Labor 

NORTHWEST FLIGHT ATTENDANTS MAY STRIKE, HARDENING STANDOFF

A federal bankruptcy judge's ruling that Northwest Airlines flight attendants are entitled to strike raises the stakes in a standoff that could push the nation's fourth-largest airline by traffic to the brink of liquidation.

U.S. Bankruptcy Judge Allan Gropper denied Northwest's plea for an injunction that would have blocked the 9,000 unionized cabin-crew members from striking. The ruling turns up the pressure on Northwest to offer the attendants a better contract or face a strike that could begin as soon as next Friday night.

Northwest said it will immediately appeal the decision and said it has "a range of contingency options" to respond, though it declined to detail them. The airline has a number of salaried personnel trained in attendant duties and more than 800 nonunion attendants based in Asia who could help out. Northwest said its customers can continue to book the airline "with confidence."

Unless it is quickly overturned or delayed by a temporary restraining order by a district court, the judge's ruling gives the flight attendants fresh leverage in their dispute with Northwest over pay and benefit cuts, and represents a big setback for Northwest Chief Executive Officer Douglas Steenland's strategy of brinkmanship with the carrier's unions.

Northwest, which is trying to emerge from Chapter 11 bankruptcy protection, has acknowledged that a strike -- even the Association of Flight Attendants' trademark campaign of limited, flight-by-flight walkouts -- could cripple it badly. Even intermittent strikes would snarl the airline's schedule and could unnerve travelers enough that they take their business elsewhere, robbing the company of revenue. Susan Carey August 18, 2006

GM CEO: DELPHI UNION TALKS PROGRESSING

General Motors Corp.'s top executive predicted Thursday that complex negotiations with parts supplier Delphi and its labor unions eventually will lead to a settlement on wage and benefit reductions.

Speaking at the Center for Automotive Research Management Briefing Seminars in Traverse City, GM Chairman and Chief Executive Rick Wagoner said an agreement would not be reached quickly.

"I think we're progressing, but it's not going to come together in the next five minutes," Wagoner said.

Troy-based Delphi is GM's largest parts supplier. It entered Chapter 11 bankruptcy protection in October of last year and is seeking court permission to void its labor contracts and impose lower wages.

Delphi used to be part of GM, but the world's largest automaker spun it off into a separate company in 1999.

The talks, Wagoner said, are complex, involving GM, Delphi, multiple unions, creditors and investors.

"It's not the kind of thing in my view that we're going to be able to just, all of the sudden - voila - bring this together in a very, very short term," he said.

But Wagoner said he is confident that an agreement will be reached, avoiding a strike that could be catastrophic to GM. Tom Krisher Associated Press Writer  Associated Press FindLaw.com August 16, 2006
 

 Benefits 

TYCO PENSION LAWSUIT GRANTED CLASS-ACTION STATUS

People employed by Tyco International Ltd. when it was run by corrupt executives have won class action status for their lawsuit over the company's retirement savings plan.

The employees claim Tyco hid the true value of the company when offering its stock as an investment option in the plan and knew the stock was a bad investment.

Tyco argued the employees who wanted to represent the class weren't involved enough in the lawsuit and weren't typical of all employees who invested in Tyco stock because they relied on the financial information Tyco provided in differing degrees. U.S. District Judge Paul Barbadoro rejected those arguments in a ruling dated Tuesday. He said that in cases involving stock fraud and a company's failure to disclose important information, the U.S. Supreme Court doesn't require investors to prove they relied on information from the company.

The lawsuit is one of a number filed by shareholders that have been consolidated in the U.S. District Court for New Hampshire, where Tyco formerly had its U.S. headquarters. Other former stockholders, including large investment funds, were granted class status in June.

Any U.S. employee of Tyco who invested retirement savings in Tyco stock from Aug. 12, 1998, to July 25, 2002, would be eligible to share in any judgment or settlement. Getting class action status is a major legal hurdle in such lawsuits, but shareholders still must prove their claims.

Former Chief Executive Dennis Kozlowski and former Chief Financial Officer Mark Swartz were convicted last year in a New York state court of multiple counts of grand larceny, conspiracy, securities fraud and falsifying business records. Prosecutors said the two conspired to defraud Tyco of millions of dollars to fund their extravagant lifestyles. They were sentenced in September to up to 25 years in prison. A judge refused to release them on bail while they appeal.

The shareholders' lawsuits allege the company misrepresented the value of Tyco and companies it acquired under Mr. Kozlowski's leadership in a giant accounting fraud scheme.
Associated Press wsj.com  August 16, 2006

NEW GUIDELINES TO CLARIFY HSA CONTRIBUTIONS

The IRS recently eased the rules on comparable contributions to health saving accounts, giving employers more flexibility in offering health benefits.

Under current federal law, an employer that has made a contribution to a worker’s HSA must make a similar contribution to the HSAs of all comparable participating employees. Employers that failed to make such a contribution faced an excise tax equal to 35% of the aggregate amount contributed by the employees during that calendar year.

The new regulations, which take effect on Jan. 1, 2007, exempt employers from the comparability rule with collectively bargained employees because they are “not comparable participating employees, if health benefits were the subject of good faith bargaining between such employee representative and such employer or employees.”

What’s more, the rules provide further clarification on HSA contributions through a cafeteria plan. For example, “if employees are allowed to contribute to an HSA by salary reduction through a cafeteria plan, all employer contributions to the employee’s HSA will be treated as being made through a cafeteria plan,” thus excluding the employer from the comparability rules.

In addition, the new regulations expand categories related to high-deductible health plan (HDHP) coverage to include “self plus one, self plus two and self plus three or more.” The old rule only recognized “self-only HDHP and family HDHP coverage.”  August 17, 2006

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