon issuance of the third reprimand, although standard operating procedure authorized termination. Rather, the plaintiff was sent home to await word on her status while the ultimate decision makers reviewed not only the facts surrounding the reprimands, but other information concerning the plaintiff's work performance.

Ultimately, all the plaintiff had was the fact that perhaps infractions she actually committed would not have come to the employer's attention but for the discriminatory motivation of the safety inspector. The court found this insufficient, explaining that if it held otherwise:

[A]n unbiased employer could never discipline or terminate an employee for an undisputed violation of company rules, including such egregious acts as fighting or stealing . . . so long as the employee could demonstrate that she was "turned in" by a subordinate employee "because of" a discriminatory motivation.

A dissenting opinion supported by four of the eleven circuit judges ruling on this case objected:

Biased subordinates without decisionmaking authority often influence [employment] decisions. Yet the majority holds that when a biased subordinate with no decisionmaking authority exercises substantial influence over an employment decision, the subordinate's bias cannot be imputed to the formal decision maker who acts for the employer . . . . This puts us at odds with virtually every other circuit, and it puts us at odds with the language of the statutes, which impose liability when an adverse employment decision is taken "because of" sex or age discrimination. . . . After today in this circuit, an employer is off the hook for a discriminatory employment decision that is motivated by the bias of a subordinate who lacks decision-making authority.

This is a tough issue and likely to be a controversial opinion. Perhaps the issue will make its way to the Supreme Court.

I think the majority is probably correct. The dissent mischaracterizes the majority to the extent it refers to "the formal decision maker." The majority endorsed, and engaged in, a searching inquiry to identify the true decision maker(s) and specifically stated it would not look only to a formal decision maker who was merely a rubber stamp.

The ultimate problem is that the law is violated only if the employment decision was made by the "employer" "because of" a protected characteristic. This requires a determination of whose conduct is considered that of the employer and evaluation of whether the actual decision was tainted by bias. The majority establishes reasonable standards for making these determinations.

On the other hand, one can imagine a case with slightly different facts and wonder about how this court would have resolved it. What if the safety inspector had written the reprimands entirely on his own, and the termination decision had been largely or exclusively based on the reprimands? Would that have made him the decision maker?

This case is also interesting as a good example of personnel policy. Perhaps Lockheed HR is very well managed, perhaps some of this was unwillingly imposed due to union requirements (I do not know for a fact whether the plaintiff was in a union-represented position, but it is not unlikely). It was good that they: 1) followed "progressive discipline" in issuing a series of reprimands prior to termination; 2) independently investigated the basis of each reprimand before issuing it, rather than relying solely on the safety inspector's word; 3) did not automatically terminate upon issuance of the third reprimand, but sent the plaintiff home pending investigation; and 4) did not authorize unilateral termination by frontline supervision.

There is always a danger that discriminatory remarks will be made (or alleged). These can be quite problematic for the defense of otherwise very solid cases. A review of this Lockheed decision demonstrates the wisdom of pushing final decision making, particularly on terminations, up the hierarchy to HR or more senior management. Hopefully these people are more likely to watch their mouth. They will not be called "rubber stamps" if they make some independent investigation and occasionally overrule recommendations from below. It is much more difficult for most employees to fabricate allegations of biased remarks by these decisionmakers for the simple reason that in many organizations they have no direct contact with such persons.

All very interesting, and now I'm finally going home for the weekend. (It took almost 2 hours to read the case and write this up!)

Continued . . .

Strikes drag on; no end in sight

CNN reports: "Striking Tyson workers reject latest offer "

The union for 470 workers who have been on strike against Tyson Foods' Jefferson plant for almost 11 months rejected the company's latest contract offer Sunday.

The workers, who walked out February 28 over wage and benefit concessions demanded by the company, voted 242-74 not to take the offer. . . .

Workers say health and pension issues still remain as sticking points, and the contract offer doesn't guarantee some jobs [hello . . . who has guaranteed jobs these days?] and doesn't allow all striking workers to return at once. . . .

The strike was in reaction to a Tyson contract proposal seeking a four-year wage freeze, creation of a lower-level wage scale for new workers, the elimination of the profit-sharing plan, cuts in vacation, sick leave and pension benefits and a bigger bill for less comprehensive health care coverage. . . .

Springdale, Arkansas-based Tyson hired replacement workers to continue production at the plant . . .

And here's another instance of people choosing not to work in a buyer's market for labor (showing complete lack of understanding of the concept of "bargaining power" that's fundamental to collective bargaining):

New York Times (Reuters) reports: Calif. Supermarket Labor Talks Break Down

Four days of secret talks between the union representing 70,000 striking southern California grocery workers and several big supermarket chains broke down on Sunday as the strike entered its fourth month, union officials said. . . .

Supermarket workers have been under mounting financial pressure, with local unions slashing pickets' pay by as much as 50 percent in recent weeks, and most workers losing health benefits as of Jan. 1.

UFCW spokeswoman Ellen Anreder said pickets who were being paid between $100 to $300 a week by their local unions have had those sums cut by 25 to 50 percent over the last several weeks. She denied reports that the pay was slashed because the local unions were running out of money.

``We're receiving strong indications that this is going to go on for a while so we're being conscious of our budgets,'' [why do this if you've got plenty of money?] Anreder said, insisting the reductions would not weaken the strike. . . .

Continued . . .

A smorgasbord of healthcare links (continued)

Start with this from the National Conference of State Legislatures: "State Health Care Cost Containment Ideas"

This is a very detailed and interesting document, described as follows:

[This is] a list of legislative ideas that states have either considered or passed into law. . . . Some of these ideas have been enacted and shown to reduce costs; others have not. Some of these ideas conflict with other ideas, and some may actually cost the state money, but may meet other state needs. The committee attempted to include a range of ideas, even though individual members considered some of these actions to have negative social or other impacts, regardless of monetary savings. . . .For each action proposed in this paper, there are often compelling counter arguments about why these ideas may not reduce health care costs, or that implementation of these ideas may create other problems, such as a decline in the quality of services. For this reason, the paper presents the rationale for a particular perspective about how cost saving may be achieved, along with some of the counter arguments of each.

Next up is a New York Times article about a legislative proposal supported by 1199/S.E.I.U., the health care workers' union, and the Greater New York Hospital Association, described as "an audacious [nice objective reporting!] and costly effort by New York State to cover one million people without health insurance and modernize hospitals." This "would be financed by a tax on businesses that do not insure their workers and by a billion-dollar state bond act."

Next, consider another aspect of healthcare costs: disability payments. Here's an LA Times article by Lisa Richardson: "Obesity Blamed as Disability Rates Soar for Those Under 60"

This article cites a study by Rand Corp., published in the January issue of the Journal of Health Affairs Here's the Rand news release, and you can buy the full journal reprint here.

The study found "Disability rates rose sharply between 1984 and 2000 among Americans younger than 60, probably because of a rise in obesity, while they declined among elderly Americans. . . . [T]he number of people aged 30 to 49 who could not care for themselves or perform routine household tasks jumped by 50%."

Speaking of disability, here is a very thorough and detailed study published in the Journal of Compensation and Benefits comparing insured versus self-insured long-term disability programs.

Finally, on the preventive health side, we have this from Employee Benefit News: Employers redesign office sites to get employees to walk more:

No wonder obesity is rampant; studies show Americans walk less than one mile per week doing daily activities and spend 90% of the average day indoors. To counter this disturbing trend, a handful of employers have gone back to the drawing board - an architect's drawing board, to be exact - to design worksites that will encourage employees to become more active, like it or not.

The article describes some interesting architectural approaches.

Continued . . .

Missions to moon & mars: what does this have to do with employment?

There's been much lately in the news about Bush's ambitious space proposals (see this today from Reuters (Randall Mikkelsen): "Bush to Outline Plans for Moon, Mars Exploration" )

President Bush on Wednesday is to outline a dramatic shift in U.S. space policy targeting a return to the moon and eventual manned mission to Mars, even as critics say a soaring deficit makes the goal unrealistic.

The proposal to replace aging U.S. space shuttles with a new generation spacecraft could give Bush a big-picture issue for his gathering re-election campaign and a theme for a potential second term.

Supporters and critics alike say Bush's proposal would also help extend U.S. military supremacy further into space, at a time China, a growing strategic power, is planning a series of lunar exploration missions.

"You always want the (strategic) high ground," U.S. Republican Sen. Sam Brownback of Kansas, chairman Senate commerce subcommittee on science, technology and space, told Reuters. . . .

Administration officials say Bush will propose landing an unmanned spacecraft on the moon this decade. Humans would return to the moon's surface in the middle of the next decade, after an absence since December 1972.

The United States would establish a presence on the moon as a stepping stone to an eventual manned mission to Mars. The United States is the only country to land humans on the moon, beginning in 1969. . . .

Bush is to propose an increase in NASA's budget, now about $15 billion, by 5 percent a year over the next three years, officials said. Other resources would be reallocated, including $3.5 billion a year for the space shuttle once it is retired on completion of the International Space Station. . . .

He said the effort would be affordable. But critics, including conservatives, blasted the idea as irresponsible at a time the federal budget deficit is expected to top $500 billion this fiscal year alone. . . .

U.S. security officials have stressed a need to ensure U.S. military dominance in space, especially in the wake of China's first manned space flight last year.

"It will not be long before space becomes a battleground," Lt. Gen. Edward Anderson, the deputy commander of U.S. Northern Command, was quoted in media reports as telling an intelligence conference last year.

When I first read about this a few days ago, I thought it was absolutely nuts. I'd rather see the government worry about what's going on here on Earth (such criticism of the space program has always had some appeal to me, even back in 1969 when we landed on the moon). On the other hand, this Bush proposal has kind of been growing on me.

Aside from the military justification -- which may indeed be the primary reason for the proposal, and may be quite valid -- I see the potential for significant impact on US leadership in science and technology, which will help reduce the damage from "offshoring" of technology jobs.

It is a legitimate criticism of the US workforce as a whole that our scientific and engineering education is no longer superior. Not enough of our "best and brightest" pursue such education and related careers. (And, anecdotally, I have heard this from the horse's mouth -- someone who works with Indian scientists only because he has found it difficult to find qualified Americans in his specialty.)

This was not always the case. I was born in 1957, the year of the Sputnik, the Russian satellite launch which started the "space race," including a major push for scientific and technical education.

As a consequence, growing up in the 1960s and '70's, the educational environment in which I was raised seemed to assume that the most academically successful students (at least the males) would pursue education and careers in science and engineering. (I rebelled against this and studied social sciences -- look where I ended up!) I don't believe this is the case anymore. American life, in many aspects, consists of pendulum swings from one extreme to another. Maybe it's time to swing back towards emphasis on science and engineering, and maybe Bush's new space proposals, like the original "space race," will provide the impetus.

Many of the jobs that would be created would be jobs that cannot be "offshored." (I realize this is somewhat debatable; arguably any job CAN be offshored, but political and security concerns would preclude it in this situation, I believe).

