Does Corporate Profit-Sharing Spread the Wealth?

As the 2016 presidential primaries draw closer, many candidates have begun to outline their economic plans, all touting to aid workers and raise the middle class. Democratic frontrunner Hillary Clinton shared her own economic plan, the centerpiece of which is increasing employee pay and raising income levels. As part of her plan, Clinton hopes to remedy stagnant wage growth with a "Rising Incomes, Sharing Profits" tax credit, which would award a two-year tax credit to companies that offer profit-sharing programs to employees. But, does profit-sharing actually spread the wealth to workers or does it have unintended consequences that could actually hurt the very employees it's supposed to help?

Clinton's proposed plan gives companies a two-year tax credit equal to 15% of the profits they share. As an example, an employee earning $50,000 a year could receive an additional $5,000 in profit-sharing and the company would then receive a tax credit of $750 per worker. The credit would only be available to companies that offered profit-sharing widely to workers and would phase out higher-income employees from the program.

Corporate profits, although lagging in the first half of the year, are still at an historic high and profit-sharing aims to distribute some corporate profits back to workers in order to raise employee wages and give workers a stake in company performance. Proponents of the plan assert that employees become stakeholders in a company under profit-sharing arrangements: when a company does well, employees share in the gains. Advocates claim that having an investment in a company's performance can lead to higher productivity, stronger employee loyalty, and higher incomes. Companies with profit-sharing plans had average compensation levels 8 percent higher than other comparable companies (National Bureau of Economic Research, 2012).

One example of profit-sharing being a win-win for both employees and companies is WinCo, an Oregon-based, employee-owned supermarket chain. The company offers its workers an Employee Stock Ownership Plan (ESOP), and more than 400 front-line, non-executive employees have accumulated over $1 million in retirement savings; within the last seven years, WinCo has paid out almost $1 billion to retirees (Forbes, 11/5/14). The grocery chain is visibly successful with 98 stores across the nation and an expected $6 billion in sales in 2015.

However, others worry that the program could actually harm the workers Clinton aims to help. Although typically bonuses from profit-sharing are in addition to normal wages, companies could try to replace some of their payroll with profit-sharing, which would harm middle-class workers that rely on consistent paychecks. Corporate profits, although high, can be erratic; for instance, during the Great Recession, profits plunged 16% (Fortune, 3/30/15). Workers that depend on reliable income could be hurt by wages being tied to their organization's performance. Skeptics of the idea also claim that the boons of profit-sharing are mostly theoretical and not enough economic research exists to prop up the idea that profit-sharing plans boost wages of middle-income workers.

Clinton's tax credit is only a proposal, and is likely only one of many that will come from a variety of presidential hopefuls in the coming months. But corporate profit-sharing is part of the larger debate around reversing wage stagnation and boosting middle-class workers.

Readers, would you want to work at company with profit-sharing? Is it a win for the economy and workers? Comment and let us know!
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The Disappearing American Worker

The unemployment rate has been falling steadily for several years as the United States emerges from the Great Recession. In June, the unemployment rate fell to 5.3%, the lowest in seven years. Job growth has also been consistently steady, if a bit sluggish after a first quarter slump. However as the unemployment rate has fallen, so too has the labor participation rate. In June, the workforce participation rate declined to 62.6%, the lowest since October 1977. Do more and more people exiting the workforce reveal that the economic recovery may not be as bright as some hope? Or is it simply the new normal?

Americans have been leaving the labor force since the tech bubble burst in 2000. Before then, the rate had been steadily climbing as women entered the workplace. More than 94 million Americans are neither employed nor looking for work, and 432,000 people left the labor force in June, causing a further slump in participation. The downward trend has been consistent for nearly fifteen years and a sluggish economic recovery has only hastened the decline.

