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Never Fly Solo How do you define trust and commitment in your organization? Are your leaders preparing and collaborating as one unified team? What if your customers viewed you as a wingman – a trusted partner – committed to their success? Rob “Waldo” Waldman is a keynote speaker, leadership guru and former fighter pilot who helps turn teams into trustworthy, accountable and high-performance partners for success. More than a decorated veteran, Waldo has real-world business experience and is a thought leader on creating cultures of commitment, trust and excellence. His book, Never Fly Solo, has been on the New York Times and Wall Street Journal’s Best Seller lists. The session will help you and your organization:
Prepare diligently for every mission Face challenges and change with courage Focus on a “one team, one mission” culture of service Build more trusting and collaborative partnerships Commit to excellence in business and life
November 12, 2015 Gather with fellow business leaders to watch a live simulcast of Never Fly Solo with Rob "Waldo" Waldman at the Manufacturer & Business Association (MBA) — or opt to live stream it at your location! MBA Conference Center: Registration/Lunch: Live Simulcast: Cost (includes lunch):
2171 West 38th Street at Pittsburgh Avenue, Erie 11:30 a.m. Noon – 1:30 p.m. $75 per person $250 group rate (up to five attendees from the same company)
Live Stream:
For more information about live streaming this event at your location/company, please call Terry Nunez at 814/833-3200.
Register today!
www.mbausa.org • 814/833-3200 • 800/815-2660
Cancellation/No-Show Policy: If notice is four business days or more, a full refund will be made. If notice is less than four business days, or if you do not show up for the scheduled class, no refund will be made. NOTE: You may substitute another individual from your organization at any time and at no cost.
BUSINESS M A G A Z I N E Manufacturer & Business Association
VOLUME XXVIII, NUMBER 11
NOVEMBER 2015
Firm helps business owners find the right buyers / Page 9
Insurance Services World-Class Customer Service Experienced, personalized service for all your employee benefit needs. Full-service agency offering: • Assistance with long-range benefit planning and strategies • Renewal comparisons and recommendations for health insurance and ancillary benefits • Enrollment administration • Assistance with preparation of Summary Plan Descriptions • HRA, HSA, FSA Guidance • Audit of dependents • Voluntary benefits • Workers’ Compensation Insurance • Long-term Care Insurance • Defined Contribution Strategies
Compliance The Affordable Care Act (ACA) can be confusing, we help companies avoid uncertainty, guesswork and potential financial penalties.
Health Insurance Ability to provide plan designs to companies of all sizes including fully insured and self-funded health plans. Access to plan designs and benefits through regional as well as national carriers including UPMC, Highmark, Aetna and United Healthcare.
Contact any member of our team to find out how we can assist you with all your employee benefit needs. Lori Joint Vice President ljoint@mbausa.org Patty Smith Director of Employee Benefit Services Licensed Insurance Agent psmith@mbausa.org Melissa Damico Client Services Manager Licensed Insurance Agent mdamico@mbausa.org Ryan Murphy Sales Agent Licensed Insurance Agent rmurphy@mbausa.org
Ancillary Benefits • Exclusive discounted rates for members only on Delta Dental, Aetna Life, and Short-Term Disability and Accidental Death & Dismemberment coverage. Both include a guaranteed rate hold for two years. • Delta Dental: Great rates, Groups as small as two, Large national network, No. 1 Provider of Dental Benefits in the United States, No waiting periods, Can be contributory – rates start as low as $18.02 per month. Aetna Group Life/AD&D and Short Term Disability: No Medical Underwriting, No waiting periods, Flat rates as well as salary based rates, Groups as small as two, Aetna has 150 years of Life Insurance experience.
2171 West 38th Street, Erie, PA 16508 • Phone: 814/833-3200, 800/815-2660 • Fax: 814/833-4844 • www.mbausa.org
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November 2015
Blue Ocean Strategy Center
EDITORIAL > 7 / Health Matters How workplace initiatives can help employees with chronic conditions. DEBI VIECELI
11 / Legal Brief The importance of carefully drafted employee restrictive covenant agreements to your business. PAT DELANEY
FEATURES > 3 / Spotlight Lorin Lacy, principal and benefit consultant for Buck Consultants, a global HR consulting firm, discusses the opportunities and challenges of the Affordable Care Act and what’s ahead for companies in the future.
9 / Decision Associates M&A Managing partners of Decision Associates Mergers & Acquisitions, LLC, explain how the Erie-based firm has been helping owners find the right buyers for their businesses, thus sustaining jobs and economic growth in the region for nearly a decade.
10 / On the Hill
State Senator Don White of Indiana County addresses the urgency of finding a solution to rising health-care costs.
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ES S BMUa Sg IN a z i n e Manufacturer & Business Associatio
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VOLUME XXVIII, NUMBER 11
NOVEMBER 2015
12 / TRAINING GRADUATES Check out the photos of the Association’s more than 200 professional development and computer training graduates.