There may also be a need to import foreign talent -- as was done in the original "space race" (anyone heard of Wernher Von Braun, a German who -- after working on rockets for the Nazis -- apparently worked for the U.S. Army's ballistic missile program for five years before becoming a US citizen, and later served as Director of NASA's Marshall Space Flight Center).

So this proposal, from an employment perspective, could help improve the US talent pool, provide government-subsidized high-level jobs that cannot be offshored, and encourage immigration of highly talented foreign workers (which I believe has many social and economic benefits and does not merely involve "foreigners taking Americans' jobs").

Continued . . .

A smorgasbord of healthcare links

I haven't the time to excerpt and comment on all the good stuff I've seen lately on the healthcare crisis and possible solutions. If you're interested in the subject, check out these links:

Here's testimony by Kate Sullivan, the US Chamber of Commerce's Director of Health Care Policy before the Senate Democratic Policy Committee 1/6/04 This is a well-expressed analysis of a number of aspects of the issue.

Here from BNA Tax Management is a "Practitioner's Forum Discussion on Health Savings Accounts" This is "the transcript of an informal discussion of employee benefit practitioners held in Washington, D.C. on December 9, 2003. The topic is Health Savings Accounts ("HSAs"), which were recently enacted under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, signed into law by President Bush on December 8, 2003. In particular, the discussion focused on the importance of the creation of HSAs, the future viability of HSAs and the effect HSAs may have on employer-provided health care."

Here from BenefitNews Adviser is a report of a study showing "24% lower costs through disease management." Here are links to more detailed papers on the subject by Accordant.

More tomorrow, and hopefully soon a couple of good new employment cases as well. But now it's off to Taco Bell to provide for my family in the manner to which they are accustomed -- to whit, 35 cent Taco night!

Continued . . .

Industry reaction to bad press over "offshoring" of IT work

Findlaw (AP) (Ted Bridis) reports: "Firms Defend Moving Tech Jobs Overseas"

Worried about possible government reaction to the movement of U.S. technology jobs overseas, leading American computer companies are defending recent shifts in employment to Asia and elsewhere as necessary for future profits and warning policy makers against restrictions.

"There is no job that is America's God-given right anymore," said Carly Fiorina, chief executive for Hewlett-Packard Co. "We have to compete for jobs."

In a report released Wednesday, the companies said government efforts to preserve American jobs through limits on overseas trade would backfire and "could lead to retaliation from our trading partners and even an all-out trade war."

Intel Corp. chief executive Craig Barrett said the United States "now has to compete for every job going forward. That has not been on the table before. It had been assumed we had a lock on white-collar jobs and high-tech jobs. That is no longer the case." . . .

Barrett complained about federal agriculture subsidies he said were worth tens of billions of dollars while government investments in physical sciences was a relatively low $5 billion. . . .

"Countries that resort to protectionism end up hampering innovation and crippling their industries, which leads to lower economic growth and ultimately higher unemployment," said the Washington-based Computer Systems Policy Project, whose member companies include Intel, IBM, Dell Inc. and Hewlett-Packard. . . .

The technology group argued in its new report that moving jobs to countries such as China or India - where labor costs are cheaper - helps companies more readily break into foreign markets and hire skilled and creative employees in countries where students perform far better than U.S. students in math and science.

"Americans who think that foreign workers are no match for U.S. workers in knowledge, skills and creativity are mistaken," the trade group's report said.

Even as technology companies lobby against limits on offshore employment, they are urging the Bush administration to approve new tax credits on research and development spending, spend more on university research on physical science and adjust tax depreciation schedules for technology purchases. They said they also want improvements in education, especially in elementaries through high schools. . .

A vocal critic of technology companies moving jobs overseas, Marcus Courtney of Seattle, dismissed the latest report. "This is not a recipe for job creation in this country," said Courtney, president of the Washington Alliance of Technology Workers. "This is a recipe for corporate greed. They're lining up at the public trough to slash their labor costs."

The WashTech group not only opposes exporting of the work, they also oppose importing of immigrant workers. A consistent position, but IMHO a wrongheaded and futile one in today's world.

Continued . . .

360-degree performance reviews

Harvard Business Online has this: "The Ratings Game: Retooling 360s for Better Performance" (full article available for $4.00)

After earning its stripes in professional development, the 360-degree feedback tool has insinuated itself into the performance appraisal processes at an increasing number of companies. But the colleague-based feedback that has made 360s such a favored tool in development can be its Achilles' heel in performance reviews: Most people possess a deep ambivalence about wielding power over a peer's livelihood. Read about how people are reshaping the tool so that it not only encourages direct and honest feedback in annual reviews, but also fits the particular needs and priorities of a broad range of organizations. "

See this related previous post in this blawg.

Continued . . .

Discussion of consumer-driven health plans

Jane Dubose reports for HealthLeaders News (subscribe to magazine here): "Reviews Mixed For Consumer-Driven Plans"

As the consumer-driven movement reaches a milestone of some 1 million covered members for 2004, the pioneering employers are assessing the impact on their costs, employees' attitudes toward healthcare and whether the model will work for the long-term.

The answers are mixed. Many early adopters say enrollment hasn't reached a critical mass to make conclusions, but they believe the potential is there. Consumer-driven plans, which typically feature a high-deductible PPO and an employer-funded healthcare spending account, have seen exponential growth since they were launched in 1999-2000, but they still occupy only a tiny portion of the total healthcare market.

Definity Health and Lumenos, the two largest consumer-driven companies in the industry, are often offered with other insurance at large companies. Few workplaces have recorded higher than a 30 percent adoption rate. . . .

On the other hand, employers who have adopted a consumer-driven option as a full replacement tell a different story. Trover Solutions of Louisville, the first customer for Humana Inc.'s SmartSuite product [strangely, I couldn't find this product on Humana's website], expects its healthcare costs to increase by only 8-9 percent in 2003 because of its decision to both self insure and to adopt SmartSuite. In 2001 before the switch, the company faced a 70 percent premium increase. . . .

Trover is unusual in that most of its employees, or 73 percent, are using the CoverageFirst feature of SmartSuite, which has a $500 spending account for medical expenses before the deductible kicks in. . . . Deductible amounts are $1,000 or $2,500. Only 10 percent of the Trover employees in CoverageFirst got to the deductible this year . . . .

Unlike many other consumer-driven plans, Humana's spending account is not a health reimbursement account, or HRA, and prescription drugs are not part of the account. Humana's second-generation consumer-driven plan, SmartSelect, takes consumer and employer choice even further, allowing employees to essentially design their own benefit from as many as 100 permutations. . . .

Behavior Change?

Getting employees to better focus on healthcare costs has been a central tenet of consumer-driven products since they were launched. But are they delivering on that promise?

Trover Solutions . . . said First Coverage "is a great learning tool. When an employee goes to the doctor and if the visit costs $60, that comes out of the spending budget. They get a statement. They get to see what the real cost was." . . .

Skeptics point out that less utilization isn't always positive, if people aren't getting the preventive care they need. In most cases, it's too early to know if that is the case.

Valid point, definitely. Possible answer: consider combining with a preventive care program. See this post.

Consumer-driven plans are also designed to engage consumers through the Internet, but critics believe provider comparison information is unreliable and the Web pages themselves are typically not user-friendly.

For some employers, any Web-based tools are an improvement over what they had before. . . . "Employees can see provider quality and pricing information on line as well as track their HRA claims balances and claims activity."

HealthMarket, a Connecticut-based firm selling consumer-driven products to the small, fully insured market, has a Maximum Allowance Charge section on its Web site. It publishes provider fees on everything from surgery to check-ups. A provider "in the green" is one whose charge is at or below the MAC.

Accounting for Accounts.

HRA accounts typically range from $1,000 to $2,000 a year. Depending on the plan, employees tap into the HRA for routine preventive care, prescription drugs and other medical expenses. . . .

Across the industry, 60 percent of employees roll over an average $400 in their accounts, said Doug Kronenberg, chief strategy officer for Lumenos.

The accounts would become even more attractive if the industry adopted the strategy of Destiny Health, whose HRA is portable from job to job.

Impact on Costs.

Humana says the first 16 companies that adopted SmartSuite saw their medical cost trend rise by only 4.7 percent, compared to an industry average of 15 percent or greater during that time.

Costs for companies renewing with Definity Health for 2004 showed an aggregate increase of less than 5 percent . . . .

Users of consumer-driven options have a greater adoption of generic drugs . . . . Industry wide, the number of prescriptions written drops by 5 to 25 percent once a consumer-driven plan is adopted . . . .

In the future, consumer-driven products may take off more quickly with the small-group segment. Those employers have faced higher cost increases and have the potential to see quicker results. In any case, the real test for staying power will come next year when [the] industry acquires enough membership to more accurately assess its financial risk.

Someday soon, I'm going to browse the sites I've linked and see if I find something suitable for me and my small business (law firm).

Continued . . .

Economics professor comments on jobless recovery, globalization

St. Louis Post-Dispatch today reprinted this interview-format story from the Seattle Times (Alwyn Scott): "Nobel laureate says jobless recovery remains a puzzle"

Interview is with Columbia Professor Joseph Stiglitz, who won the Nobel Prize in economics in 2001.

This article is somewhat long and well worth reading if you're interested in this topic, so here are just a few snippets:

This is an unusual recovery, and I think even labor economists are finding it puzzling. The normal jobless recovery is really the following: Firms prefer to go on overtime before they start hiring workers because they'd rather pay a worker time-and-a-half than put up with the training cost and anxiety of hiring. That is why, typically, employment lags in a recovery.

What happened last quarter is that the number of hours worked was down by almost 1 percent. . . . This is a recovery in which hours worked aren't going up. That suggests it may not be recovery.

You're getting firms trying to squeeze more and more work out of workers, working fewer and fewer hours. . . .

The workers that you fire - lay off - you're going to have to retrain and rehire them eventually. The economy will grow again. There has always been a recovery. So I take that as a premise.

But that means it's a shortsighted strategy, where you see the profits today because you've gotten rid of a cost. You don't see the future expenditures and you hope maybe those future expenditures will be hidden by the fact that demand will be high, prices will be high. So nobody will notice that. But you will undoubtedly need to be paying more for training workers. . . .

On loss of non-manufacturing jobs to "offshoring":

Overall though, the United States still has the strongest university system in the world. I think that that has been an enormous pull for people to come here. . . .

If we underfund our universities, which we have been doing, people can go abroad. Cambridge and Oxford have lost an awful lot of people to American universities.

Other countries are realizing you can become a center of intellectual strength. You can buy a center of intellectual strength. What makes America more precarious is that we aren't producing at the high school and undergraduate level enough science majors to feed ourselves. . . .

On globalization:

Is globalization a zero-sum game or is there some way all nations can benefit?

The general principle of trade is everyone benefits. Now, there are many circumstances where that general principle doesn't work, particularly when you don't have free and fair trade rules.