The drop in participation could be caused by certain demographic groups opting out of work. For instance, Americans are now living longer and the Boomers who once made up the majority of the workforce have retired in force in the last years. Only a third of Baby Boomers in the U.S. are still working (Gallup, 1/26/15). On the opposite end of the spectrum, more young Americans have opted to stay in or return to school rather than start their career. Non-working students, mostly under the age of 35, increased from 5.8% in 2006 to 7.1% in 2012 (Bloomberg, 1/19/15). Those continuing their education are predicted to return to the labor force once they've finished school, but for now their education keeps them from being employed. Younger people staying in school longer and a mass exodus of older workers means that the labor participation has dragged since well before the Great Recession and will continue to do so as more Boomers retire.

However, less people working may not just be about generations. The more worrying aspect of decreased participation is the decline of "prime workers" (those between 25 and 54 years of age) dropping out of the workforce. The amount of men in the workforce declined to 69% in June, the lowest since the data started being tracked in 1948 (U.S. News & World Report 7/16/15). Women, who were responsible for the climbing participation rate for several decades, have also left the workforce and their participation has declined to 56.7%, down from the 60% peak in 2000.

Most concerning is that economists do not expect prime workers who have left the labor force to return to it, even if the economic recovery speeds up. Those who have opted out have done so out of discouragement and changing work environments. Despite 5.4 million vacant positions, these workers do not have the skills potential employers are seeking for their open jobs. This becomes a vicious cycle: as workers drop out of the labor force due to lack of skills, being unemployed means they can't get the job skills they need and decreases their employability even further.

The shrinking American workforce is predicted to continue and economists worry that low labor participation will hurt the economy. A decline in productivity could mean depressed development and stagnant GDP growth. The disappearing American worker may mean that the economy will continue to limp along rather than surge ahead.

Readers, why do you think the labor participation rate is falling? Comment and let us know!
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Black Friday in July: Retail Giants Battle for Online Sales

Seeing advertisements for blowout sales, slashed prices, and one-day deals might make some feel as if it's the beginning of the holiday sale season. The heat, however, makes it quite clear that Christmas is far off and instead online retailers have decided to recreate Black Friday in July. Amazon was the first to anoint July 15 as "Prime Day," a one-day online shopping event "with more deals than Black Friday," exclusively for Amazon Prime members. When the online retail giant announced their day of deals, Walmart quickly declared a rival sale with exclusive online "rollbacks," while Target also joined the fray with their sixth annual "Black Friday in July" week.

The three retail behemoths continually compete to capture the growing amount of sales made online as more and more people opt to make purchases on the web rather than at brick-and-mortar stores. For instance, in 2014 Cyber Monday outpaced Black Friday sales as predicted: total sales hit over $2 billion and were up 17% from the previous year (Fortune, 12/2/2014) while companies saw their Black Friday sales drop 11% (Fortune 11/30/2014).

E-retail sales are skyrocketing throughout the whole year, not just Cyber Monday. In 2014, web sales totaled more than $300 billion for the first time and sales were up 15% from 2013. The majority of sales are still made in brick-and-mortar establishments: E-commerce accounted for 6.5% of total retail sales in 2014 (Internet Retailer, 2/17/2015). However, that number is expected to grow continually and researchers predict that by 2018, e-retail will account for about 11% of total sales, nearly double the amount currently (Internet Retailer, 5/12/2014). Online sales will continue to be driven by Millennial consumers and mobile purchases. During Cyber Monday in 2014, sales made on mobile devices increased 30% from the previous year and accounted for 20% of total purchases (Fortune 12/1/2014). Mobile shopping accounted for 15% of digital commerce in Q1 of 2015 and accounted for 59% of time spent online shipping, overtaking the amount of time spent shopping on a desktop (Internet Retailer, 6/8/2015).

Walmart, Target, and Amazon are all trying to capitalize on consumers' increased online shopping by fabricating holidays in order to boost spending. As the master of online sales, Amazon took a cue from China's e-commerce goliath Alibaba which made the holiday "Singles' Day" into a huge sales day in order to bump online purchases. Alibaba generated more than $9 billion in sales just for that one day (Forbes, 11/11/2014). Amazon's Prime Day was ostensibly planned around their 20th anniversary, but is more about increasing its Prime membership before companies like Walmart and eBay launch similar programs this summer than celebrating the company's birthday.

