Compensation & Benefits Review

Class action overtime and minimum wage cases are “hot” for plaintiffs’ lawyers. Those lawyers are focusing on corporate practices such as exempt status, incentive compensation and flexible scheduling as sources for new cases. Senior managers, including compensation professionals, need to evaluate and respond carefully to employee complaints, the source of most lawsuits in this area. A mishandled response to a complaint also can lead to a wage and hour retaliation lawsuit for punitive damages. Wage and hour class actions in federal court operate under an “opt-in” procedure that is very different from other class actions. The number of records and the need for detailed information on human resources practices mean that managers have a critical role in the defense of wage and hour class actions.

Most government employers offer retiree medical coverage, but there are several factors converging to force government employers to review their current retiree medical programs. Whatever funding mechanism is chosen—medical savings accounts, defined contribution plans, government “pick-ups” or a variety of other options— the goals must remain to maintain effective benefits for current and future retirees, treat all parties fairly, keep retiree medical benefits affordable, adopt legally permissible funding methods and develop an approach with reasonable administrative external and internal costs. This article looks at the current funding mechanisms being used as well as the pros and cons of available alternatives. In the end, the ultimate challenges will be not only structuring the funding to be as tax efficient as possible but also designing plans to manage the erratic, but ever increasing, cost of health care in general.

Employee benefit professionals will redraft certain benefit plan documents in the current calendar year to comply with recent changes in tax law and U.S. Department of Labor regulations. Such redrafting presents an opportunity to ensure that plan document language will invoke the most favorable judicial standard of review should the plan become the subject of a claim dispute. Generally, courts may impose one of two standards of review in deciding claim disputes. The “arbitrary and capricious” standard seeks to determine only whether the plan administrator acted within the provisions of the plan in denying a claim. The “de novo” standard gives courts greater latitude to decide disputes based on the merits of each side’s arguments. Where plan documents explicitly grant the plan administrator discretionary decision-making authority, courts will invoke the arbitrary and capricious standard of review. Benefit professionals must familiarize themselves with the issues and ensure that plan documents contain the correct language to invoke the most favorable judicial standard of review.

Negative emotion is a common experience for many employees. Competition for rewards, resources and recognition drives much of the animosity and ill feelings associated with employee envy and jealousy. In this article, the causes and consequences of employee resentment are highlighted. Factors that contribute to greater levels of employee resentment include reengineering, diversity and generational conflicts. In addition to reduced performance, dysfunctional consequences of negative emotion include stress, job dissatisfaction, withdrawal, retaliation and poor citizenship. The article concludes with a set of five specific suggestions for reducing and managing negative emotion at work: (a) giving consideration to emotional maturity at the time of hire, (b) using teams and participative management, (c) implementing an incentive system that supports employee cooperation, (d) encouraging open communication and (e) placing high achievers in mentor positions.