Continued . . .

Wal-Mart CEO on health care, exporting of jobs, legal system

Forbes (Reuters) has this story: "Wal-Mart CEO wants government to fix health care"

Wal-Mart Stores Inc. Chief Executive Lee Scott said Sunday that soaring health-care costs were among the biggest challenges facing retailers and called on the U.S. government to help.

In a speech to the National Retail Federation convention here, Scott said the U.S. health care system is in "crisis."

"We believe it is time for the government to step in ... and get a handle on health care costs," Scott said. He gave no examples of potential remedies.

No doubt it is a crisis. But I am increasingly convinced that while government can help, the solution is not a one-size-fits-all government program. Better to focus on improving the environment within which competitiveness and entreprenurial spirit can find creative solutions. It's unfortunate to hear capitalists such as Scott of Wal-Mart, who presumably reject Big Government solutions to other problems, begging for them in the health care arena.

Wal-Mart is the largest U.S. importer of Chinese goods, but Scott said the retailer believes in buying American and is willing to pay more to put U.S. goods on its shelves. . . .

Scott said manufacturing will continue shifting to China, but said cheap labor was not the only factor. He said some manufacturers have moved production to escape steep U.S. health-care and worker's compensation costs as well as a legal system that he said badly needed reform.

Scott said there was "something wrong" with a legal system that awarded huge sums of money to lawyers, and not enough to people who were harmed.

"There ought to be some sanity," he said, calling for tort reform to protect companies from "people who simply make their living from slip-and-falls."

Continued . . .

Employee ownership: story from North Carolina; statistics from survey

Here's a story from Asheville, NC (by Angie Newsome on Citizen-Times.com) "Worker-owned bakery watches business rise"

Monica Zailer and Jack Herranen . . . look at the price list sheathed in a plastic folder on the front counter of Blue Moon Bakery.

Zailer points to the list, a two-page print out of every food the bakery sells . . . As she runs her finger down the page, Zailer tells Herranen - who is just one week on the job - the prices and how to ring up items.

Money means a lot more to the group of workers baking bread and cookies and making sandwiches at this downtown eatery.

On Dec. 10, the group handed over a check for $3,700 to . . . the bakery's former owners. With that check, the worker-owned business - one of a handful of businesses like it in the region - retired its debt to the former owners. . . .

Advocates and experts both say worker-owned businesses - in all their formations - are one way employees can have more control, say, and investment into their workplaces, a necessity in a transitioning job market.

Frank Adams, a consultant with the local Southern Appalachian Center for Cooperative Ownership, says that worker-owned businesses are one of a string of strategies that can help jobs stay where they are, something North Carolina's workers and officials are all struggling to encourage in the face of job losses. The center, itself worker-owned, specializes in education and consultation with worker-owned businesses. . . .

How a worker-owned business organizes itself may be as unique as the products and services it offers. Print shops, manufacturers, restaurants, bike stores, high-tech companies, and orchestras: All are examples of worker-owned businesses.

There are many variations of worker-owned businesses, says Genna Miller, a visiting economic instructor at Duke University who has studied cooperative businesses across the country. Miller says many can fall into two broad categories: firms where workers have ownership but no management say and firms where workers have both ownership and management responsibilities.

How to structure the worker-owned business have many varieties, too. But according to the National Center for Employee Ownership, a research organization based in Oakland, Calif., Employee Stock Ownership Plans, or ESOPs, are one of the most common forms. . . .

In ESOPs, Gilbert says, the company is set in a trusteeship until the investor is paid off. Until then, the investor has control in how the company is run. . . .

Adams said there are several incentives for closely held companies such as sole proprietorships and limited liability corporations to consider setting up ESOPs. Among those includes a tax-deferred Section 1042 "rollover" that allows shareholders to indefinitely defer capital gains taxation on the proceeds from the sale of stocks to an ESOP.

But the bedrock of Blue Moon's ownership structure is one person, one vote, says Dick Gilbert, a worker-owner and consultant with the Southern Appalachian Center for Cooperative Ownership. Gilbert and nine other partners of New Moon Partners bought the bakery in 1999, making it a worker-owned firm.

Now, he said, the group can look forward and expand the numbers of employees who can also call themselves owners.

Gilbert and others say that operating in a new workplace paradigm that encourages and expects leadership from its employees takes patience and training.

The employee partnership - a group called New Moon partners - has worked to educate employees like Zailer on how to run the business and its finances. After nine months of probation and training, workers at Blue Moon must either become owners or find other work.

Gilbert says that to become a new owner, each employee must invest $1,000 through a cash payment or working without pay. Either way, the employee has up to three years to pay the fee. When workers decide to leave, the money is paid back. . . .

For new employee Herranen - who worked at Blue Moon five years earlier - the bakery's new ownership style brought him back. Herranen, like many other workers and advocates, believes that democracy belongs not only in politics, but also in the workplace. They see worker-owned businesses as alternatives to traditionally structured businesses.

"In and of itself, being worker-owned is a sustainable model because there is a level of investment and accountability and collaboration and innovation," he says, taking a short break from learning the front cash register before the lunch rush begins.

And Carol Haack, another consultant with the Southern Appalachian Center, says that more people could be turning to worker-owned businesses to sooth their disillusionment with corporate structures and financial scandals.

But buying a workplace is not an overnight proposition. Many employees and advocates say it takes a serious time and capital commitment to either build or transform a traditionally organized operation into a worker-owned business. . . .

Economics professor Miller says that capital can be a challenge because group ownership makes some lenders nervous. Also, she adds, employees with large ownership stake in the business could be at risk if it starts to fail, though they are usually set up with limited liabilities.

The National Center for Employee Ownership has published this summary of survey results on employee ownership: "New Data Show Employee Ownership to Be Widespread"

New data indicate that 23.3% of all employees working for for-profit companies report owning stock in their companies, while 14.4% hold stock options. The two categories are exclusive of one another, but other data indicate that almost all employees holding options also own company stock in other ways. That would mean that approximately 25 million Americans own employer stock through ESOPs, options, stock purchase plans, 401(k) plans, and other plans; while 14.6 million hold stock options (and, usually, other stock). . . .

In addition to these overall findings, the survey looked at how much employees actually own through their plans. Here, respondents were asked to indicate how much their ownership stake would be worth, assuming it would be fully vested, if they sold it today. The results are below:

Mean in dollars: $84,409
Median in dollars: $10,000
Mean as percentage of annual pay: 99.6%
Median as percentage of annual pay: 21.2%

The mean (average) and median (point at which half are above) differ so much because a small minority of employees hold very large stakes. Nonetheless, the median values are impressive, especially considering that many of these plans are fairly recent, and employees will build up considerable additional value over time. Those who argue that employee ownership usually provides only a trivial financial stake clearly are off the mark; these numbers are not too far from the median 401(k) holdings (the mean was about $57,000 in 2002; recent median data were not available, but were $11,300 in 1996 and would probably be about $17,000 today). Most participants in ESOPs, ESPPs, and stock option plans also are in 401(k) or other, usually (but not always) diversified retirement plans.

One interesting thing is that we have just seen the major damage that can be done when people rely excessively for their retirement savings on their ownership interest in their own employer (can anybody say ENRON?). This risk is arguably greatest when there is a lack of employee involvement in management and/or lackof employee access to financial information. See Who Knows Your Critical Numbers? on the National Center for Employee Ownership's website Of course, most companies that are quite willing to give out stock and options are quite unwillling to make such radical changes in management style and structure.

Continued . . .

Grocery clerks' real nightmare

San Diego Union-Tribune has this interesting story by Leslie Berestein:
"Grocery clerks' real nightmare; Many pickets mindful of what may be toughest obstacle in their futures"

It's about the role of automation in displacing the jobs the UFCW is striking.

Talk about miscalculating bargaining power!

One fall afternoon outside the Ralphs grocery store in Hillcrest, two grocery workers stood with their picket signs in hand, arguing back and forth about the potential competition inside.

"I don't think they'll take our jobs any time soon," said a checker, Linda Trombley.

"Anytime soon," shot back grocery clerk Renme Alfaro. "What about the future?"

They weren't talking about the temporary workers inside, but about competition of a steelier sort.

For the past several years, grocery workers throughout the United States have increasingly worked side-by-side with robots, automated self-checkout machines that, in theory at least, perform all the duties of a human checkout clerk minus the smile and the "thank you, ma'am." . . .

Kroger, the parent company of Ralphs, has installed about 5,500 of the machines nationwide since the late 1990s. Other leading chains that have installed them include Albertsons, Publix, A&P and a host of others, including mass-merchandise retailers Wal-Mart and Kmart, and non-grocery retailers Home Depot and Walgreens. . . .

The machines are not any faster than human checkers. But retailers, the technology firms that make the machines and some retail industry analysts are quick to tout the many virtues of automatic self-checkout: shorter lines, more engaged shoppers and, to the dismay of grocery workers and the union that represents them, labor savings.

The typical set-up for the U-Scan Express, the machines found at Ralphs, is a set of four machines overseen by one human cashier. Installing this system usually entails removing three traditional checkout counters, resulting in two fewer cashiers. . . .

The average grocery store in the United States must sell $15 worth of groceries per transaction to break even on labor and benefits, said Buzek. That figure jumps to around $20 per transaction in California because wages are higher.

Install an automated self-checkout system for $80,000 to $90,000, the thinking goes, and once it's paid off, instead of $20 "the break-even point may drop to $12," Buzek said, resulting in savings for the retailer. . . .

The idea behind employing automated self-checkout machines is not to cut down on the need for employees . . . . Instead, . . . the idea is to deploy them elsewhere in the stores, preferably to "profit centers." These are the service-oriented areas of the store, such as the deli and the bakery, where more available staff can help move merchandise faster and boost profits.

"This is what the union doesn't get," Buzek said. "They (stores) have got to move people to profit center positions. They can't compete on price. It's the only way they can survive against a Wal-Mart. Self-checkout could be the very thing that saves their jobs, not the other way around." . . .

In general, grocery workers are divided over whether automation is a genuine threat. Many don't think the machines are sophisticated enough to compete with human intelligence. For example, in one well-publicized mishap last fall, the U-Scans initially rejected newly issued $20 bills.

"It's supposed to be perfect technology, but the system is really sensitive," said Trombley, the checker. "It goes by weight. You can't put your keys or your purse on there. It'll say 'please put your items back on the scale.' People literally scream at the machine, 'Shut up!' " . . . .

Already, Albertsons has ordered about 4,000 new self-checkout machines from NCR Corporation . . . , with plans to install them in the coming year.

In addition, potentially better technology is on the way. In some Eastern states, Stop & Shop and Jewel stores – the latter owned by Albertsons – have been testing small cart-mounted tablets and hand-held scanners with which customers can scan and bag their own items as they wheel their carts along the aisles.

Both devices are manufactured by Symbol Technologies of Holtsville, N.Y. Customers receive extra discounts for using them, with special deals popping up on their screens that customers who stand in checkers' lines have no access to.

