All posts by Jack Robinson

Jack Robinson is a senior editor at Human Resource Executive magazine.

A Hot Issue Reaches The High Court

As lawyers prepared to argue before the U.S. Supreme Court today over the legality of mandatory arbitration clauses in employment contracts, a new study came out that underscores what’s at stake, estimating that more than 60 million workers are now covered by them.

The Economic Policy Institute, which says its mission is “to inform and empower individuals to seek solutions that ensure broadly shared prosperity and opportunity” carefully timed the release of results to come as before a widely-watched case reaches the high court.

The case is actually three cases involving different employers: Epic Systems Corp., a Wisconsin-based maker of software for health care systems and medical groups, Ernst &Young U.S. and Arkansas-based Murphy Oil USA Inc. All invoked arbitration clauses in disputes with individual workers over overtime and other issues.

The Supreme Court like will take months to decide the issue. And employers will be watching carefully.

To  gauge the potential impact of that ruling, the Economic Policy Institute surveyed 627 private employers with 50 workers or more nationwide, focusing questions on their nonunion workers. Author of the study was Alexander J.S. Colvin., a professor at Cornell University’s ILR School.

Based on this sample, researchers estimate 53.9 percent of private employers require workers to sign arbitration clauses. Researchers estimate 60.1 million U.S. workers are subject to mandatory arbitration with waiver of class-action rights. The practice appears to be more common in large businesses, the study said.

 

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B-School Applications Are Up

Applications for graduate business degree programs are up this year, suggesting a bumper crop of potential recruits down the road, reports the Graduate Admissions Council. The nonprofit association of B-schools administers the GMAT admissions exam.

Among larger programs, 73 percent reported an uptick in applications in the council’s latest annual survey . Smaller programs saw increases of 39 percent to 51 percent. The survey polled 965 degree programs at  351 business schools in 45 countries.

The survey also showed growth of a trend we first noted early this year: amid uncertainty about the nation’s immigration policies, foreign students are steering away from U.S.business schools. About 75 percent of full-time two-year MBA programs in the United States saw a decline in foreign-student applications. By contrast, 22 percent saw increases in U.S. applications.

 

The report quotes one unnamed admission official at a U.S. school  offering an explanation: “Anecdotally, we have had prospective and admitted students express concern about applying for and enrolling in [graduate management programs  in the United States because of the current political situation and fears of finding employment/H1Bs after graduation.”

 

Are Employers Too Powerful?

It’s not often that a philosopher’s book makes even a small splash in the business world. This one may be an exception: Private Government: How Employers Rule Our Lives (and Why We Don’t Talk about It) by University of Michigan philosophy professor Elizabeth Anderson. The book, published earlier this year by Princeton University Press, has attracted attention in Forbes, on the daily public-radio business show Marketplace and elsewhere.

It’s not hard to see the interest for business leaders. Anderson argues that despite our faith that the nation is rooted in freedom and egalitarian values, many Americans work in oppressive conditions, with bosses who exercise tyrannical control over their lives both at work and home.

Anderson sketched parts of her thesis in a 2015 lecture at Princeton, according to a university transcript [pdf here]:

“Most workers in the United States are governed by communist dictatorships in their work lives. Usually, those dictatorships have the legal authority to regulate workers’ off-hour lives as well—their political activities, speech, choice of sexual partner, use of recreational drugs, alcohol,smoking, and exercise. Because most employers exercise this off-hours authority irregularly, arbitrarily, and without warning, most workers are
unaware of how sweeping it is. Most believe, for example, that their boss cannot fire them for their off-hours Facebook postings, or for supporting a political candidate their boss opposes. Yet only about half of U.S. workers enjoy even partial protection of their off-duty speech from employer meddling.”

“Far fewer enjoy legal protection of their speech on the job,
except in narrowly defined circumstances. Even where they are entitled to legal protection, as in speech promoting union activity, their legal rights are often a virtual dead letter due to lax enforcement: employers determined to keep out unions immediately fire any workers who dare mention them, and the costs of litigation make it impossible for workers to hold them accountable for this.”

Employment lawyers might challenge some of Anderson’s claims, and most HR executives likely would say they don’t recognize the business world she describes.

But Anderson’s book comes at a volatile time in America, and it’s difficult to predict which public-policy issue will next catch fire. If the nation’s recent populist anger swings in a new direction, it’s not hard to imagine Anderson’s work providing intellectual fuel for a left-wing presidential candidate such as Bernie Sanders or Elizabeth Warren in 2020. Private Government provides a sneak peak at possible stump-speech talking points.

