Labor in the News

LABOR IN THE NEWS

April 8, 2004, 11:53PM

WORKING

Law says Texas gets to hold unclaimed back wages

By L.M. SIXEL

When $2 million worth of checks are mailed to thousands of construction workers later this year, some will come back undeliverable.

That's not too surprising. Many construction workers jump from job to job, living out of travel trailers or renting apartments until the work ends. Some don't want to be found because they aren't legally entitled to work in the United States.

The reason for the search for construction workers?

The Houston Airport System used the wrong wage scale when it put 12 federally funded contracts out to bid, and employees who built new taxiways, runways and renovated terminals at the three Houston airports were underpaid. An alert contract compliance officer found the error.

But who should get the unclaimed funds?

Velma Laws, director of the Mayor's Office of Affirmative Action and Contract Compliance, says the city should. In fact, it plans to deposit the uncashed checks into the general account of the Houston Airport System after waiting a year.

Not so fast, the Texas Comptroller of Public Accounts says.

Neither the city nor the airport system has dibs on the unclaimed money.

Under Texas law, any unclaimed wages must be forwarded to the Texas comptroller, who holds the money until the employee or his heirs are found, according to George Tamayo, division manager for unclaimed property at the agency.

Employers used to have to hold the money for three years, which the most recent Legislature reduced to one year, he said.

If the amount is under $100, the money is held by the city or county treasurer. And if a federal agency is involved, that agency typically keeps up with its own abandoned property, such as savings bonds or IRS refunds.

In no case can it be used for agency profit or to provide supplies to the agency, Tamayo said.

While the biggest source of the $1.1 billion in unclaimed property in Texas stems from forgotten savings and checking accounts and utility deposits, a substantial portion comes from wages.

Sometimes it's a salesman who doesn't know he earned commissions or a student who works one day at a fast-food restaurant and quits, Tamayo said.

To get the money, an employee only has to prove who he or she is and provide some sort of link to the company. That could include a previous check stub or a piece of mail that was sent to that person's last known address.

There is no requirement to show a Social Security number or immigration papers, he said.

If it turns out you have money coming, the state charges a processing fee: 1 percent if the value is between $100 and $4,999. If the value is $5,000 or more, the fee is 1.5 percent.

E. Dale Wortham, president of Harris County AFL-CIO, said he'd like to see the city put in more of an effort to find the workers.

There is an underground network that all construction workers use, said Wortham, an electrician by trade. People know how to find each other by trading cell phone numbers and pagers.

That way they can pass along information on "overtime jobs" as well as the names of good — and bad — foremen, he said.

By using the informal network, he said, more of the employees who have as much as $25,000 coming to them would be found pretty easily.

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April 14, 2004, 11:42PM

United Way pension woes may pinch agencies

By L.M. SIXEL

A pension shortfall of more than $14 million is forcing local United Way agencies to make hard financial decisions that could affect employees and thousands of area residents who rely on their services.

The United Way of the Texas Gulf Coast is asking its affiliates to consider a plan that would require some agencies to drastically increase their payments to the plan.

Some, like Big Brothers Big Sisters, already operating on a tight budget, are being asked to boost payments two to three times what they have been paying.

"I'm worried how we'll pay it," said Katy Ford, the local organization's CEO. "We don't have the funds to cover it."

Overnight, Big Brothers Big Sisters' annual pension contribution would go from $13,651 to $46,446, a substantial hit for the agency that provides role models for 1,200 local children.

Just as airlines, automakers and steel companies nationwide have had to struggle to keep up their minimum funding payments, nonprofits like the United Way are dealing with years of accumulated stock market losses and extraordinarily low interest rates that have hammered their pension plans.

And the United Way's fund-raising options are limited.

The local United Way has proposed a plan that would suspend contributions to the pension plans of individual employees. The money that would have gone to the workers instead would go toward paying down the plan's $14.3 million deficit.

Under the proposal, 14 of the local United Way's affiliated agencies would pay more into the plan, and 12 would pay less beginning July 1.

The United Way says its plan would allow it to wipe out its unfunded liability by 2009.

"We are looking for the best way to help," the United Way says in a prepared statement. "The proposed freeze takes into account all current employees, vested former employees and retirees."

But some social service agencies say United Way's plan could put them in financial peril.

"It will put our agency out of business," said E. Dale Wortham, board president of the Community Services Program of the AFL-CIO, which operates a food pantry and refers financially struggling residents for social services.

To spread the burden, the United Way wants to recalculate the amount each agency pays into the plan based on the liability it has built up.

Currently, United Way calculates pension contributions based on payroll and doesn't take into account the number of employees who are either eligible or receiving a pension.

Agency employees, who have been receiving between 3 and 6 percent of their salaries each year in a special fund for their retirement, would no longer receive those contributions beginning July 1. They would, however, continue to receive interest on the money that's already in their accounts.

In addition, new employees would not be allowed to participate in the pension plan, according to the United Way's proposal.

The United Way has told all 25 agencies — including its own administrative arm — that to freeze the plan, they must agree.

And if one or more agencies refuse to go along, which they can under the plan agreement, the financial burden could become overwhelming, according to several agency executives.

"If we don't do something, we could possibly trigger a voluntary termination," said Rick Daigneault, vice president of finance and administration for Neighborhood Centers, which provides community services to more than 250,000 area children, families and seniors.

When an employer wants to end its plan, a voluntary termination, it has to pay off the total liability immediately.

"That would put some of these small agencies out of business," Daigneault said.

But the situation isn't likely to get to that point, said Anthony Scattone, consultant for Mercer Human Resource Consulting, the plan's actuary.

In fact, a freeze is a way to head off a problem, said Mercer principal Philip Tenenbaum. The intention of the United Way is to slow down the growth of liabilities to allow assets to catch up.