Denier, of the grocery union, finds the idea of consumers being rewarded for taking on additional work ridiculous.

"Pretty soon they (the stores) are going to tell customers, 'For your convenience, we are going to let you unload the trucks,' " he said. "It really reflects a negative trend in society where we eliminate service from society altogether."

With the use of self-checkout machines already widespread and additional technology in the testing phase, the handwriting is on the wall as far as some grocery employees are concerned.

"These will take jobs, just like ATMs took tellers' jobs," said Sabrina Ruiz, a striking Ralphs checker. "I just feel like we are all going to be extinct."

You may think it'll never happen, but then 35 years ago nobody had even heard the term "self-serve gas station"; 10 years later it was already really tough to find one that wasn't.

Continued . . .

Washington Post educates public on employment at will; good drafting saves the day for employer

Back on December 28, Kenneth Bredemeier of the Washington Post wrote: "Employers Have the Right to Fire Away; Anti-Discrimination Laws, Union Contracts Can Protect Positions"

He discussed the basics of employment at will in connection with a particular case involving a written written employment agreement that said the employee could be fired "for such specific reasons as being disciplined by a professional organization, committing a crime or being grossly negligent at work."

Following her termination, the employee sued because the reason she was fired -- a dispute over ownership of a missing computer and ongoing loyalty to the firm -- was not one of the firing reasons listed in her contract. The court apparently granted summary judgment for the employer:

[I]n pursuing her case, [the employee] discovered a basic fact of life for most workers . . . : There's a strong presumption in the law in favor of the employment-at-will doctrine, meaning that employers can hire and fire at will, for a good reason or no reason, as long as they do not violate anti-discrimination laws or some other specific public policies, much as workers can move from one job to another. . . .

Loudoun Circuit Court Judge James H. Chamblin said, "Virginia strongly adheres to the common law employment-at-will doctrine, and an employment relationship is presumed to be at-will." He said that [the employee's] contract did not state that she "shall only be discharged 'for cause,' nor did it state that [she] will not be discharged except 'for cause.' "

Indeed, [the] contract said the "for cause" reasons for her possible firing included such things as breaches of medical ethics, immoral conduct and loss of her state license, but said the "for cause" reasons "shall be defined to include, but not be limited" to the list.

Good drafting. Better for an employer not to have any contract restraining the right to terminate at will, but if a for-cause clause is negotiated, it needs the "but not limited to" (or at least "including"). Alternatively some good catch-all causes may work (e.g., "conduct detrimental to the company's interests").

Declan C. Leonard, an Arlington lawyer who at various times represents both corporations and employees in work disputes, said that "employees more often than not think [the at-will right of employers to fire workers] is a harsh system. But employees were jumping from one company to another in the boom times. They were leaving companies in the lurch and there was no compulsion on the part of employees to stay" when they had what they felt were better offers elsewhere.

So viewed, this is not an unfair system at all.

Continued . . .

Unions supporting free international trade?

In one of the more interesting of the recent NAFTA 10th anniversary retrospectives, Tamara Kay recently wrote this in YaleGlobalOnline:"Even Labor Unions Can Gain from Free Trade; Despite dire predictions to the contrary, NAFTA has led to closer bonds between North American unions"

When NAFTA went into effect on January 1, 1994, many predicted that by increasing competition for jobs between North American workers, the free trade agreement would intensify animosity among North American unions. . . . Even activists worried that in an effort to prevent a hemorrhaging of jobs to Mexico, US and Canadian unions would scapegoat Mexican workers and immigrants. On the eve of NAFTA's ten-year anniversary, an examination of the aftermath of the struggle against free trade in North America reveals that far from polarizing workers, NAFTA had the unanticipated consequence of stimulating labor transnationalism - ongoing relationships based on cooperation and collaboration - among North American unions.

The relationships that developed during NAFTA's negotiation among some North American unions stand in stark contrast to the sporadic contacts unions had in the pre-NAFTA era . . . . This presents a compelling puzzle: how did NAFTA, the concrete manifestation of globalization processes in North America, help deepen labor solidarity on the continent?

Perhaps the most robust relationship to emerge out of anti-NAFTA organizing is that between the United Electrical, Radio, and Machine Workers of America (UE), and the Authentic Labor Front (Frente Autentico del Trabajo, or FAT). . . . Since 1994 the two unions have collaborated on labor organizing and political campaigns, built a workers' education center in Mexico, and held yearly worker and organizer exchanges and training/education sessions.

Like the UE, the Canadian Steelworkers also developed a relationship with the FAT as a way to deal with the effects of NAFTA. Their cutting edge program involved building a strike fund for the FAT, which previously had no access to emergency funds. Grounded in mutual interest and long-term strategic planning, these developments signal a real shift in the nature of labor transnationalism in North America. . . . One of the most salient examples of this shift occurred in 1994, when the UE requested assistance from the FAT to organize Latino workers as part of its organizing drive in a Wisconsin plant - and won.

NAFTA also stimulated labor transnationalism by creating an institution through which labor activists could collaborate. The North American Agreement on Labor Cooperation (NAALC) established new rules, procedures, and venues to adjudicate complaints of labor rights violations (called submissions) through National Administrative Offices (NAOs) in each of the three NAFTA countries. The NAALC's procedural rules require that submissions be filed through an NAO in a country other than the one in which a labor violation occurred, which makes it extremely difficult for a union to file with a "foreign" NAO without the assistance of a "foreign" union. This stipulation sparked a flurry of trinational activity among unions. To date, twenty-six NAO submissions have been filed, and while only one or two unions participated in the first few submissions, up to fifty unions and nongovernmental organizations - many with no previous contact - participated in subsequent submissions. . . .

NAFTA also marked a turning point for how many US unions dealt with the issue of foreign workers and job flight. While NAFTA's introduction led a bevy of anti-free trade pundits to suggest that foreign workers were "stealing" American jobs, the AFL-CIO and leaders of most US unions did not join the melee. Matt Witt, Teamsters Communications Director during the fight against NAFTA offered one explanation: "The increased communication and contact with union activists from Mexico meant that whatever instinct people might have had to go in that direction ran up against the real coalition work people were doing based on the traditional union principle that you either raise and maintain standards together or you face a race to the bottom." . . . .

Somehow, I don't think this represents mainstream thinking in the US labor movement, which is still pretty simplistically anti-free-trade, because this appeals to the rank and file, as best as I can tell.

Continued . . .

More on the Peterson v. HP anti-gay religious discrimination case

This case (see this earlier post and the comments to it) was covered in The Volokh Conspiracy -- the noted blawg run by a collection of law professors.

I post here the email exchange I had today with Professor Bernstein. He of course is more analytical, being a highly regarded and much-published law professor.

I said:

David: I'd be honored if you checked out my remarks about this case and the subsequent comments on my blawg.

I'm just a humble employment lawyer (not a learned professor) and only gave it a knee-jerk quick reading and off-the-cuff response.

But it seems to me the whole disparate treatment analysis is a red herring under the facts of this case. It is axiomatic (or was until the Supreme Court's Costa opinion muddied the waters) that discrimination can be proven by direct evidence or by circumstantial evidence. What the court seems to have done here is apply a circumstantial evidence test to a quintessential direct evidence case. The employer essentially admitted the reason he was fired was because of his religious expression. It should have at least applied a "mixed-motive" analysis, putting the burden on the employer to show that the employee would have been fired regardless of religion (which would be pretty tough to prove).

He responded:

Interesting post, but I think you need to read the opinion. Ultimately, it isn't, and cannot be (since gays are not protected from discrimination by Title VII), based on the idea that HP was justified in firing Peterson because it needed to protect gays from offense under the law. Rather, HP had a policy of encouraging a tolerant workplace; Peterson tried to undermine that policy; he was eventually fired for insubordination. He claimed disparate treatment based on religion, but provided no evidence of such treatment; is there any doubt that a nonreligious employee who simply put up a sign that said "Tolerance sucked" would have also been asked to take it down?

I had this rejoinder:

David: thanks for the quick response. Actually, I did read the opinion, not just the article about it, but only quickly. On closer examination, it looks like perhaps the lawyer goofed in focusing on McDonnell-Douglas circumstantial evidence, not direct evidence, as I suggested (though I suspect had it wanted to the court would have raised it sua sponte).

Your point "Is there any doubt that a nonreligious employee who simply put up a sign that said "Tolerance sucked" would have also been asked to take it down?" would be an argument in support of the "same-decision" defense to a "mixed-motive" case based on direct evidence that his religious views and expression of them led directly to his firing. Actually, it would be analogous to a sign saying "gays suck" (pun intended), and clearly although gays aren't protected (yet), an employer can fire an at-will employee for such hostility.

But he wasn't merely opposing gays; he was doing so for religious reasons and utilizing a core form of religious expression -- Scripture ("gays suck because the Bible says its a sin"). So I guess my question is whether that entitles him to more protection. Perhaps the answer might be different if he were a state employee? But in the private sector your point would prevail since it seemed clear the employer was prepared to quash any anti-gay hostility, not just that which was religiously based or expressed.

Finally, he agreed:

"But in the private sector your point would prevail since it seemed clear the employer was prepared to quash any anti-gay hostility, not just that which was religiously based or expressed."

"OK, that's an even more direct analogy."

Continued . . .

Blawg reader survey

I know you're out there. You've liked this blawg enough to return at least once or twice. Now I'd like to know a little more. It would be greatly appreciated it you would take just a minute to answer the follwing questions in an email to me. Just click "E-mail George" at left and copy and paste the questions. Here goes:

How did you find this Blawg?

What is your current occupation?

How often do you read it?

What types of items that I post are you most interested in? Least?

Do you like or dislike my style of lengthy (but still selective) quotation? (I could probably get more items up just posting links and my comments, but the comments would be out of context until you clicked over to longer stories.)

Have you tried a newsreader, Daily Whirl, or looked at my headlines-only feed?

Any other suggestions/comments/criticism?

Continued . . .

Jobs report: press and dems seize on the negative

Reuters reports: "Payrolls Barely Rise in Weak Jobs Report."

First the facts:

Unemployment rate fell to 5.7 percent, the lowest in over a year and down from 5.9 percent in November (it had been forecast to hold steady at 5.9 percent).

Non-farm payrolls in December increased by just 1,000, after a downwardly revised rise of 43,000 in November. It was the fifth consecutive monthly climb (but was far below economist expectations for a rise of 130,000.)

309,000 people dropped out of the work force, for a total of 433,000 "discouraged" workers in December who were not looking for work because they believed no jobs were available, up from 403,000 a year ago.

Retailers cut payrolls by 38,000, which the department said was caused by general merchandise stores taking on fewer workers than usual.

The troubled manufacturing sector failed to break its job-cutting trend, shedding 26,000 jobs in December, the 41st month of declines.

Now the spin:

The poor report is a headache for President Bush as he seeks re-election in November with the economy -- specifically job creation -- expected to be a key issue in the campaign.