In longer-range terms, this book also could influence the common perception about business as did Michael Moore’s 1989 documentary Roger & Me, or Nickle & Dimed, Barbara Ehrenreich’s 2001 book about her attempt to live on a minimum wage.

Asked in a Q&A with Princeton University Press editors how she would prefer workplaces to be organized, Anderson says this:

“I argue that workers need a voice in how the workplace is governed. Other measures, such as making it easier for workers to quit, and laws protecting workers’ privacy and off-duty activities from employer meddling, can certainly help. But these can’t substitute for workers having a say in how the workplace is governed. Labor unions once gave voice to more than a third of American workers. These days, outside the state sector, few workers are represented by a union. Yet unions are not the only way that workers can have a say in workplace governance. In Europe, so-called co-determination, in which workplaces are jointly managed by owners and workers, is common. I make the case for exploring different ways workers could have a say, to open up a topic that is hard to frame in today’s impoverished political discourse.”

 

Opioid Epidemic Hinders Hiring

Economists in recent days have taken note of a trend that’s been painfully obvious to many in HR: The opioid epidemic is preventing some employers in parts of the country from hiring and keeping workers.

Most notable among the new voices was Federal Reserve chairwoman Janet Yellen, who addressed a question that has puzzled labor economists —what is driving the decades-long decline in the labor-force participation rate for prime working-age men? (Translated from econo-speak: Why are fewer men ages 25 to 54 either employed or looking for work?)

Speaking to the Senate banking committee on July13, Yellen tied that decline to another troubling trend: the rising death toll from overdoses of prescription opioid painkillers. “I do think it is related to declining labor-force participation among prime-age workers,” Yellen said. Other economists have elaborated on this theme in recent weeks. For example: the Federal Reserve Bank of St. Louis, in its August 2017 “beige book” economic report, notes: “Manufacturing contacts in Louisville and Memphis reported difficulties finding experienced or qualified employees,

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with some citing candidates’ inability to pass drug tests or to consistently report to work,”

The link between opioids and employment isn’t just guesswork. Yellen and other economists cite the work of Princeton University economist Alan B. Krueger. His latest research, published in the Fall 2017 edition of the Brookings Papers on Economic Activity, “makes a strong case for looking at the opioid epidemic as one driver of declining labor force participation rates,” write Brookings Institution editors in a summary of the research.

Building on his own earlier finding that Krueger’s latest findings are built on his own earlier research looking at labor and medical datafor U.S. counties. Krueger found that over the last 15 years,  after controlling for other variables ,“labor force participation fell more in counties where more opioids were prescribed.”

Privacy May Trump Fed Data Demands

A judge’s early ruling in Google’s complex legal battle with the U.S. Department of Labor highlights a new argument that other companies may use in fighting regulators’ demands for HR data: The government can’t be trusted to keep it safe from hackers.

The ruling came after the DOL’s Office of Federal Contract Compliance Programs had been auditing the company’s compensation practices for much of 2017, according to a blog post by Google vice president for people operations Eileen Naughton. Federal officials first requested documents in September 2015.

The Labor Department has not publicly accused Google of any specific violation, but critics have claimed the company—and others in tech—pays men more than women for the same work. Naughton, however, maintains that company data disprove this claim. “Our own annual analysis shows no gender pay gap at Google,” she writes.

The company had been cooperating with the audit, providing the government more than 329,000 documents and “detailed compensation information,” Naughton writes. Included were records on more than 21,000 employees.

But the two sides reached an impasse over the summer after the Labor Department demanded more information in June, according to a summary of the case by San Francisco-based administrative law judge Steven B. Berlin accompanying his July 24 preliminary ruling in the case (posted here, thanks to the Washington Post). The agency and company found compromises on some requests but remained at odds over others, Berlin writes.

According to Naughton, Google balked after DOL auditors wanted “employees’ compensation and other job information dating back 15 years, as well as extensive personal employee data and contact information for more than 25,000 employees. We were concerned that these requests went beyond the scope of what was relevant to this specific audit, and posed unnecessary risks to employees’ privacy.”

In his July decision, which is not yet final, Berlin granted a portion of the DOL request, but ruled that the request for employee contact information was “over-broad, intrusive on employee privacy, unduly burdensome, and insufficiently focused on obtaining the relevant information.”

