The corporate chieftains at Blue Shield of California have a special surprise for workers this Labor Day—a furlough. To save $4 million in payroll costs, they are forcing employees to take the four days after Labor Day off and use their paid vacation time to do it.
According to a management email to employees, which someone shared with me (I’m a former employee-turned whistleblower), the insurer is falling short of its profit target and that is putting salary bonuses at risk:
This shutdown will deduct approximately $3.8 – 4.0 million in PTO liability to help us close our operating income gap. This gap also has a direct impact on eligible employees receiving incentive bonuses, which may not happen if we do not work together to get back on track. This is a way each and every one of us can play a role in helping close our operating income gap.
Who are the “eligible” employees with bonuses at stake? The most eligible, of course, are senior executives. Last year, CEO Paul Markovich took home $2.5 million in bonus pay—70% of his total compensation of $3.5 million. No wonder he’s desperate for Blue Shield to hit the profit target that triggers bonus payments.
But for lower level employees, any bonus—if they get one at all—will be a pittance compared to the cash value of those four vacation days, which the furlough precludes workers from saving and redeeming when they leave Blue Shield. The furlough also prevents employees who use their vacation days from using those four days when it’s best for them—like, for example, when the kids haven’t just gone back to school and they can take an actual vacation.
But Blue Shield’s top brass doesn’t care about any of that. Their bonuses are at risk, so workers will have to sacrifice to get profits back up. (Never mind the fact that Blue Shield is officially a nonprofit corporation.)
Meanwhile, Blue Shield is facing accusations of wage theft from its lowest-paid workers, its customer service representatives, who filed a class action last year. And the company still won’t come clean about the $20 million golden parachute to its former CEO or the 60% year-over-year jump in executive pay reported last year by the Los Angeles Times.
I’m not a labor strategist, but Blue Shield’s hourly workers—a big portion of its 6,800-member workforce—sure seem like a ripe organizing opportunity. And this Labor Day week, while they’re sitting at home forgoing earnings so that executives can collect bonuses, they’ll have plenty of time to chat with union organizers.