Other charitable groups have also had to take drastic action as they've seen their employee benefit costs rise while their donations have dropped.

The board of the United Way Capital Area in Austin voted last year to cut its pension contributions by 50 percent, said Jan Hames, vice president of marketing. It also laid off 30 percent of its staff.

"The board feels fiscal controls are in place and it can monitor what is going on in the economy," Hames said. "It's a balancing act."

While several social service agencies in Houston are upset about the request to pay more, others in the Gulf Coast region would pay substantially less.

Target Hunger, for example, would see its annual pension expense fall from $7,114 to $2,050. That's because the agency has no current retirees and no former employees who are eligible for a pension. And it has only five vested employees.

The United Way has given the individual agencies until April 26 to decide if they'll go along with the freeze. If they do, United Way plans to announce the freeze May 3 to the 3,000 employees and retirees already covered under the retirement plan.

"Throughout the evaluation process the Agency Benefits Committee has worked to find options most beneficial to employees," according to a prepared statement from the United Way.

But when one employee heard about the plan to freeze her pension, she was horrified.

"I'm a single grandmother raising two grandkids," said Shirley Smith, administrative assistant for the AFL-CIO's Community Services Program.

"I don't want to work forever," said the 54-year-old who has been with the program for 15 years. "I want to be home with them."

To make it more palatable for employees, Neighborhood Centers will look into using some of the money it saves from lower premiums to beef up its 403(b) retirement plan, the nonprofit's version of the 401(k).

"We're not sure what we will do yet," said Daigneault, but "we will do something to make up for it as we can afford it."

April 22, 2004, 11:00PM

WORKING

Who will lose overtime pay? List likely to be long

By L.M. SIXEL

Let's cut right to the chase: Are you going to lose your overtime pay under the new Labor Department rules?

While lawyers, labor leaders and policy wonks pore through the 536 pages of regulations the government released Tuesday, a few clear winners and losers have emerged.

If some of the critics are right, millions of U.S. workers are in danger of losing their overtime pay.

And don't think the issue doesn't apply to you. If you are suddenly no longer eligible for overtime, what's to stop your boss from working you 60 hours a week? Or 80?

So, let's get a drum roll going and announce the winners:

• Anyone who earns $23,660 or less a year, including supervisors and managers. They would be eligible for overtime. That's a big improvement from the current floor of $8,060, which was set decades ago.

The new minimum would provide overtime pay for the first time to thousands of low-paid but hard-working retail and restaurant managers. The Labor Department estimates that by boosting the minimum, an additional 1.3 million workers will be eligible for overtime pay.

• Firefighters, police, correctional officers and emergency responders. It appears that intense pressure by their unions to keep their overtime pay forced the Bush administration to drop its earlier proposal to exempt key public servants.

Losers: just about everyone else.

• The financial services industry. It appears from the regulations that just about the entire industry will no longer be eligible for overtime, said Kelly Ross, legislative representative of the AFL-CIO in Washington, D.C.

How many in total, he added, he just doesn't know yet.

• Labor relations, public relations and government relations employees. The party's over. Ditto for human resources employees: No more OT.

• Funeral directors and embalmers. Congress has been trying for a decade now to try to make them exempt from overtime.

• Insurance claims adjusters. They recently won a court battle for overtime, but under the new rules, they'll no longer be eligible. Neither will computer network, Internet and data base administrators. Same story for athletic trainers.

• Many outside sales representatives who deliver as well as sell their products. Currently they're entitled to OT if they spend more than 20 percent of their time engaged in nonselling duties.

• Team leaders. These are the people who lead projects but aren't supervisors, a practice that is especially popular in factories, refineries and chemical plants.

"That will affect millions of workers right there," Ross said. Maybe everyone will eventually become team leaders.

• Employees who do a smattering of administrative, management or professional work during the course of the day. Currently employees must spend the majority of their day doing administrative, management and professional duties to be considered exempt from overtime pay. That could potentially affect a huge number of people, Ross said.

• Employees no longer need college degrees to be considered professionally exempt from overtime. Work experience is enough, which could, overnight, cost 1 million workers their overtime, said Ross Eisenbrey, vice president of the Economic Policy Institute in Washington, a research group that focuses on low-wage and middle-income workers.

Under the new rules, an employer could contend, for example, that the non-degreed engineers working beside the degreed engineers have enough work experience to make them ineligible for overtime, he said.

That learned professional exemption could also make paralegals ineligible for overtime if they have knowledge or experience that the law firm uses.

• And, near and dear to my heart, television, radio and newspaper journalists, who are stuck under a "creative professionals" category. An exception: people who work for the media and "merely" rewrite news releases.)

• Finally, anyone who earns more than $100,000 a year would no longer be eligible for overtime — and it's not indexed to inflation. Currently, eligibility is not limited by income.

That new ceiling, however, could be meaningless, what with all the other restrictions.

"I can't think of any one at that level who would be eligible," Eisenbrey said.

While the rules have many employees worried, the fight isn't over yet, especially in this election year.

The Senate has already voted 54 to 45 to block any effort by the Bush administration to take away overtime from those currently receiving it while also adopting the new $23,660 minimum.

Sen. Tom Harkin, D-Iowa, is expected to introduce this provision as an amendment again in early May when an unrelated bill on tax and trade tariffs comes up for consideration.

"It's must-pass legislation because tariffs have already been attached to U.S.-made products in Europe," said Mike Aitken, director of governmental affairs for the Society for Human Resource Management in Alexandria, Va.

"We expect a fight," said Aitken, whose group represents employers.

Eisenbrey is also gearing up for a big debate. The new rules have a lot of cosmetic changes, he said. "But it's like trying to put lipstick on a pig."