Noting that hackers have accessed the federal government’s own employee records in a well-publicized 2015 data breach at the U.S. Office of Personnel Management, the judge outlined his other main objection to the DOL requests: “My concern centers on [the] extent to which the employee contact information, once at OFCCP, will be secure from hacking, OFCCP employee misuse, and similar potential intrusions or disclosures. OFCCP has already collected for 21,114 employees information such as name, date of birth, place of birth, citizenship status, visa status, salary, and stock grants. That information, if hacked or misused, could subject tens of thousands of employees to risk of identity theft, other fraud, or the improper public disclosure of private facts. Adding contact data, such as personal phone numbers and email addresses, increases the risk of harm to Google’s employees. The contact information could ease the efforts of malicious hackers or misdirected government employees.”

What does this mean for HR?

One employment attorney says the lesson for employers is to respond cautiously to government demands for sensitive employee data.

“The July order demonstrates that employers can, and should, take steps to protect their employees’ confidential information—even when such information is demanded by the government,” writes Margaret C. Inomata of the Washington, D.C. office of Vedder Price, in a blog post. “By resisting the OFCCP’s overbroad requests, Google managed to significantly pare down the scope of the agency’s demand and forced the OFCCP to take additional steps to protect its employees’ contact information,” she writes “Like Google, other employers should consider creative solutions to defend against the unnecessary disclosure of sensitive employee data and maintain their employees’ trust.”

 

Workers Wary of High-Deductible HPs

High-deductible health plans are gaining traction with employers, says one new report on the U.S. benefits landscape. Another report concludes that growth in adoption of these plans has leveled off. Both reports, however, say many workers are not yet sold on the plans.

The 2017 Employee Benefit Trends Report from the Houston-based benefits administrator Empyrean says 80 percent of clients it surveyed now offer high-deductible plans. And 22 percent offer such a plan as the only option for medical coverage — the so-called “full replacement” strategy.

The latest report by PwC’s Health Research Institute offers a different perspective. Authors of Medical Cost Trend: Behind The Numbers 2018 conclude that the move to HDHPs “may be plateauing.”

The evidence: First, the share of employers that have adopted a full-replacement strategy has been flat for the last three years,” according to PwC’s 2017 survey of major U.S. companies.

In a second sign of trouble for HDHPs, the survey finds only 28 percent of companies are considering a full-replacement strategy in the next three years, down from 44 percent in 2014.

Both reports note that many workers remain leery of HDHPs.

“Though consumer-driven plans are becoming more common among employers, HR teams may find it difficult to communicate the advantages of these options to their workforces,” write authors of the Empyrean report. Employees who are accustomed to traditional PPO and HMO plans “may instead disregard these plans as corner-cutting by their employer.”

The PwC  report reaches a similar conclusion, noting that workers recognize that HDHPs mean higher-out-of-pocket costs.

Calling HDHPs “a plan design that has proven largely unpopular with consumers,” the report cites a PwC consumer survey to demonstrate the point. That survey found 69 percent of HDHP participants“ likely would choose a different plan type next year if it’s available, even if it means making a higher monthly premium contribution.” The survey also found that 72 percent of consumers who are not participating in a high-deductible plan say they are not likely to choose one in the future.

 

 

A Tricky Legal Question for HR

The Aug. 11 march by white-supremacists in Charlottesville, Virginia, ended after a car plowed into a crowd of counter-demonstrators the next day, killing a 32-year-old woman.

Authorities have charged an Ohio man in the case, starting what could be years of legal repercussions.

For HR executives, the incident raises a legal question that is at least as complex: How can employers protect themselves when a worker participates in extremist political conduct that puts the business at risk?

That risk is painfully clear to the owners of two restaurants on opposite sides of the country. Both employed men who were publicly identified as participants in the Charlottesville rally. Both companies found themselves in the glare of unfavorable publicity as a result.

Boston-based Uno Pizzeria and Grill quickly fired a cook in a Burlington, Vermont outlet after he was identified in a news video and in social-media posts as a march participant and ardent white supremacist.

Owners of Top Dog, a small chain of hot-dog restaurants based in Berkeley, California, did not fire an employee who also was linked to the Charlottesville rally in social-media accounts. Instead, they told local news outlets, he chose to resign.

What about the First Amendment? Does it protect employees  from punishment by employers for exercising their constitutional right to free speech?

Not if they are employed in the private sector, lawyers say. The First Amendment only limits government control of a person’s speech or writing, writes employment attorney Robin Shea of Constangy, Brooks, Smith & Prophete LLP in Winston-Salem, North Carolina. “The First Amendment doesn’t prohibit limits on speech that are imposed by private individuals, or private-sector employers.”

State or local laws may apply in some cases, “but those jurisdictions are the exception, not the rule,” she writes.

