Emerging from Chaos

Reform Overload

Health care has dominated the popular press since Congress and President Obama finally agreed on the general parameters of the Patient Protection and Affordable Care Act (PPACA) that was signed into law in March 2010. While the press covered the bickering in Congress, from an employer perspective, it was hard to tell what to do, how and when to implement the sweeping changes, and the cost impacts of the new law for higher education institutions. In an effort to help business officers get a better handle on the new legislation, NACUBO’s Annual Meeting this past July featured presenters Dean Hatfield and Norm Jacobson of Sibson Consulting and Dwaine Duckett, vice president of human resources at the University of California System. In their session, “Health-Care Reform: What the New Law Means for You,” they offered attendees a thorough examination of the legislation and detailed what steps institutions will have to take now, and later, to be prepared.

“The law requires employers to redesign their health-care plans to meet new coverage requirements, and in some cases those changes will have to be made almost immediately,” said Jacobson. Possibly the most talked about rule was the new requirement extending full preventive health-care services to employees' adult children up to age 26 and eliminating lifetime dollar limits and certain annual limits as well. “Now is the time to consider your grandfathered status,” said Hatfield. “Until 2014 a grandfathered plan does not need to offer coverage to a young adult, if and only if that young adult is eligible for employer-sponsored coverage. After 2014, eligibility for other coverage is irrelevant.”

Although the PPACA focused on health insurance, it also amended the Fair Labor Standards Act (FLSA) to provide “reasonable break time for an employee to express breast milk for her nursing child for one year after the child’s birth each time such an employee has a need to express milk.” In actual terms, what does that mean?

• Employers must also provide “a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.”
• According to Department of Labor Fact Sheet No. 73 (July 2010), where an employer already provides compensated breaks, the employee who uses the paid break to express breast milk must be compensated in the same way other employees are compensated for break time.
• The new requirement applies only to employees not exempt from the FLSA’s overtime requirements.
• It excludes employers with fewer than 50 employees where complying would impose an “undue hardship.”
• This does not preempt more generous state laws that may require paid breaks, apply to employers with fewer than 50 employees, and so forth.

Other discussion topics surrounded the cap on flexible spending account contributions and considering whether it still makes sense to offer retiree prescription-drug coverage. Duckett explained that ultimately all institutions will have to consider what design changes they need to make to reduce their exposure “to a whopping new federal tax” that will be imposed on the most costly employer plans.

Workforce Realities

The theme of the 2010 CUPA-HR Annual Meeting & Expo—“Emergence: Chaos to Convergence”—was evident in conference sessions, keynotes, and networking opportunities. While the aftershock of the nation’s economic downturn dominated most institution agendas during 2008-09, the past year and a half has presented human resource professionals with an onslaught of incredibly tough workforce-related challenges that are driving fundamental shifts in how business gets done and propelling creative solutions for doing more with less. Concurrent sessions covered a wide range of topics related to workforce supervision, labor relations, succession planning and mentoring of high-potential talent within the organization, compensation and benefits, and performance management policies, procedures, and systems. Among the presentation highlights:

Enforcement. Howard Radzely, partner at Morgan Lewis & Bockius, focused on the increased enforcement capacity in nearly all agencies, with more than 670 investigators hired and steep increases in the number of attorneys in the solicitor’s office. Radzely described the intense focus from all enforcement agencies on companies and entities receiving stimulus funds as a plan, prevent, and protect agenda:

• Plan: Identify and remediate risks of legal violations.
• Prevent: Implement the plan “thoroughly and completely,” including regularly updating the plan.
• Protect: Ensure the plan’s objectives are regularly met and that the plan protects employees from violations of workplace rights.

The enforcement goal is to move away from the “catch me if you can” compliance to placing the onus on employers to “assemble plans, create processes, and designate people charged with achieving compliance,” said Radzely.

Retirement incentive designs. Another session presented by Norm Jacobson and Dean Hatfield of Sibson Consulting featured creative ideas from University of Buffalo to maximize positive retiree decisions. With $19.5 million in state aid cuts, UB created a one-time incentive as a way to deal with its drastically reduced budget. Scott Nostaja, UB’s vice president for human resources, described working with academic deans and administration to find out exactly what it would take to increase retirement satisfaction. “We offered faculty use of their office, email address, and access to campus facilities,” he explains. “And we negotiated a generous salary reduction with benefits plan, making it difficult for faculty to say no.” UB’s voluntary separation incentive program will pay faculty their full salary for one semester, starting no later than the fall 2011 semester, and then pay a lump-sum payment of 50 percent of their salary. Staff will receive one payment equal to 50 percent of their annual base salary. Some staff members, based on their employment categorization, would receive full salary for six months rather than the 50 percent lump-sum payment. UB will likely spend $5 million to implement the program, which is projected to save approximately $18 million.

Talent planning. Anticipating greater competition for key talent, leaders will need to reshape their institutions’ talent-management programs as the economy shifts out of a recessionary period. According to a talent-management panel convened at the conference, many institutions are currently formalizing their talent-management approaches and people practices with greater rigor. “Cost and economic challenges continue to dominate decisions, but acquiring, engaging, and retaining staff in key positions remains the top priority for most institutions,” said panelist Pamela Beemer, assistant vice president for human resources at Northwestern University.

Panel discussion focused on best and emerging talent-planning practices in the higher education and corporate settings. Ken Simek, principal, Mercer, noted that while the environments and requirements are different, many of the challenges are similar. Five categories to consider when forming a talent-planning process include:

1. Talent 2010 and beyond.
2. Meeting the new challenges of employee engagement.
3. Talent segmentation.
4. Reward for results.
5. Aligning administration/leadership and HR teams to deliver.

Panelists concluded that while institutions have access to the best and brightest talent, retaining and learning how to grow leadership must be done with more purpose and care.

Tadu Yimam is a director of online learning at NACUBO. E-mail: tadu.yimam@nacubo.org.