Amazon's Prime membership is an essential factor in its attempt to beat out retailers that dominate with storefronts, such as Walmart and Target. For $99 a year, Prime members have free two-day shipping (with same-day shipping available in some areas) as well as access to Amazon's media library. In Q1 of 2015, Prime had 40 million members and those enrolled spent nearly 2.5xas a much annually as compared to non-members (Harvard Business Review, 7/13/2015). Consistently higher sales have prompted Walmart and eBay to announce similar subscription services of their own. However, Amazon has never been concerned about operating at a profit and loses up to $2 billion annually on its Prime shipping costs (Reuters, 1/2/2015). Amazon is more concerned with dominating online sales than remaining profitable, a strategy that its competitors may not have the luxury of pursuing.

Online sales will not overtake storefront spending anytime soon, but the skyrocketing growth of digital commerce has retailers already competing for customers. Whichever business corners the market first on online sales may have an advantage over competitors if retail ever becomes bigger than brick-and-mortar.

Prime Day Update: The initial reaction to Amazon's Prime Day sale on social media was less than glowing. Many users started to use the hashtag #PrimeDayFail to express frustration at the lack of discounts on enticing items. However, despite the online disappointment, sales soared for the retailer. Amazon's sales rose 93% in the U.S. and 53% in Europe (CNN Money, 7/16/15).

Readers, do you online shop? Do "Black Friday in July" deals influence you to shop online? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/7/16/online-retail-prime-day-black-friday-in-july/

New Proposed Overtime Rule Shifts Focus to Salaried Workers

In the ongoing saga of arguing whether raising the minimum wage would either benefit workers or harm businesses, certain industries and stakeholders battle more passionately than others as they are the ones most affected by these wage laws. When cities like Los Angeles institute higher hourly pay, employees in retail, food service, or personal care services are the ones who, according to proponents, would benefit the most, while the companies that employ them, according to critics, would suffer proportionately.

However, a new Department of Labor rule proposed by the White House last week has shifted the focus of the wage debate to salaried workers. The Obama administration's plan would more than double the threshold for overtime eligibility for salaried workers, making nearly 5 million more employees entitled to overtime pay and affecting nearly every corner of the labor force. If passed, the rule would guarantee overtime coverage for salaried workers earning less than $50,440 per year (currently the threshold is for those earning less than $23,660 per year). The proposal is planned to go into effect in 2016 and would make those earning less than $50,440 eligible for the standard overtime rate (time-and-a-half pay) whenever they work more than 40 hours per week.

The overtime law under the Fair Labor Standards Act was inducted during the Great Depression and the threshold has only been updated once in the last forty years. Four decades ago, the rule covered more than half of U.S. workers; now less than 8% of salaried employees are covered by the regulation (Los Angeles Times, 6/30/15). The overtime law has also not historically been tied to inflation, making a high salary in 1975 one that would leave a family of four below the poverty level in 2015. The new rule would either tie the threshold to future inflation or keep it to the 40th percentile of incomes.

When proposing the reform, Obama cited millions of workers who consistently work upwards of 40 hours a week, but are not paid for their extra time. Obama announced the proposed rule in a blog post where he lamented that "too many Americans are working long days for less pay than they deserve." Supporters of the rule claim that paying a premium for extra labor will help employers to either pay a higher salary or stop taking advantage of their workers for free labor. Some wished the new rule had gone further and were urging the White House to make the cutoff $69,000 per year. There is a 60-day period for public comment before the proposal is finalized, but debate about the subject is already delineating along familiar lines: proponents hail the rule as a win for workers and the economy, while critics are predicting dire consequences that would restrict workers' flexibility in their schedule, limit career growth opportunities, and strangle job growth.