But Bush, speaking to a small business forum, was upbeat, saying all economic signs were "very strong." He said the drop in the unemployment rate was a "positive sign" of an improving economy.

Economists disagreed.

"It's a shocker. The one ray of sunshine, the decline in the unemployment rate, is ironically a sign of weakness," said Cary Leahey, senior U.S. economist, Deutsche Bank Securities, New York.

"The only reason it declined is that fewer people were looking for jobs in December." . . .

Democrats seized the opportunity to criticize Bush's record on the economy. "I think it's time that George W. Bush loses his job so that we can put the American people back to work," said Democratic presidential hopeful Wesley Clark. . . .

Economists say productivity gains have helped speed up economic growth but allow companies to raise output without creating new jobs.

One bright spot in the report was hiring in construction, which was up 14,000. The building industry has boomed as low mortgage rates have fueled home buying.

Continued . . .

Christian rights vs. gay rights in the Ninth Circuit: guess who wins?

Law.com has this article by Jason Hoppin in The Recorder:
"Cubicle Anti-Gay Postings Merited Firing."

A former Hewlett-Packard employee whose silent protest of a workplace sensitivity campaign earned him a trip to the unemployment line can't have his job back, the 9th U.S. Circuit Court of Appeals ruled Tuesday.

Richard Peterson, described as a 55-year-old devout Christian, objected to one of a series of posters posted at HP's 3,800-employee office in Boise, Idaho. To protest a poster highlighting a gay employee, the tech support specialist printed out controversial passages of biblical scripture and fixed them to the overhead bin in his cubicle. When he refused to take them down, he was canned.

"While Hewlett-Packard must tolerate some degree of employee discomfort in the process of taking steps required by Title VII to correct the wrongs of discrimination, it need not accept the burdens that would result from allowing actions that demean or degrade, or are designed to demean or degrade, members of its work force," Judge Stephen Reinhardt wrote.

Peterson's lawyer, Christ Troupis of Boise's Troupis & Summer, said no one complained about the posted passages, nor did Peterson confront any co-workers.

"The record is that nobody was offended at all," Troupis said. "If something like that had come up, we'd have a different case."

The court relied on one statement by Peterson that he intended the scripture to be "hurtful" (so as to encourage "repentance" and being "saved").

"It is evident that he was discharged, not because of his religious beliefs, but because he violated the company's harassment policy by attempting to generate a hostile and intolerant work environment and that he was insubordinate" for not removing the passages, Reinhardt wrote.

Paul Cane Jr., a partner with Paul, Hastings, Janofsky & Walker, said the law in this area is evolving to the point that if competing rights are asserted in the workplace, "The correct advice [to employers] is that they require employees to avoid offending co-workers."

Good advice perhaps, but bad law and outrageously bad political and social policy. The court cobbled together an analysis that almost makes legal sense, but sure violates common sense. I mean, if firing an employee for displaying Holy Scripture (of any faith) is not religious discrimination, what is? Here's the opinion in full: Peterson v. Hewlett-Packard Co. (9th Cir. 1/6/04)).

And how far should employers follow this "no-offense" policy as to offenses not based on protected classifications? Can vegetarians insist they are offended by the smell of burgers being eaten in the next cubicle? Republicans that they are offended by display of campaign posters for Democrats? Where is this nation headed if attempts to persuade others to change their viewpoint and/or mere expression of other viewpoints or lifestyles are suppressed as "offensive"?

Yes, I know this is "only" the workplace and people are still free to do what they want away from work, but so much of our social interaction is at work that this is a significant limitation on freedom. And it sets the pattern for all social discourse. I have recently found that many well-educated opinionated people scrupulously avoid discussing politics and religion, for fear of offending or getting into an argument. What's that doing to the "marketplace of ideas"?

Continued . . .

Aggressive employee wellness program pays off for Missouri city

Interesting healthcare article in the St. Louis Business Journal (registration required): St. Peters adds wellness plan, saves $1.2 million (by Carolyn Green)

While health insurance costs are skyrocketing for most employers, the city of St. Peters has saved $1.2 million during the last six years and expects the savings rate to increase next year because of a new wellness program.

Starting Jan. 1, the more than 450 employees of the city will have a benefits package that includes three hours paid leave for routine health screenings for major medical concerns such as cancer and heart disease. . . .

The idea was that if, as an employer, St. Peters could get employees out for routine medical screenings, it would head off leading killers like colorectal cancer, which is easily treated when detected early.

"If we can find these things in a timely fashion, we can keep our work force healthier; we can keep them alive," Hollingsworth said. "It's a great way to show how much we care about them, and from a financial standpoint we reduce the cost of our health care."

For St. Peters the savings are immediate because since 1996 the city has been primarily self-insured. It maintains a policy with a $125,000-per-person deductible. Expenses up to that point are paid out of a pool of funds saved from what was previously paid to premiums.

The city has hired an independent third party administrator to manage the claims process.

"So far it has been wildly, wildly successful," Hollingsworth said. "We have been able to budget what we paid in premiums in 1995 and hold at that rate for five years."

During the same five years, many employers have seen costs double (the article cites them as up 60%-80% for most employers).

This is a wise element of a consumer-driven plan. While you want to discourage unnecessary use of medical services by putting more of the cost on employees and allowing them to benefit from the savings, you should also look at incentives for them to avoid shortchanging themselves on the routine checkups and screenings that can save so much in the long term.

Continued . . .

Looking at the bright side of employee complaints

The latest "Dear Workforce" newsletter from Workforce Management Magazine (subscribe here) has this Q. & A. :

How to Deal with Employee Complaints About Managers?
Q. I have employees making bad comments and complaining about their managers. They are very unhappy about the way one of our locations is being run. They will not talk to the managers about the problems. What should I do? . . .

A. Complaining about one’s manager is virtually a national pastime. The fact that the employees have made you aware of the problem indicates a healthy degree of confidence in you, and provides you with an ideal opportunity to demonstrate the value of human resources.

Start with one-on-one discussions with a representative handful of employees, coupled with a review of the unit’s most recent employee survey results, if you have them (if you don’t routinely conduct surveys, now would be a good time to start).

Whatever you do, thank people sincerely for bringing the matter to your attention. It’s far better than regrettable turnover, notice of a lawsuit/representation election petition or continued grumbling. If it turns out that the complaints are frivolous or due to readily explainable causes, nip the matter in the bud right then, while still leaving people a responsible "out." If the complaints pertain to legal, ethical or moral issues, you may wish to get additional help. . . .

The ability to maintain open, honest communication in a work group is a vital skill for anyone in a leadership position, and should be a condition of employment for all managers. If these managers aren’t skilled in this area, they should be provided with training and support, and held accountable for developing the skill. . . .

SOURCE: Richard Hadden and Bill Catlette, co-authors, Contented Cows Give Better Milk, Nov. 18, 2003.

Employees who raise legitimate complaints should be viewed as performing a valuable service. Others, however, may raise trivial or unfounded complaints for reasons ranging from chronic grouchiness to ulterior motives like getting someone fired or building a lawsuit. Tread carefully with such people, and don't give them ammunition for retaliation claims. Sometimes even an unfounded complaint is protected against retaliation.

PS: Don't miss the "Contented Cows" website, if nothing else for the sound file (Moooo . . .)!

Continued . . .

Reverse discrimination settlement (in demotion case!) consumes half of employer's annual budget

This AP story from Atlanta is incredible: Fulton County settles $18 million bias suit by librarians

The Fulton County Commission has opted for an $18 million settlement of a lawsuit filed by librarians who claimed they were discriminated against because they are white.

The settlement ends four years of litigation but represents more than half the entire library departments budget for 2003, which was $29 million.

It is also more than the county spends each year on functions such as planning and zoning, parks and recreation or family and children services.

Under the circumstances, this was the best we could do, commission Chairwoman Karen Handel said Wednesday.

The librarians sued in 2000 after seven of them said they were demoted and moved to outlying branches and a black employee was punished for speaking up against the transfers.

How much could the actual damages be in a demotion case? I obviously don't have the facts to judge the wisdom of the settlement in comparison to risks of trial (though I have my doubts).

But what about these librarians? Are they greedy or what? I thought librarians cared about serving the public; by absconding with half the annual budget they are outrageously damaging their mission!

Continued . . .

Employment plays key role in Bush immigration reform plan

FindLaw (Reuters) reports:"Legal News - Bush to Propose Temporary Worker Program."

"Hoping to attract more Hispanic support for his re-election bid, President Bush on Wednesday will propose a temporary worker program to help millions of immigrants work legally in the United States, officials said."

Immigrants could enter the US legally if jobs were waiting for them. Undocumented workers already in the US could move toward legal status (Bush rejects the proposals for a blanket amnesty).

Illegal immigrants in the country and those seeking to find work in the United States would be eligible for jobs Americans did not want, once employers showed the jobs could not be filled by Americans. . . .

"The president believes that America should be a welcoming society," [a presidential spokesman] said. "We are a nation of immigrants, and our nation is better for it." . . .

Bush's re-election team would like to increase Hispanic support for a second term for the president, particularly in states where they could tip the balance in his favor, such as Florida and California.

Hispanics have traditionally been part of the Democratic base. Democrat Al Gore beat Bush by 66 percent to 32 percent among the Hispanic electorate in the 2000 election. . . .

Any legislative proposal would likely run into opposition from conservatives on Capitol Hill who are particularly concerned about border security.

Here are the Washington Post and Christian Science Monitor articles on this development.

The Monitor, at the bottom of its story, after all the human interest and politics angles, summarizes key provisions of the plan, including that "undocumented workers who gained temporary-worker status would enjoy the rights and protections of legal workers. They could also apply for green cards, which convey permanent residency and, potentially, citizenship." Other key provisions include that "The employer must show no Americans wanted the job" and "Temporary workers would get all the same protections afforded US workers."

Predictably, according to the Monitor, nobody is happy with the proposal, which means it may be a good compromise:

"Immigrant-rights groups are not entirely satisfied. One concern is that if the plan does not greatly expand the number of green cards . . . undocumented workers could face an extended wait [and] [i]f their guest-worker status expired before they received a green card, they would have to leave the country."

"Anti-immigration groups criticize the initiative for its potential to hurt US workers." "'From our perspective, American workers have become sacrificial lambs for the Bush reelection campaign,' says David Ray, with the Federation for American Immigration Reform in Washington. 'We are in the middle of a jobless recovery.... To push for a guest-worker program at a time like this is unfathomable.'"

Here's the position statement from Federation for American Immigration Reform, containing what appear to be some very legitimate criticisms of the plan, most notably that it really is an amnesty program, but just avoids using the word "amnesty."

The Post article reports what may be a significant loophole: "The program is designed to match willing foreign workers with willing U.S. employers when no American can be found to fill those jobs. But if an immigrant is already working in the United States, that requirement will be considered fulfilled."

