Health Management: The Eye of a Gathering Storm

As 2007 begins, two issues will pose legal challenges for employers: health-care costs and job-protected leaves. New and sophisticated strategies by labor unions will also be a factor.

Friday, November 17, 2006
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Some CEOs are already advancing a new health-care strategy -- more aggressively managing employee-health risks. At the Third Annual World Health Care Congress in Washington, Michael Critelli, chairman and CEO of Pitney Bowes, argued that "managing costs instead of health creates both poorer health and higher costs." Ivan Seidenberg, chairman and CEO of Verizon, echoed a similar sentiment, stating: "It is not the cost I want to shift to employees; it is the responsibility."

One solution being tried by some companies is to ask employees to disclose health information in "health risk appraisals," or HRAs. After completing these questionnaires, employees receive profiles of their personal health risks. The profiles help the employees, their doctors, insurers or other health-care professionals design interventions to reduce or control their personal health risks.

We anticipate employers will face both practical and legal obstacles when implementing these programs. Some employees and civil-rights lawyers, intent on maintaining a wall between work and personal lives, are apt to challenge these programs. While most employers prefer to present HRAs as voluntary, many find it necessary to offer financial incentives to increase participation, often discounting employee health-care-premium contributions.

The U.S. Equal Employment Opportunity Commission casts doubt over such practices, noting the size of an incentive may make programs "involuntary" and illegal under the Americans with Disabilities Act. Interim regulations under the Health Insurance Portability and Accountability Act also limit the size of premium discounts for bona fide wellness programs.

Leave Issues

While Congress justifiably passed the ADA and the Family and Medical Leave Act with overwhelming support, the applications of these acts to the workplace have been frustrating to human resource professionals.

The ADA is a purposely vague law with few bright-line rules. For example, it includes "job-protected leave" as a potential "reasonable accommodation" for disabled workers, but offers no guidance on how much leave must be provided.

The FMLA has more bright-line, but very technical, rules for obtaining medical information. Many absences prompted by chronic conditions that appear not to be "serious" are often overlooked as FMLA-qualifying. Intermittent leave -- absences taken in increments of one day or less and sometimes for as little as 15 minutes -- can make operational planning a nightmare. When an episodic condition, such as a migraine headache, asthma or depression, unexpectedly flares up, employees must give only as much notice "as is practicable under the circumstances."

Many companies also lack technology that allows managers and supervisors -- the individuals whom employees tell about the medical reasons for their absences -- to record, track and communicate medical information to human resources or others responsible for ensuring compliance with ADA and FMLA obligations.

Too often, human resource professionals are asked for approval to terminate employees, but have wholly inadequate information to make informed judgments about the legal risks of doing so. This must change. Faced with exposure to six- and seven-figure judgments, companies cannot continue having supervisors record reasons for employee absences on little yellow sticky notes.

Companies also must develop systems to ensure they have "peripheral vision," over state leave requirements. More and more states are expanding their protection of ill and injured workers beyond federal law. Multi-state employers must grasp state-law obligations easily and completely as leave situations arise. Communicating with an employee's medical provider also poses challenges, as rules change depending on, among other things, the timing and purpose of the request, the nature of an employee's job and the employee's entitlement to FMLA protections.

Employers seeking to regain control over absence management should begin by developing uniform processes for managing leaves and centralizing review of such leaves within a small group of internal "leave experts." We believe local managers should be asked only to "spot" leave issues, record and communicate factual information concerning the reasons for absences and employee communications, and to implement forms, letters and other preventive strategies developed by the "leave experts." This ensures that human resources is integrated earlier and deeper into the management of employee illnesses and injuries.

Labor's Schism

In the summer of 2005, the AFL-CIO went into its annual convention hoping to celebrate its 50th anniversary. By the conclusion of the convention several unions that made up the convention, including the Teamsters, the Service Employees International and the United Farm Workers departed and rallied around the banner of the "Change To Win Coalition."

For human resource executives, labor's schism is spawning new challenges. Labor is aggressively deploying two major weapons -- the "corporate campaign" and "neutrality agreements." Corporate campaigns are targeted against companies that are both union-free and partially organized. Tactics commonly and effectively incorporated in these sophisticated and well-orchestrated campaigns include:

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* Criticizing the treatment of employees, including companies' policies concerning the provision of health-care benefits;

* Publicizing examples of alleged discrimination;

* Criticizing the institution's role as a "corporate citizen" and its involvement in the community;

* Complicating regulatory processes to interfere with or block construction projects, large and small, by arousing public sentiment;

* Interfering with the ability to obtain financing and/or discouraging investment in the company;

* Attacking the tax-exempt, charitable status of nonprofit institutions;

* Contacting current or potential donors or investors and urging them not to invest or contribute; and

* Organizing mass demonstrations to interfere with fund raising and other corporate sponsored events.

"Neutrality agreements" are big labor's other weapon. They facilitate union organizing by preventing employer opposition, allowing union access to employees and avoiding federally-supervised, secret-ballot elections. While neutrality agreements waive employer rights, they also limit individual employee rights and stifle workplace democracy.

They generally require that employers provide a union with the names, addresses and home telephone numbers of non-union employees. They grant union organizers access to the cafeterias, break rooms and other places where employees congregate. They prohibit statements about the union that could be considered derogatory. They prevent a governmentally supervised, secret-ballot election to decide the union question. They require acceptance of the union if it presents union cards signed by a majority.

A company's health-care policies are a common target in corporate campaigns. Businesses sensitive to public opinion should take particular notice of these tactics and consider health management a key component of their labor-relations strategy. Emerging behavior-management models also give businesses a new course to travel to control health-care costs and reduce employee absences. While not without risk, companies may need to sail through uncharted legal waters to avoid the gathering storm.

When planning for the year ahead, human resource executives should seriously consider making health-management initiatives their highest strategic priority. Big labor has already set sail on its own journey, intending to discover new health-care solutions if businesses do not.

Francis P. Alvarez and Michael J. Lotito are partners in the national workplace law firm of Jackson Lewis LLP and members of the firm's disability, leave and health-management practice group. Lotito also is a member of the firm's labor-practice group. Alvarez can be reached at (914) 514-6149 or by e-mail at Lotito can be reached at (415) 536-6322 or by e-mail at

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