The National Retail Federation has already submitted a condemnation of the new rule and others have insisted that it would force companies to reclassify salaried employees as hourly workers, thereby stripping them of benefits and flexibility. The NRF estimated that new overtime rule would cost restaurant and retail businesses $9.5 billion per year, and warned that employers would bend over backwards to avoid paying overtime, meaning that wages, bonuses, and hours might be cut to avoid having to pay time-and-a-half (NRF, 5/18/15). The White House has estimated direct costs to employers at $255 million per year (Los Angeles Times, 6/30/15).

Proponents argue that the new rule will fight stagnant wage growth and put more money in Americans' pockets, which could boost consumer spending (which has remained stubbornly flat) and the overall economy. The law would also curtail the practice of misclassifying workers as "managers" to avoid paying overtime, even though their job duties don't differ from non-managers, a practice that is especially prevalent in food service and retail. Advocates also hope to stop companies from taking advantage of free labor from employees and will either have to pay for the extra hours worked or make schedules fit into a 40-hour week.

Readers, do you support the new overtime rule? Why or why not? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/7/9/new-overtime-rules-salaried-workers/

June Jobs Report

A third straight month of strong job growth continued to boost optimism for the second half of 2015. The U.S. economy added 223,000 jobs in June according to the Bureau of Labor Statistics' Employment Situation Summary. The unemployment rate decreased to 5.3%, the lowest in seven years. However, economists worry that falling unemployment was prompted by Americans exiting the workforce, rather than more people finding jobs. The labor participation rate decreased to 62.6%, the lowest since October 1977.

Industries that experienced the most growth in June included professional and business services (+64,000), health care (+40,000), and retail (+33,000). Temporary help services increased by 0.7% and created 20,000 new jobs.

No More Negotiations: A Way to Solve the Gender Wage Gap?

Ellen Pao, former junior partner at Kleiner Perkins and now interim CEO of Reddit, has consistently made headlines. First, for her highly publicized discrimination suit against her previous venture capitalist employer, and then for making a bold move as the Reddit chief executive. Just days after losing her case, Pao announced that she would be eliminating salary negotiations at the social news-sharing site in order to eradicate the gender wage gap. Now all new-hire job offers at Reddit are attached with a take-it-or-leave-it salary amount. According to Pao, the offered pay is based on comparing the salary for similar positions against industry standards and does not take into account a candidate's salary history or other personal factors.

Pao claims that eliminating the uneven bargaining table that women encounter when they try to negotiate can help close the wage gap. For instance, of graduating MBA students, half of men negotiated their job offers, while only an eighth of women did (Harvard Business Review, 6/16/2014); but research into why women are hesitant to negotiate has revealed that it has less to do with a lack of confidence and more to do with how women are treated when they advocate for higher pay. Women who are hesitant to negotiate have been advised to simply "man up" and use tactics that work for men – being more assertive, sharpening their competitive instincts, and maintaining a firm stance. However, even when women employ these "masculine" techniques, they still lose. Women who negotiate pay a social price: they are seen as demanding and less-than-ideal colleagues. In a study, the evaluators of those negotiating salary found that the "social cost" of negotiation – a decline in the evaluator's willingness to work with the person negotiating – was 5.5 times higher for women than for men (Harvard Business Review, 6/16/2014). Realizing that women are statistically less likely to negotiate than men and that "when they do they're often penalized for it," Pao has taken negotiations off the table entirely.

Reddit may also be benefiting from an unexpected advantage of the new policy: a less antagonistic and suspicious dynamic when hiring new employees. Pao has claimed that they've had many new applicants to Reddit because of the new rule alone. But critics of Pao's policy contend that it rests on enforcing the gender stereotype that women can't or won't negotiate and also takes the control from the employee and gives it entirely to management. A candidate may not deem their offered salary as "fair" and is given little to no room to communicate a differing viewpoint. Reddit does not have salary transparency, which means that any new hires must simply trust that they are being offered the same or similar pay to their counterparts. Detractors worry that taking away negotiations strips candidates of their power to evaluate their own worth and results in a hiring process that happens behind closed doors. Additionally, it is unclear whether eliminating negotiations would actually help eradicate gender pay disparity. Opponents point out that a "fair" offer from management does not ensure that implicit bias has not influenced the salary offer.