Certainly, the requirement that no American can be found willing to perform the job makes common sense and is designed to appease those who whine about foreign workers stealing Americans' jobs. Enforcing it seems a nightmare, but simply assuming that if a foreign worker has taken the job this requirement is met does not appear fair or rational.

As I have previously said, I'm strongly opposed to rewarding illegal behavior, including illegal immigration. On the other hand, I believe globalization is inevitable, and with it a worldwide labor market for many types of work. Reasonably opening up legal immigration may save more American jobs than it loses, if it allows work to be performed here using less expensive immigrant labor (as well as willing Americans) rather than being exported, and the immigrants spend much of their earnings here, having a generally beneficial impact on the economy.

Politically, this move again shows Bush is not a dummy. While some core Republican constituents (e.g. Southern working-class) will disapprove, it is unlikely to cause them to switch their vote. On the other hand, it may very well succeed in buying a significant number of Hispanic votes.

Prediction: we will not see this legislation enacted before the election, enabling Bush to get the credit for making the proposal and blame the Democrats for stalling (no dummy).

Continued . . .

Blogging gets attention

Dennis Kennedy reports in his blog: "The Magical Million Hit Mark – Yes, Blogs Might Work for You."

I got a note from my web host, who was running my log files for 2003, that my web site had hit the magical 1,000,000 hits mark for 2003. As a frame of reference, there were 200,000+ hits in 2002. . . .

What were the differences between 2002 and 2003? The two significant ones where (1) I left my old law firm to start my own practice and my website became a more central part of my marketing, and (2) I started this blog. I think difference #1 might have accounted for a significant, but reasonable, increase. However, I would guess . . . that perhaps 80 – 90% of the increase is attributable, directly or indirectly, to the blog.

Way to go, Dennis. Personally, I'd be thrilled with 100,00 hits, not a million. Dennis is way ahead of the game, having had an excellent website in place for many years.

Continued . . .

Employers bear costs of employee depression

BenefitNews Connect reports: "Treatment costs down, yet depression still cost drain."

New research indicates the economic burden depression places on employers may be somewhat self-inflicted. Although costs to treat the disease have decreased over a 10-year period, absenteeism and productivity costs have remained high, a sign employers do not yet have a firm grip on how to target the disease in the workplace.

The annual cost per treated case of depression fell 19% between 1990 and 2000, mainly due to fewer hospitalizations and effective treatment through antidepressant medication, according to a new study published in the Journal of Clinical Psychiatry (available at www.psychiatrist.com; free registration required). However, researchers also discover the workplace costs of the disease remained nearly $53 billion annually over the same period.

Study coauthor Ronald Kessler believes depression sufferers are being "half-treated" due to poor education and follow-up treatment of the disease. Workplace programs such as depression screenings and employee assistance programs can go a long way to identify depressed employees, and intervene early enough to lessen the disease's personal and financial impact, experts say.

Often employers bear these costs but then fail to see the employee through to recovery, so in many cases you can add on the costs of turnover, sometimes including litigation over termination of employment.

Continued . . .

"Names can never hurt me" (but they can get me a big settlement if I'm a schoolkid in California teased about homosexuality)

Yahoo! News (Reuters) reports: "Calif. Students Get $1.1 Mln in Gay Taunting Case"

Six students who said school officials mostly ignored their complaints that other students had taunted them with anti-gay remarks will receive $1.1 million under a settlement announced on Tuesday.

Alana Flores and five other students in Morgan Hill, 12 miles south of San Jose, California in Silicon Valley, had claimed that the school did not provide them with equal protection under the law. . . .

The legal fight by the five girls and one boy dating back to 1998 received a major boost last April when the 9th Circuit Court of Appeals in San Francisco ruled there was a good chance a jury would find that school officials had violated the students' rights.

The students charged that school administrators had responded to their complaints in a discriminatory manner to what is, after all, the common growing-up experience of bullying. One recent Journal of the American Medical Association (news - web sites) study found that 30 percent of public and private students in a sample group in grades 6 to 10 either bullied others or were bullied themselves.

Hopefully they don't all have million dollar legal causes of action, or the schools will really go broke. I mean, where do these people think this money's coming from? This district has 9000 students. That's over $100 a student that won't go towards education.

Why aren't future reforms good enough? Because the kids are cash cows for the greedy parents and their greedy lawyers, and the activists don't really care what happens to the school district?

Here's a clue. The district's press release indicates the plaintiffs' attorneys claimed that if the case went to trial their fees would be about $3 million. The San Jose Mercury News report says: "The district . . . agreed to pay roughly $500,000 to the six former students who filed the lawsuit, as well as another approximately $600,000 for their lawyers."

Students taunted by their peers as gay have launched a growing number of lawsuits nationwide in recent years against schools, and some have won settlements in the hundreds of thousands of dollars, said John Campbell, co-founder of the Gay and Lesbian Political Action and Support Group in New Jersey. . . .

Stuart Biegel, a professor of law and education at UCLA, said the core issue in these cases is that educators must respond to all instances of bullying in an equal way.

"What we're finding in regard to the gay student bullying cases is that too often school officials look the other way. And you even have instances in reported cases in the mid-90s where school officials actually blamed the kids for being too openly gay," he said.

Under the latest California settlement, the school district in Morgan Hill, population 33,000, will also start a training program for staff and students to fight anti-gay harassment.

Continued . . .

Coffee drinkers take comfort: it's actually good for you

Reuters reports:"Coffee Lowers Diabetes Risk, U.S. Study Shows"

Men who drank more than six cups of full-caffeine coffee a day cut their risk of diabetes by more than half over 12 to 18 years, the study found. Women who drank that much coffee reduced their risk by 30 percent.

That's great news for me (6 cups a day sounds about right). And here I was worrying about how bad all my coffee breaks were for my blood pressure. . . .

Continued . . .

Annual Fortune magazine "Best Companies to Work For" list is out

CNN/Money reports: "J.M. Smucker tops Fortune 'Best Companies to Work For' list"; Fortune magazine names jam and jelly maker new No.1 company to work for in 2004."

Jam and jelly maker J.M. Smucker & Co. made the top spot in Fortune magazine's 2004 ranking of "Best Companies to Work For," an annual list released Monday.

It's the first time a manufacturer has made No. 1 on the top 100 list. . . .

Legal services firm Alston & Bird took the second spot, inching up from No. 3 last year. . . .

Rounding out the top 5 "Best Compaies" were, in order, home decor retailer Container Store, financial services firm Edward Jones, and commercial bank Republic Bancorp . . .

Republic managed to climb to No. 5 from last year's No. 17 spot, after awarding 300 employees trips to Aruba, Cancun, or the Dominican Republic last year. Edward Jones, falling to No. 4 from last year's top spot, added 1,500 employees in the past year and hasn't had a single layoff in 34 years, according to the report.

To arrive at its list of best companies to work for, Fortune randomly selected 46,526 employees from 304 candidate companies to fill out a survey created by the Great Place to Work Institute. Each candidate company also filled out a questionnaire detailing its people policies, practices, and philosophies. The employee portion accounted for two-thirds of the total score, according to Fortune's report.

Software maker Adobe, engineering and construction company TDIndustries, software maker SAS Institute, family-owned supermarket Wegmans Food Markets, and chipmaker Xilinx made the bottom half of the top 10 companies, in that order.

Wow . . . a law firm's right up there with a jellymaker!

Here's the story on Smucker from Fortune:

The best company to work for in America is headquartered in Orrville, Ohio (pop. 8,000), a quiet, tidy town 50 miles south of Cleveland. Employees don't get any razzle-dazzle perks—no pet insurance, no subsidized feng-shui consulting, none of that. It's a 107-year-old, family-controlled business that is run by two brothers who tend to quote the New Testament and Ben Franklin. It's a throwback to a simpler time. If Norman Rockwell were to design a corporation, this would be it. . . .

Smucker's gimmick-free management starts with the co-CEOs, Tim and Richard Smucker, who took the reins in 2001. Tim and Richard are popular with their 2,930 employees—they're affectionately known as the "boys" . . . . The boys have made sure Smucker adheres to an extremely simple code of conduct set forth by their father and CEO No. 3, Paul Smucker: Listen with your full attention, look for the good in others, have a sense of humor, and say thank you for a job well done.

If nothing else, Smucker brass takes that last directive seriously. Plant supervisors have been known to serve celebratory barbecues after hitting new records; managers routinely thank teams with lunches and gift certificates. There's also the annual commemorative Christmas plate, holiday turkeys, screenings of films in which Smucker's has a tie-in, like The Cat in the Hat.... Tonie Williams, director of marketing for peanut butter, says she's been thanked more in her two years at Smucker than she was in her nine years at Nestle, Kraft, and P&G combined.

The play-well-with-others approach, as precious as it comes across to an outsider, has clearly won over employees. "At first I was skeptical," says director of operations Brian Kinsey, who spent ten years at P&G. "But this family feel is for real." Irrefutable proof of remarkably high worker satisfaction: Earlier this year Ken Tabellion, a 26-year plant veteran, used his own time and money to erect a monument to the company—a boulder with a plaque expressing gratitude to the Smucker family.

Tim and Richard Smucker say that the biggest challenge they have to deal with is to make sure the company's culture stays the way it is. . . .

But then, not every company has Smucker's ace in the hole for employee morale: the smell. On a windy day you can smell what's cooking at Smucker's throughout Orrville—jams, chocolate fillings, the works. "There's nothing too fancy here," says Ted Fry, a machine maintenance supervisor and 21-year Orrville plant veteran, as he explains why so many people stick around the company for so long. He takes a whiff of the grape jelly that's cooking a hundred yards away. "Maybe the great smells make people happy," he says. "What do they call it? Aroma-something?"

Kinda makes me hungry for a pb&j. . . .

Continued . . .

More good jobs news: decline in announced job cuts

CNN/Money (Mark Gongloff) reports:"Can jobs momentum continue?"

U.S. businesses announced 93,020 job cuts in December, down 6.5 percent from 99,452 in November, according to Challenger, Gray & Christmas . . . .

There were 1,236,426 job-cut announcements in all of 2003, down 16 percent from 1,466,823 in 2002.

"The decline in job cuts is certainly welcome news, but it is difficult to get too excited about a year in which more than 1.2 million people fell victim to downsizing," said John Challenger, the firm's CEO. "That is more than double the 553,044 job cuts averaged annually during the six-year period before the recession."

Industrial goods makers led the December job cutting, followed by computer firms, telecommunications firms, and consumer products makers.

Several indicators have lately pointed to labor-market improvement, including:

A steady decline in the number of new weekly claims for unemployment benefits;

A jump in the Institute for Supply Management's manufacturing employment index in December;

A gain in first-quarter hiring intentions in the latest survey by Manpower Inc., a private research firm; and

An increase in help-wanted advertising, . . .

"It generally takes a few months after GDP growth such as we saw in the third quarter before that turns into strong growth in employment," said David Kelly, senior economist at Putnam Investments.

Structural changes in job market?

