ORC Sightlines

March 2006

New Guidance Shines Enforcement Light on Old Labor Law

For almost 50 years, employers have been required by law to report to the government any significant payments or gifts provided to union officials. And for almost 50 years, employers, unions, and the government have all pretty much ignored the requirement. In fact, few labor relations professionals were even aware of their reporting obligations until last summer, when the Department of Labor announced its intention to require that certain expenditures be reported. In November, DOL issued guidance to employers outlining what their approach would be and setting the end of this month as the deadline by which employers who operate on a calendar-year basis must file their initial reports covering 2005.

According to the guidance, expenses such as meals, golf outings, award ceremonies, etc. above a de minimus floor must be reported. (The de minimus exception is for payments to an individual union or union representative that total $250 or less in one year.) This means that practices once taken for granted—such as picking up the tab for dinner while meeting with union officials—will now be reported to the government and could be flagged as a violation of the law by the Labor Department. However, the lack of clarity as to what kinds of expenses must be reported, and what may or may not be acceptable under the law puts employers in the uncomfortable position of having to figure it out the best they can. One vexing question involves the definition of union official or employee and whether it includes, for example, an employee of the company who holds a union position.

In response to DOL's new vigilance, labor law experts speaking at a recent meeting of ORC's Labor and Industrial Relations Group (LIRAG) advised companies to develop policies and procedures regarding their reporting obligations. Among areas to consider are:

For more information on this issue or on ORC's US, Canadian, and Pacific Rim Labor & Industrial Relation Groups, contact Tom Connors, 212-852-0352.

Lessons Learned from 9/11

Interviews with 1,435 workers who successfully evacuated the World Trade Center on 9/11 paint a revealing picture of best practices for emergency preparedness, said Robyn R. M. Gershon, MHS, Dr.PH at last month's meeting of ORC's Occupational Safety and Health (OSH) Group.

"One of the most important lessons here is to train evacuation leaders and instruct workers to follow these designated leaders during an emergency evacuation" Gershon stressed. The human tendency to stick together during a crisis can be harnessed to save lives, if well-trained, identifiable leaders are present to minimize panic and direct the evacuation. For example, 58 percent of those participating in her study were unaware that the World Trade Center had three stairwells, and 88 percent did not know where the stairs would lead. Many lives were saved, however, when knowledgeable group leaders quickly emerged to steer those who followed to safety.

A corollary lesson is that employees need to become familiar with those working near them, even if they have different employers, because familiarity helps groups form more quickly.

Gershon's study also showed many employers were unprepared to help disabled people evacuate. Even relatively mild disabilities, such as deafness, placed workers at increased risk because they did not become aware of the danger quickly enough to respond appropriately. In fact, the disabled were twice as likely to delay evacuation as those without disabilities.

ORC's Occupational Safety and Health Groups provide timely information on emerging issues and best practices to corporate safety, health, and environmental managers, lawyers, and physicians. For more information, visit http://www.orc-dc.com or call 202-293-2980.

HR Technology Leaders Taking a New Look at Disaster Planning

The members of ORC's HR Technology Solutions Network agreed at their last meeting that Hurricane Katrina, among other recent disasters, has energized their companies' efforts to revisit business continuity plans. What became clear in their discussion is a shift in the traditional focus of data and systems to the people issues involved with keeping business going during or following a catastrophic event.

The two most important technology/data-related challenges in dealing with these people issues are

  1. Finding people after a disaster (e.g., making sure contact information is accurate, that procedures for reporting in are established and promulgated, and that infrastructure is set up)
  2. Enabling staff to work remotely (e.g., providing the equipment, setting up procedures, and anticipating the cultural issues that will affect how employees work together under these circumstances)

The heightened awareness that has accompanied Katrina and the pandemic flu scare has motivated many companies to take serious steps to meet these challenges. Some of the actions taken by HRTS member companies include:

The Human Resources Technology Solutions Network brings together executives and specialists concerned with human resources strategy, processes, and practices that can be supported and advanced by the effective use of information and technology. For more information, please contact Cynthia Laird  at 310-846-4200 or Jodi Starkman at 212-852-0394.

Transferring Employees from Less-Developed Countries

The practice, crucial to the talent-management strategies of many global companies, of seconding employees from less-developed countries (LDCs) for assignments in higher-wage locations carries with it some special challenges that must be dealt with, especially regarding remuneration. Because base salaries are usually so much lower in LDCs, the usual allowances provided to expatriate employees may not be enough to allow transferred employees to enjoy a life style in the host country comparable to peers there. On the other hand, if the transferred employees are paid at the same level as their peers, it will be more difficult for them to move back to the pay scale of their home country once the assignment is over.

Members of ORC's expatriate roundtables for the Midwest U.S. and the Canadian regions considered the options at their recent meetings. Taking India as an example of an LDC from which many companies are drawing an increasing number of employees for expatriate assignments, the group considered the special compensation issues that might arise. Traditionally, remuneration packages for local professionals working in India feature a fairly low base salary but also include a number of other fixed cash elements such as allowances for housing, children's education, transportation, et al. When these folks move to a higher-wage country like the U.S., the total fixed cash compensation—not just base salary—needs to be figured into the calculation.

Even after doing so, however, a typical balance sheet approach that includes the usual expatriate allowances and differentials may result in net compensation one third of that of a trasnferee's peers in the U.S. Some companies make this up by paying a position allowance or an enhanced goods and services allowance that disappears on repatriation. Others put the transferred employee on a headquarters or global pay structure. This assures adequate pay and internal equity, but is costly and makes repatriation more difficult.

Ultimately, the approach a company takes to rationalizing pay for these employees will depend on its budget concerns, the number of such assignments involved, tolerance for individualization of pay packages, the purpose and length of the assignment, and the details of pay and benefits in particular home and host locations. There is no single right answer, except to maintain as much flexibility as possible. ORC consultants at the meeting cautioned participants to pay particular attention to how any remuneration package will affect repatriation.

ORC's expatriate workforce roundtables allow participants to share information and innovative approaches to managing international compensation and a global workforce. For more information, contact:

Tricia Danielsen (Canadian and regional US Roundtables), 1- 212-719-3400, Phil Stanley (Asia MNC Roundtable), 65-6438-0004, Siobhan Cummins (UK and European Expatriate Forums), 44-20-7591-5600.

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