Rather than eliminating negotiations, critics counter that Pao, Reddit, and other companies should give women the tools to negotiate more effectively and create a work culture that does not penalize women for being assertive and negotiating pay. Some point to Marc Benioff, CEO of Salesforce, as an example of a positive alternative. The company has launched a program that will examine the existing salaries of all 16,000 female employees to eliminate gender pay disparity. The initiative also aims to hire and promote more women and has set a new policy that at least 30% of the people at every meeting must be women.

No stranger to sex discrimination, Pao hopes to eliminate what she considers a no-win scenario for women by abolishing salary negotiations. However, it has yet to be seen whether her plan will help women close the gap in pay.

Readers, would you apply at a company without salary negotiations? Do you think it could help eliminate the gender pay gap? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/7/2/no-more-salary-negotiations-gender-wage-gap/

Can Blind Auditions Eliminate Hiring Bias?

Last year, to the surprise of many, Google released its employee diversity statistics, making a promise to update the information annually. Other tech companies such as Facebook, Yahoo, and LinkedIn followed in Google's wake and also disclosed their diversity data. Google recently released an update to the statistics, but despite the acknowledged importance of hiring women and minorities, the outlook barely improved. The percentage of women in tech jobs for Google only increased from 17% to 18%, and women in leadership roles slightly budged from 21% to 22%. Company minority hires in tech and leadership positions did not show any uptick (Google, 6/1/15). The tech giant and many other companies recognize that a more diversified workforce makes a stronger company. It plans to invest $150 million in diversity initiatives; however, the tech (or any) industry could help increase diversity by building in blind auditions to eliminate hiring biases.

Managers may not even be aware of their gender or racial bias when hiring. A study found that both men and women managers were twice as likely to hire a man over a woman, even when both applicants possessed equal skills. Additionally, even when men were under-qualified and performed worse on aptitude tests, they were still 1.5 times more likely to be selected over women (Proceedings of the National Academy of Sciences, 1/31/14). Minorities face similar prejudices: even when African-American applicants had the same qualifications and education as their white counterparts, they were 16% less likely to get called back for an interview (Fortune, 11/4/14).

To eliminate racial or gender bias when hiring, some companies have started implementing blind auditions for job applicants. The startup pioneering blind hiring is GapJumpers, and employers such as Dolby, Adobe, Mozilla, and Google are already using the service. The startup calls itself "The Voice" of hiring after the reality TV competition show. Employers post a job opening and candidates apply through the platform; however, the employer does not receive any information regarding the applicant's ethnicity, age, gender, or educational background. Instead, candidates answer work assessment questions and are tasked with some sort of challenge related to the job. For instance, a web developer might be asked to create a web page or a social media manager might outline an online strategy. From their first year's worth of data, GapJumpers found that with their blind hiring process, 58% of those who were selected to interview and 68% of those who ended up getting hired were women (Business Insider, 5/31/15).

Prejudices when hiring women and minorities are evident through multiple studies and tests; even self-aware hiring managers might have implicit prejudices that could cause them to pass up minority or female candidates. Companies that want to hire the best talent and create a meritocracy where applicants are judged for their qualifications, not for their gender, race, or educational background should consider how blind hiring auditions could help eliminate biases and instead onboard the best people for the organization.