But there have been other signs that the labor market isn't fully healed, in addition to recent gains in job-cut announcements:

The number of people drawing unemployment benefits for more than a week rose at the end of 2003 to the highest level in four months;

The percentage of people in the Conference Board's monthly consumer confidence survey who say jobs are "hard to get" has stayed near the highest level in a decade; and

Small business hiring intentions shrank in November, the latest data available, according to the National Federation of Independent Business.

Some economists worry that structural changes in the job market, including technological advances and a growing appetite for cheap offshore labor, will keep hiring growth muted in 2004.

"These ... factors are going to keep hiring from taking off in 2004," Challenger said. "Job seekers certainly should not expect to see a repeat of the tremendous job expansion of the mid-to-late 1990s.

Challenger suggested the next such hiring boom might not be seen until at least 2008.

Other economists disagree, however, saying productivity gains and labor globalization can co-exist with long-run growth in U.S. jobs, in part because they improve corporate profitability, enabling companies to expand business and develop new technologies.

Continued . . .

Harassment claim a setup? Claimant caught in consensual relationship with alleged harasser after settling claim returns settlement money

Thanks to Michael Fox at Jottings by an Employer's Lawyer for this one. The original story by Lee Melsek is entitled "Rekindled romance gets taxpayers $36,200 refund; Sexual harassment settlement repaid."

Lee County [Florida] Property Appraiser Ken Wilkinson and his employee, Julie Dalton, on Wednesday repaid taxpayers the $36,200 she received last year in a settlement of her allegations he sexually harassed her.

The money was sent back to the county one day after Wilkinson confirmed that he and Dalton are dating again.

Dalton quit her job as Wilkinson's chief deputy in the Property Appraiser's Office in March 2002 after her affair with Wilkinson became public. She changed her mind a day later and asked for her job back, but Wilkinson said by then he’d ended the affair and refused to let her come back to work.

Dalton then hired an attorney and filed a sexual harassment complaint against Wilkinson with the federal Equal Employment Opportunity Office.

After months of negotiations, taxpayers paid for lawyers and what was described as Dalton’s mental anguish over the affair.

Dalton was given $35,000 from the county's self-insurance fund, which is comprised of tax dollars.

A total of $10,000 of that money compensated Dalton for what the settlement describes as "mental anguish, injury to reputation and stigma," all of which she claimed to have suffered as a result of the affair, the breakup and the publicity surrounding it. The other $25,000 went to her attorney. . . .

But on Wednesday, Wilkinson and Dalton sent checks to Lee County Risk Management, the county’s self-insurance fund, and sent copies to The News-Press.

“We jointly request the press respect our private life,” a message attached to the copies of the checks said. . . .

Lee County Risk Management Program Manager Wayne Fiyalko . . . said there was no reason given on why the money was being returned. . . .

Fiyalko said he had heard from other county officials that the two were back together.

“I haven’t seen this before. Management explained to me that, apparently, they are a partnership now. I can understand it would be inappropriate to keep the money,” he said. . . .

“I've atoned for my sins. It cost me a marriage," Wilkinson said Tuesday after a reporter told him he and Dalton were seen together on Christmas Eve.

Dalton, who was earning $93,000 a year before she quit in 2002, claimed in her complaint last year Wilkinson pursued the sexual relationship with her then dumped her after the press found out about it.

Wilkinson, she said in her federal complaint, “clearly used his position as my boss to influence me to have a relationship with him. When he no longer desired to have this relationship he wanted me to resign.” . . .

In a letter to Wilkinson during the settlement talks last year, Dalton said that if she came back to work she wanted nothing to do with him.

“No suggestive remarks, comments or conversation. No inappropriate touching or conduct of any kind as you have done with me ... ,” she told Wilkinson in the letter just before she went back to work at the Property Appraiser’s Office.

So did she just change her mind or was this all a setup to milk the system -- gone bad when they were caught?

It is not unusual to see the harassment claim from the subordinate employee who the boss swears enjoyed every minute of the relationship; but it's usually not so easy to prove this was the case when the relationship sours and she claims it was coerced and/or her desire to terminated was not respected.

Good reason for supervisors to keep their hands off the employees no matter what . . . .

Continued . . .

Tough to prove duress invalidating release of right to sue for discrimination

In Clark v. Riverview Fire Protection District (8th Cir. 1/5/04), the plaintiff was a firefighter who had been terminated for sleeping through a fire call. With the assistance of his union, an agreement was negotiated whereby he would be returned to employment subject to a one-year, unpaid, disciplinary suspension and final warning, in exchange for which he would release the employer from and waive all claims relating to his employment, including claims of employment discrimination.

After signing the agreement, he brought a race discrimination action and sought to avoid the release by arguing he signed the agreement under duress.

He supported this argument with testimony that one of the board members pointed his finger at him as he told him to sign the agreement, that this board member's eyes were "real big and blown up" and he was "just being rude." The plaintiff also testified that another board member "had her hands on her hips and engaged in extensive hand waving and body language as she told him to sign the agreement." He claimed he was "literally being assaulted by the offensive gestures of the board members who were pointing fingers at him and waving at him in order to get him to sign." He claimed he asked for time to read the agreement but they told him he had to "sign it today or you're terminated."

Somewhat curiously, the District Court, in rejecting the plaintiff's duress argument, relied on Missouri law, not federal law (the court noted in a footnote that this choice of law had not been challenged, suggesting that perhaps it would have found it improper had it been challenged). The court concluded:

Because Clark points to no facts indicating he was prevented from exercising his free will by threats or wrongful conduct, we conclude he was not under duress when he signed the agreement. Likely this was a stressful situation for Clark, and under pressure he made a decision he later regretted. Clark's dissatisfaction, however, stems from a lack of favorable bargaining position and knowing the future of his employment was in the hands of a Board which was less than hospitable toward him.

Under federal law, there would most likely have been a different result had this been an age discrimination claim, as there are very specific requirements protecting individuals being asked to release age discrimination claims.

While this employer was fortunate in that its release was ultimately upheld, it would have been in a much better position had it given the employee the time he requested and treated the issue more calmly and rationally. Had it done so, it is doubtful the employee would have sought to challenge the release and even more doubtful he would have been able to find a willing lawyer.

Nonetheless, the case does highlight the difficult standard for proving duress, at least under state law in conservative states like Missouri.

Continued . . .

More on healthcare issues

Catherine at sonria.org has another good post on healthcare: "Critique of BCBS's The Uninsured in America."

I've added my two cent's worth on association health care plans in a comment to her post.

Continued . . .

Termination during FMLA leave based on superior performance of replacement did not violate FMLA

In Phelan v. City of Chicago, (7th Cir. 10/21/03) the employer said that prior to his FMLA leave, the quality of the plaintiff’s work had been poor, and that of the employee hired to fill in for him during his leave was more satisfactory. For these reasons, the employer said, it chose to terminate the plaintiff.

The principle applied was:

[i]n cases such as this where an employee is terminated while taking FMLA leave, the trial court must determine whether the termination was illegally motivated by the employee's choice to take leave, or whether the termination was motivated by other, valid reasons.

The plaintiff conceded he was terminated because of the poor quality of his work, but nonetheless argued the termination violated the FMLA because the decision was made while he was on FMLA leave -- only after the employer saw how much better his temporary replacement could perform.

The court rejected this argument, stating:

The employer's preference for the replacement does not itself demonstrate that the employee would not have been terminated if she had not taken leave. . . . Put simply, an employee is not afforded greater rights than he would otherwise have merely because he takes FMLA leave. Hence, it is not in violation of the FMLA for the [employer] to dismiss [the plaintiff] for poor performance, regardless of when [it] came to that decision.

This seems to open a fairly large loophole in the FMLA’s reinstatement requirement. FMLA leave would become an opportunity to find a superior replacement, and keep him or her in lieu of the employee taking leave.

I think the limiting factor is that in this case it wasn’t just superiority of the replacement, but good evidence of unacceptable prior performance by the terminated employee. Still, I think more could have been made of the timing issue: why wasn’t the poor performance used to terminate before the leave began?

Continued . . .

"Blawgspace is a generous place"

Says local (but nationally known) law and technology "guru" and blawger Dennis Kennedy, complimenting the generosity of blawgers:

Nearly every time I've spoken about the Internet over the last seven years, I always end by saying something to the effect that "I've found the Internet to be a helpful and generous place. There have been many people who given me great advice and many kindnesses over the years, and, as a result, I'm always happy to try to help people out, if I can, so that they can also experience some of the good things I've found in my Internet experiences." . . .

And here's the cool part. When I watch lawyers on the news talk shows, there always seems to be so much bitterness, divisiveness and polarization - all those things that give lawyers a bad name.

As we near the end of 2003, it is so cool to see how blogs have not only brought back the enthusiasm and energy of the early days of the web, but also provided a medium in which lawyers can show that the TV picture is not the only picture, that lawyers can be creative, generous and help in creating communities.

With that, I salute those who have created the blawgosphere in 2003.

Amen to that. Dennis was the biggest influence in convincing me that amply providing "free" information was a good idea for firm websites and blogs. (I swear the year 2004 will finally bring a cool and very informative website from my firm. . . really.)

Carolyn Elefant seconds Dennis and puts in her two cents' worth:

I wholeheartedly second Dennis' post -- and for good measure, offer my own perspective as a solo. These days, when I have the opportunity to write articles or speak on the value of blogs to solos (a benefit directly connected to this site, whose success is in turn attributable to the generosity-phenomenon described by Dennis), I always mention the friendly nature of the blawg-o-sphere and the non-competitive, collegial environment as one of the benefits to solos. Frankly, in the real legal world, it's so rare for many solos to have an opportunity to even run into a large firm lawyer, let alone have a conversation with one. In that context, the democratic diversity of the blog world - where solo and large firm lawyers, academics and government attorneys mix and mingle and discourse on equal levels - is a real treat and a welcome respite from both the isolation of solo practice and the hierarchy of the legal profession. My wish for 2004 is that more solos will join in this fabulous party.

Continued . . .

Dept. of Labor launches new interactive tool for employers

Law.com reports: "You Can Look It Up."

Overwhelmed by the vast range of federal employment laws? The U.S. Department of Labor wants to help with a new feature on its Web site. The FirstStep Employment Law Advisor (www.dol.gov/elaws/FirstStep) starts by asking questions about your business in order to determine which statutes apply. Then it links to online information about these laws, including the Family and Medical Leave Act, Immigration and Nationality Act, Contract Work Hours and Safety Standards Act, and the Davis-Bacon and Related Acts (the minimum wage law).

DOL has other E-Law Advisors as well and generally a great website with tons of good info. (though you sometimes have to dig a bit).

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Interesting new-old health-care approach

Here's a very interesting story from Tennessee (Bill Lewis in the Tennessean): "VUMC study tries new tactic to cut health-care costs."

This "new tactic" amounts to encouraging the old-fashioned medical practice of having a "bedside manner" and actually talking to and listening to patients, and using common sense and experience. Imagine that!

