posted on July 20, 2003 12:22:30 PM new
Another straw on the camel's back.
Strapped companies fire disabled workers to cut costs
As it was preparing the sale of its assets to Bank One Corp. last July, Polaroid Corp. sent a letter to 180 disabled employees notifying them that they had been fired and that their health, life and dental insurance were being terminated.
At the time he received the letter, Nelson Tauriac, a Polaroid forklift operator for 21 years, was bedridden, his feet swollen to three times their normal size because of kidney disease. John Magenheimer, who had headed a Polaroid research laboratory, was recovering from surgery in which one of his ribs was removed so doctors could cut out a cancerous tumor pressing against his heart. Elizabeth Williams, a senior human-resources administrator, was at home, doubled over with pain from a form of lupus that attacks the lungs and muscles.
"I couldn't believe this was happening," recalls Magenheimer, who says his wife showed him the letter as he lay "in a fog" from chemotherapy and radiation treatment. "How could Polaroid do this to me? For more than 20 years I gave them everything I had."
Across the corporate landscape, disabled workers are becoming an increasingly common casualty of the drive to cut costs. As recently as three to five years ago most companies paid health benefits for the long-term disabled until they were 65, according to James Curcio, a senior consultant for Washington Business Group on Health, a trade association that helps companies contain health-care costs. At 65, federal Medicare benefits kick in.
But as health-insurance costs and the number of disabled employees climb, more companies are firing them. A Mercer Human Resource Consulting study last year found that 27 percent of the 723 companies surveyed dismiss employees as soon as they go on long-term disability and that 24 percent dismiss them at a set time thereafter, usually six to 12 months. The survey found 15 percent keep the disabled on as employees with benefits until age 65.
Magenheimer and the other employees fired by Polaroid were on long-term disability leave because of injuries or illnesses that left them too incapacitated to work. They are entitled to be compensated at 60 percent to 70 percent of their regular pay through a combination of Social Security disability benefits and payouts from disability-insurance policies purchased by Polaroid.
They still receive that money. But the loss of their other benefits - especially their health and life insurance - has brought them additional financial burdens at a time when they already are struggling with reduced income and the ravages of cancer, heart disease and other serious conditions.
The federal law known as COBRA mandates that they can keep the health insurance they had at Polaroid for 18 months after their dismissal. Some companies pay the premiums, but most, like Polaroid, require employees to pick up the tab themselves. Disabled workers can purchase Medicare coverage after 18 months. Both kinds of coverage cost thousands of dollars a year, which many disabled workers can ill afford. Because people on long-term disability leave continue to receive a portion of their salaries, they are typically not eligible for the Medicaid program that offers health insurance to poor Americans.
Kevin Pond, a Polaroid spokesman, says Bank One took over Polaroid with the understanding that the new management would decide whom to hire and whom to let go. "Even though the old Polaroid maintained their employee-like status, the (workers on long-term disability) were not real employees," he says.
The disability-payment squeeze is likely to continue for companies and their employees. Some 5.5 million people received long-term disability benefits last year, according to the U.S. Department of Labor, a 62 percent jump from 1992. The reasons for the big rise aren't completely understood, but the most cited explanation is an aging work force.
Bankruptcies and takeovers often spur companies to fire disabled workers. When International Steel Group Inc. acquired the assets of LTV Corp. last year, it rehired many of the able-bodied workers who had been dismissed in LTV's bankruptcy proceeding. It didn't rehire the hundreds of employees on disability. MMI Co., a medical consulting and insurance firm in Deerfield, Ill., acquired Applied Risk Management Inc. of Oakland, Calif., in 1999, it only hired ARM employees who weren't on medical or extended leave. Five employees on long-term disability leave weren't hired. ARM administers worker's compensation programs for companies.
MMI has since been acquired by St. Paul Cos., an insurance concern. A spokeswoman declined to comment. Mitch Hecht, vice president of external affairs at International Steel, says, "It's strictly an arithmetic fact that the profits are not being generated to cover the costs of all the health-care programs of workers from the past."
The company views the plight of the disabled workers as a tragedy and calls on the government "to come up with a broad solution to fix the problem," says Hecht.
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Pink slips
When do companies dismiss employees on long-term disability?
As soon as a worker goes on LTD: 27 percent
After a set number of months*: 24 percent
Not specifically defined: 18 percent
At normal retirement age: 15 percent
Other criteria: 16 percent
* Commonly between six and 12 months
Note: From a 2002 survey of 723 employers
Source: Mercer Human Resource Consulting
posted on July 20, 2003 12:55:30 PM new
How sad Reamond. Multiple years in a company means nothing anymore, so I'm not surprised. The days of company security and being taken care of are l-o-n-g gone. Profit is the only thing that runs anything anymore. People are expendable and it'll get worse.
posted on July 20, 2003 02:34:22 PM new
Profit HAS ALWAYS BEEN THE ONLY THING !!
What you are seeing is the result of competing with work forces that have no benefits, no taxes for infrastructure such as schools, welfare, hospitals, and very low wages.
This "competitive" situation is squeezing all the margin out off our commerce and industry that used to pay for things such as health insurance and disability benefits.
These "fringe" benefits such as health care and retirement, and disability benefits are the first to go. Next wages will also start falling more dramatically than ever before.
But they won't actually cut your wages. First you lose your job, then you are forced to take a lower paying job.
Things are going to get much worse before they get much better.
posted on July 20, 2003 04:46:31 PM new
A common way to live these days, is to put all your eggs in one basket. Not many people think of alternatives when they plan anything, and are left hanging if something fails. This is the way companies have been headed for the past 15 years, so I feel people have to take some of the responsibility of where they're at. It's unfortunate, still.
posted on July 20, 2003 10:23:07 PM new
It would be interesting to know how many upper management positions were removed or salaries were cut before these actions were taken.
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What luck for the leaders that men do not think. - Adolph Hitler