Readers, have you ever experienced hiring bias? Do you think that blind auditions could help increase diversity? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/6/25/can-blind-auditions-eliminate-hiring-bias

Los Angeles is Now the Largest City with a $15 Minimum Wage

In an anticipated move on Saturday, Los Angeles Mayor Eric Garcetti signed a measure into law that will require employers to raise the minimum wage from $9 an hour to $15 an hour over the next five years. The first increase will take place in July of 2016 and raise the wage to $10.50. The Los Angeles law was approved with a 14-1 vote and requires that any business with more 25 or more employees raise their hourly wages to $15 an hour by 2020. The wage hike will affect upwards of 600,000 workers, but no one is quite sure the effects the new law will have, and the second-largest U.S. city has now become an experiment for a huge higher minimum wage. Although other cities such as San Francisco and Seattle have also recently raised their wages to $15 an hour, the city of Los Angeles will be watched closely as a trial for whether other cities, and even the federal government, could reasonably institute similar wage hikes. No city as large as Los Angeles, which has nearly a million people living below the poverty line, has tried to institute such a hefty or fast pay increase. The success or failure of the new law will be closely scrutinized and could either be a huge victory for those advocating for higher wages or deter other cities from implementing similar pay increases.

A seemingly endless debate surrounds raising the minimum wage and whether it will help or harm the economy. Mitchell Englander, the only City Council member to vote against Los Angeles' new measure, argues that this new minimum wage "may hurt the very people it is designed to help" by forcing low-margin industries and small businesses to reduce jobs and hours and relocate to the many districts outside of LA city limits which have much lower wage standards (Los Angeles Times, 6/15/2015). Additionally, Englander points out that even $15 an hour will not do much good when affordable housing is so scarce in LA, where the average apartment rents for more than $2,000 a month. A report from the LA Chamber of Commerce echoes Englander's concerns, citing that the increase will result in job loss, business relocation, and will do little to aid low-income families to rise above poverty due to the high cost of living in Los Angeles. Many restaurants openly opposed the measure, predicting that they would be forced to cut as much as half of their staff (The New York Times, 5/19/2015).

However, some are concerned that the wage hike is too little too late. For instance, by the time that LA's minimum wage reaches $15 an hour in 2020, it will be worth the equivalent of $13.75 today (assuming that inflation holds steady). Add to that the fact that it currently costs 40% more to live in Los Angeles than in the average American community, and the future $15 an hour for LA residents diminishes to be worth about $9.75 an hour (FiveThirtyEight, 5/20/2015).

Other cities such as Seattle and San Francisco have passed similar measures to raise the minimum wage. The pay increases have not had enough longevity to determine whether they've helped or hurt workers and businesses. San Francisco's first pay increase was instituted on March 1 and will reach $15 an hour by 2018. Long-term effects of the minimum wage increases are still a mystery, although some are already decrying the escalations in San Francisco as a disaster that has led to local businesses teetering on the brink of closure and restaurants increasing prices by 20% (The Wall Street Journal, 3/24/2015). Seattle's minimum wage, which took effect April 1 has already spurred a debate about whether the pay increases will lead to adverse effects including an abnormal amount of restaurant closures or whether that speculation was wildly exaggerated without the full facts.

Whether the recent minimum wage hikes will be a boon to the economy or will make these metro areas go bust is still unknown. Economists, politicians, business owners, and employees will all be watching these major cities as they experiment with significantly higher wages. Los Angeles especially will be under close scrutiny since it will be the largest city to date that has decided to raise the minimum wage so much and so quickly.

Readers, how do you predict that the $15 minimum wage will affect Los Angeles and other cities? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/6/18/los-angeles-largest-city-with-fifteen-dollar-minimum-wage/

6/17/15 Update: The small California city of Emeryville, near the San Francisco Bay area, voted to raise the minimum wage to $16 per hour by 2020. This will make Emeryville the city with the highest minimum wage in the nation.

Are Wellness Programs Really Voluntary?

Many job applicants are familiar with undergoing a drug screening before being accepted for a job, knowing that any signs of illegal drug use could result in losing the opportunity. However, some would be shocked if they were passed over for testing positive to a legal substance, such as nicotine. At many companies, however, refusing to hire smokers is becoming more common because of corporate wellness programs aimed to promote health and keep insurance costs low. Of the 50 states, 21 allow companies to refuse to hire someone on the basis of whether they are a smoker. Generally, Americans disapprove of this practice: only 14% said that companies should be able to refuse to hire someone based on tobacco use (Gallup, 7/22/2014).