Public employers take special care, Shea notes. And employers with a collective bargaining agreement should check to see if it limits their options, Shea writes.

In any case,“Employers must also be careful not to run afoul of the National Labor Relations Act by punishing employees who may be commenting about the terms and conditions of their employment,” writes Kimberly A. Ross, a partner with Ford Harrison in Chicago.

Ross recommends that employers tread carefully no matter what. “Because of all of the complex issues to be considered, employers are encouraged to consult with their employment counsel before making any significant decisions based on their employees’ off-duty conduct,” she writes.

Shea also urges employers to be cautious: “Never take action against any employee based on ‘politics’ unless you have consulted with counsel first,” she writes.

Survey: 3-percent Raises in 2018

The economy is generally strong and low unemployment rates mean some organizations are scrambling for workers. But most companies are not planning to spend more on pay increases in 2018, according to a new survey.

Employers are prepared to open their checkbooks a bit wider to reward top performers, according to the global consulting firm Willis Towers Watson, which surveyed 819 U.S. companies in a range of industries from April through July.

Of companies surveyed, 99 percent expect to grant raises next year, according to a summary by Willis Towers Watson. The average 2018 raise forecast for most employees, including both professional and nonexempt workers, was 3 percent — the same as the average raise given in the last three years. The average expected raise for executives is about the same — 3.1 percent.

“Most companies are not under any significant pressure to increase their salary budgets in the near term,” said Laura Sejen, Willis Towers Watson’s managing director for human capital and benefits, according to a company announcement.

Employers continue to offer performance bonuses to their most valuable players, the survey found. Among companies surveyed, top performers received raises of up to 4.5 percent. Willis Towers Watson found some companies surveyed base their bonuses not only on performance, but on professional development.

“While organizations may be forecasting 3% increases, the landscape of how and when they are giving increases varies considerably,” said Sandra McLellan, North America rewards practice leader at Willis Towers Watson, according to the company announcement.

 

Diversity Memo Causes a Stir

The tech world is chattering today about a widely circulated internal memo from a male software engineer unhappy with Google’s diversity practices.

Posted in full over the weekend by tech-oriented websites Motherboard and Gizmodo, the memo argues that innate biological differences between men and women account for underrepresentation of women in the upper reaches of the industry.

“I’m simply stating that the distribution of preferences and abilities of men and women differ, in part due to biological causes, and that these differences may explain why we don’t see equal representation of women in tech and leadership,” the memo reads.

The engineer also argues that Google’s diversity practices amount to a politically liberal orthodoxy “that can irreparably harm Google.”

In response to the memo, which drew a harsh response from some Googlers on Twitter, the company’s vice president of diversity, integrity and governance offered a memo of her own. Danielle Brown had been on the job just a few weeks when the controversy erupted.

“Diversity and inclusion are a fundamental part of our values and the culture we continue to cultivate,” she writes. “We are unequivocal in our belief that diversity and inclusion are critical to our success as a company, and we’ll continue to stand for that and be committed to it for the long haul.”

Addressing the complaint about what the engineer perceived to be a pervasive liberal ideology at Google, Brown writes: “Part of building an open, inclusive environment means fostering a culture in which those with alternative views, including different political views, feel safe sharing their opinions. But that discourse needs to work alongside the principles of equal employment found in our Code of Conduct, policies, and anti-discrimination laws.”

(By Tuesday, word emerged that Google had fired the engineer for violating its code of conduct.)

H-1B Visa Limits Ease — Just a Bit

Hold on, employers! The immigration roller coaster just took another turn. And it may — or, more likely, will not — help you.

U.S. Citizenship and Immigration Services announced last week that on July 24 it resumed expedited processing of H-1-B visas – but only in certain cases.

The so-called premium service is effectively a fast lane that, for a $1,225 fee, speeds the hiring of foreign skilled workers in certain “specialty occupations” such as software engineer. The service ended in March, soon before President Trump issued his “Buy American, Hire American” executive order. The Trump administration signaled at the time that it would be scrutinizing H-1-B applications more carefully prevent fraud. The apparent targets include offshore staffing services that have been accused of scooping up technical workers in India, China and elsewhere, then placing them in American jobs using visas obtained in bulk.

The new policy applies only to employers not subject to a cap on H-1B visas — that is, universities or related nonprofits, such as institutes and medical centers. Government research organizations also qualify.

The immigration agency said that in June it already had resumed premium processing for physicians. Hospitals, particularly those in rural areas that struggle to find highly experienced doctors without recruiting abroad, had complained about the limit on expedited visa processing.