A Vanderbilt University Medical Center study is considering a novel way to cut health-care costs.

If insurers paid doctors for talking patiently with patients — instead of seeing as many people as possible in a day — we all might become healthier and spend less on medical care. And, in the long run, health insurance costs paid by businesses and their employees might go down.

''If somebody pays doctors to see patients, they are going to see patients. If someone pays doctors to care for patients, maybe they'll do what they need to do,'' said Dr. Steve Coulter, chief medical officer for Chattanooga-based BlueCross BlueShield of Tennessee, which helped organize the Vanderbilt study and is playing a key role in it. . . .

[P]articipating doctors are being asked to follow common sense guidelines that evidence proves will work for patients with three medical conditions — high blood pressure, congestive heart failure and diabetes. BlueCross has agreed to pay doctors participating in the study somewhat differently for treating these serious illnesses.

For instance, doctors might be paid for time spent on the telephone or sending e-mails, explaining how a patient can manage his or her condition better. That might hold down costs, make physicians happier and help patients too, said Paul Keckley, executive director of the Vanderbilt Center for Evidence-Based Medicine.

The average primary care physician sees 38 patients a day and has just five minutes and 48 seconds to spend with a patient whose disease has just been diagnosed, Keckley said. ''It's like a 7-Eleven,'' he said, referring to the chain of convenience stores. ''They're running patients through turnstiles.''

That leaves no time to educate patients, he said. ''Let's pay for the right results.''

Hendersonville insurance consultant Buddy Shaw said such an old-fashioned idea makes financial sense.

America's health-care system rewards doctors for all the wrong reasons, he said, especially when it comes to expensive tests that might not be necessary. And it doesn't reward them at all for doing things that might really help, such as spending time talking with patients on the phone. . . .

In some ways, the health-care system has its priorities backward, said Coulter of BlueCross BlueShield. How else, he asks, can you explain a system that pays thousands of dollars for a heart bypass operation but only pays a doctor $100 to decide whether you need one. . . .

Vanderbilt spokesman John Howser said the idea is to teach people how they can improve their health.

''The program is all about getting these people complete access to the comprehensive care they need for disease management,'' he said.

Shaw said the solution can be as simple as clear communication between insurance companies and doctors.

He was amazed to learn that insurance companies do not always share a patient's full medical record with each physician who provides treatment. As a result, different doctors might prescribe medications that interfere with each other.

BlueCross promised to make those records available to the participating doctors, he said.

''A doctor could literally go on-line and see what medications a patient is taking,'' Shaw said. ''It surprises me that isn't happening'' in the broader health-care system. ''It's an exciting step, a step in the right direction.''

Helping people learn to manage their own conditions, while avoiding pointless tests, will save money, Keckley said. Instead of immediately ordering tests for patients with low back pain, for example, a doctor might advise them not to lift heavy objects for a few days.

Right now, he said, ''It doesn't happen.'' . . .

Taking a good look at the incentives built into the present system is key to reform.

I can say personally that I saw a huge difference in the amount of time my old-fashioned (now retired) doctor would spend with me and the few minutes (seconds?) the young doctor I saw after he retired would spend. The young guy was just responding to the incentives: trying to cram as many patients into a day as he could.

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Great article on employee views of prescription drug costs and need to educate employees as part of cost controls

Benefitnews.com has this article by David Halter: "How to enlist employees in Rx cost control ."

[T]he key to managing disruption in the face of benefit changes is sound preventive maintenance: understanding your members and effectively communicating with them.

The financial challenge today is clear. Prescription drug costs continue to rise. Medco Health projects that the annual increase in plan sponsor drug spending could range from 13% to 18% per year over the next three years based on existing plan coverage designs. . . .

There is, however, another challenge. Members are neither universally prepared to accept drug benefit changes nor convinced that changes are necessary. When Medco Health surveyed nearly 1,000 members, almost two-thirds (614) were either neutral or disagreed with the idea that what they have to pay for prescriptions will increase over time. And 78% were either neutral or disagreed that their prescription drug plan had limited funds to provide a benefit.

Though rising drug costs are making headlines, members do not fully understand the economic fundamentals. Medco Health's consumer research, both quantitative and qualitative, has revealed some interesting results in this area. For example, many members do not know the total cost of their prescription drug benefit. Many do not even know what their plan sponsor pays for the benefit.

Members believe "insurance companies," not plan sponsors, pay the balance of their prescription drug costs. Worse, members don't know that cost conscious behavior, such as choosing generics, helps their plan sponsor to continue offering a benefit. Instead, they think it merely helps these "insurance companies" boost their profits.

Compounding this knowledge gap is the consumer view that prescription drug benefits are part of a moral contract with their company. In one-on-one interviews, some consumers responded to a hypothetical situation saying it would not be "fair" for an employer facing a $220 million increase in prescription plan costs to raise member co-payments. . . .

Some of the article's suggestions:

Educate members about costs and savings goals, and explain why they should care. . . .

Aim communication to members who need it the most. . . .

Be clear about the change, but offer choice where possible. Tell members exactly how their benefit structure and co-payments are changing. And remember to give step-by-step instructions if you're asking them to take action.Emphasize choice even if the choice doesn't appear to be a very good one. In consumer testing the message "you must use generics when available" drew a negative response. But, consumers were more accepting when given a choice: "You may continue to use brand-name drugs when a generic equivalent is available, but you will pay more."

Make communications timely and ongoing.

The type of employee ignorance described above is one of the sources of some of the labor strife related to healthcare benefits. Employees have come to consider health benefits "free," while they have become a hugely significant part of the compensation package, not just a nice little perk. Employees with the type of attitudes described have difficulty understanding the need for change in benefits and/or trade-offs.

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Strongly positive projections for employment in new year -- end of the "jobless recovery"?

Yahoo News (AP) reports: "Economists Predict Drop in Unemployment."

This is a brief summary of an in-depth piece in today's Wall Street Journal:

The 54 economists surveyed for the Journal's 2004 economic-forecast report said they thought the unemployment rate could fall to 5.5 percent by November.

Hiring fueled by increasing corporate profits and economic growth could lead to as many as 1.5 million new jobs, the Journal said. . . .

Real gross product was expected to grow at an annual rate of 4.5 percent in the first quarter, 4.3 percent in the second quarter and 4 percent in the second half of the year, the economists said.

Half of the respondents said they thought the Dow Jones Industrial Average could exceed 11000 by year end, and 93 percent said they had increased the amount they had personally invested in the stock market in the past year.

Prediction: Now the Democrats will focus on the "quality" of the new jobs being inferior to that of the jobs lost (possibly with some justification).

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Flexible retirement savings options atractive to and used by younger workers?

Martha Irvine writes for AP: "In search of flexibility, young Americans invest in their own retirements"

They're doing what financial experts say every young person should be doing, even in small amounts. They are twentysomethings, saving for that far-off, almost unimaginable time known as retirement -- but not the way their parents did.

At age 22, Ben Ganje is buying a second condo in Minneapolis as an investment in his long-term financial future. And Kelly McCarthy, a 26-year-old in Canton, Mich., is putting her extra cash into an IRA.

Like other young Americans preparing for retirement and not just digging themselves out of debt, Ganje and McCarthy don't expect Social Security to be around when they stop working. . . .

Many young people also have little interest in working for the same company all their careers, making traditional pensions -- in which the dollar amount increases most just before retirement -- much less attractive. . . .

Experts say younger workers' desire for flexibility is prompting many employers to rethink their retirement packages. Some . . . have recently begun offering 401(k) plans -- an option already popular at many companies. And increasingly, other companies have opted for newer types of portable pensions that employees can take from job to job.

"It's not to say that people won't have pension plans. It's that they'll have different types of pensions," said Jim Jaffe, spokesman for the Employee Benefit Research Institute, a Washington nonprofit.

As I write this blawg, I look up and link the websites for many of the organizations whose studies and experts are quoted. It's amazing how many employment, healthcare, and benefits thinktanks and special interest groups there are!

It's very cool that the employees written about are thinking ahead to retirement, but how many of their peers are doing likewise?

Many others in their 20s, and even 30s, are just scraping by and are often in serious debt because of student loans and credit cards.

"Most of my friends have gone the route of moving back with their folks or going to law school. So that seems to be the two ways of getting out of having to face reality right now," said Christopher Jones, 24, a recent UCLA grad who's now a musician, playing with his rock band at clubs in Los Angeles.

Like many people his age, he has no money for rainy-day savings, let alone the long term.

"At this point, my attitude of life is 'carpe diem' -- if I have some money, take a trip, something like that," Jones said. "I understand that being a young person and saving money is the right thing to do. But finding happiness is more important to me than having a little money down the line."

Indeed, thinking about saving for retirement is the last thing many twentysomethings have on their minds. That was the case for Jason Anthony, co-author of the books "Debt-Free By 30" and "Financially Fearless By 40."

"I was a financial disaster," said Anthony, who graduated from Columbia University with student loans and continued to get deep into debt through much of his 20s.

Now 34, debt-free and a savvy investor, he likes to hit twentysomethings with statistics like these: if a 25-year-old deposited $20 a week into a retirement account until age 34, that money would, thanks to compound interest, be worth more at age 65 than $20 deposited weekly at the same rate from age 35 all the way to 65. "Compound interest -- it's the key to financial happiness," said Anthony, who said he's still playing catch-up with his own retirement account.

"If only I had put 20 bucks a week away when I was in my 20s," he said. "If only."

That kind of example of the benefit of starting young needs to be publicized far and wide.

Here's the "other side of the story" (Craig Gunsauley in Employee Benefit News): "401(k) plan participation, deferral rates drop."

Although a resurgent stock market is helping to boost 401(k) account balances, many young investors are missing out on these returns as participation rates among employees under age 35 have dropped dramatically in recent years.

Plan participation has fallen from an estimated all-time high of 80% at the height of the stock market boom in 1999 to 70% in 2002, while average deferral rates have dropped to 7% during the same period, finds a new report from the National Defined Contribution Council prepared by Spectrem Group. . . .

Most of the 401(k) plan dropouts are younger employees and new-hires, observes David Wray, president of the Profit Sharing/401(k) Council of America (PSCA) in Chicago. Wray says that 1999 was the high point for 401(k) plan participation, as these retirement savings plans were identified with the booming Internet-driven stock market. . . .

The majority of plan participants understands the importance of retirement savings, but aren't taking the right action to help ensure retirement income security. Participants should follow a consistent investment strategy, calculate retirement savings goals, develop asset allocation models that meet their needs and risk tolerance levels, and actively manage accounts, Collinson explains.

"People are not taking full advantage of what they could be saving on a pre-tax, payroll deduction basis," she says. "Eighty percent of participants have less than $50,000 in their accounts." . . .

While 55% of participants agree either strongly or somewhat that they could work until age 65 and still not save enough for their retirement needs, some 90% of employers feel their workers will not have saved enough by age 65.

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