The trend of passing over smokers comes with companies' increased efforts to keep insurance expenses low by promoting health and discouraging or eliminating habits that add to the cost. Some 98% of large companies and 73% of smaller ones offer some sort of corporate wellness program (Kaiser Family Foundation, 9/10/2014). These initiatives must be voluntary under the Americans with Disabilities Act (ADA). However, programs with harsh penalties have led to criticism that many are "voluntary" in name only and are masquerading as beneficial to employees when they really shift insurance costs from the employer back to workers. These programs also delve significantly into the realm of the personal, including habits around smoking and alcohol, details around height and weight, as well as medical preferences such as receiving flu vaccines and family planning decisions.

Most employee wellness programs use a combination of both incentives and penalties to encourage participation. For instance, workers could gain financial discounts for lowering blood pressure or cholesterol, or for completing health-risk assessments. Safeway, whose wellness program was applauded by President Obama and is generally held up as an example of an effective program, lowered annual premiums significantly for individuals and families that passed four measures of health: tobacco use, weight, blood pressure, and cholesterol levels. However, these programs also commonly penalize poor performance or lack of progress by charging higher health insurance premiums to those who smoke or who have a high body mass index. Workers can also be penalized for refusing to participate. For example, CVS required all employees to submit to a medical exam or pay a $600 fine. The Affordable Care Act has encouraged wellness programs by raising the legal limit of penalties that employers can charge for health-contingent wellness program to 30% of total premium costs; for tobacco users, businesses can charge up to 50% more (The New York Times, 9/11/2014).

The penalties imposed on those who do not participate or who do not meet wellness program requirements has elicited the question of whether these programs are truly "voluntary" and whether they comply with federal law. In 2014, the Equal Employment Opportunity Commission (EEOC) sued several companies, claiming that their wellness programs were not voluntary and that these programs did not comply with the ADA. One such program was that of Honeywell, which implemented a plan where employees could face up to $4,000 in financial penalties for not participating or not meeting requirements, such as smoking cessation (PBS 12/2/2014). The EEOC claimed that such penalties induce employees to undergo medical examinations that are non-job related and therefore violate the ADA, which limits the circumstances that an employer can require physical examination or answers to medical inquiries. The EEOC asserts that such harsh financial penalties rendered the programs involuntary and in violation of the ADA.

The EEOC recently released a proposal that includes guidelines to clarify the interpretation of wellness programs under the ADA and how the definition of "voluntary" applies to these programs. However these rules are not finalized and a bill proposed in Congress could limit the EEOC's ability to enforce restrictions on corporate wellness programs.

Depending on the outcome of the bill and the final rules decided upon by the EEOC, the penalizations in wellness programs may be restricted, but not eliminated altogether as the Affordable Care Act would still provide that employers can charge 30-50% more for premiums based on health-contingent wellness programs.

Readers, do you think corporate wellness programs are truly voluntary? Comment and let us know!
http://tradepost.selectfamily.com/index.cfm/2015/6/11/are-wellness-programs-really-voluntary

May Jobs Report

A second straight month of strong job growth continued to boost optimism that first quarter stagnation was due mostly to winter weather and not a sign that the economy is stalling. The U.S. economy added 280,000 jobs in May according to the Bureau of Labor Statistics' Employment Situation Summary. The unemployment rate edged up slightly to 5.5% as more Americans returned to the labor pool and actively started looking for work. Wages increased 0.3% last month and have risen 2.3% over the last year, which may be luring some back to job searching again.

Industries that experienced the most growth in May included professional and business services (+63,000), leisure and hospitality (+57,000), health care (+47,000), retail trade (+31,000), and construction (+17,000). Temporary help services increased by 0.7% and created 20,000 new jobs.

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