< EVENTS / 20
See exclusive photo coverage from the Association’s two-day Manufacturing Day celebration in Erie.
DEPARTMENTS > 5 / Business Buzz 14 / HR Connection
18 / GIFT GIVING GUIDE
See which companies you should consider contacting for your holiday gift giving and event planning.
Firm helps business owners find the right buyers / Page 9
Read on the Go! For the most current Business Magazine updates, visit www.mbabizmag.com, fan us on Facebook and follow us on Twitter.
16 / HR Q&A 21 / People Buzz November 2015 > www.mbabizmag.com > 1
SPOTLIGHT > While employers have survived the hassle and complexity of the Affordable Care Act so far, there are some changes in the system that may contribute to improvements in the long run. Here, Lorin Lacy, principal and benefit consultant for Buck Consultants, a global HR consulting firm, discusses those opportunities and what’s ahead for companies in the future.
VOL. XXVII, NO. 11 NOVEMBER 2015
What are some ACA updates that employers should be aware of as we approach 2016? As we move toward a new calendar year, it’s important to know about the changes that are coming in 2016. Here are the top five: • Employers with 50 to 99 employees are subject to the employer mandate effective January 1, 2016. • Individual Medical Out-of-Pocket limit is restricted to the federal cost-sharing limit of $6,850. • Effective January 1, 2016, employers will not be allowed to reimburse employees through a health reimbursement account (HRA) for premiums of individual insurance purchased in the public marketplace. • Employers should ensure their wellness incentives are compliant with ACA and ADA requirements. • Employers should keep in mind that the Cadillac tax is fast approaching (2018), and should modify benefits strategy going forward to minimize the impact. You’ve mentioned that it will be key for employers going forward to identify ACA opportunities and understand how to maximize them. Tell us more. There are more ways to purchase health insurance protection for your employees than ever before. In addition to the traditional group health insurance, there is an ever-growing selection of private exchange solutions (such as the MBA Absolute Choice program), the SHOP small group public exchange option, and the opportunity to direct employees to the public Marketplace for individual insurance plans.
Contact: Karen Torres
Manufacturer & Business Association Board of Governors
Harry Eighmy Andrew Foyle Mark Hanaway Donald Hester Bill Hilbert Jr. Timothy Hunter Phil Katen C. Bruce Kern II Paul Kenny Jeff Plyler Mark Rose Greg Sbrocco Mike Weber
Editor in Chief
Ralph Pontillo rpontillo@mbausa.org
Executive Editor
Managing Editor & Senior Writer
John Krahe jkrahe@mbausa.org Karen Torres ktorres@mbausa.org
Contributing Writers
Pat Delaney Debi Vieceli, RN
Tim Rohrbach Photography
Feature Photography
Private exchange solutions, in particular, offer program features that were previously available only to larger groups. Employers should understand their short- and long-term business objectives and how their benefits objectives should align in choosing a direction.
Additional Photography
Christine DeSantis Casey Naylon Karen Torres
How can organizations use new structures, tools and transparencies to take advantage of emerging strategies, such as private exchanges, defined contribution funding, incentives for healthier behaviors, driving consumerism, targeted messaging and employee advocacy? By far, the largest driver of health-care costs today is the demand for health-care services. This is a result of unhealthy lifestyles and poor chronic condition management, which account for as much as twothirds of health-care costs, and lead to greater absenteeism and lower productivity on the job.
Advertising Sales
David Thornburg 814/833-3200 dthornburg@mbausa.org
Employers, however, can have an impact in the following ways: • Choose plan designs that get the employee involved from a cost-sharing perspective at the time of service so they see it as spending their own money. • Promote the use of carrier and private exchange transparency tools that allow the employee to “shop” for health care based on quality and cost. • Provide financial incentives for employees and spouses to be engaged in their health care, getting biometric screenings to know the current state of their health, and actively participate in programs and coaching to improve the state of their health. • Communicate with employees regularly about the importance of maintaining healthy lifestyles and effectively treating any medical conditions they have. • Partner with private exchanges and carriers that include health advocacy resources to help employees navigate through the health-care system. What’s the best way to help companies and employers prepare for the future under ACA? Most employers don’t have the resources or the expertise to analyze the complexities of the ACA and accompanying regulations, so it is extremely important to find a partner that will identify potential pitfalls, provide direction for compliance, and prepare you in advance for future ACA provisions. Private exchange solutions offer the most comprehensive and unbiased path toward ACA compliance, combined with the greatest flexibility in designing a solution that meets an organization’s specific objectives and needs. What compliance issues, such as the approaching Cadillac tax, should businesses be keeping an eye on and why? The rules around reporting and disclosure under ACA are very complicated and should be reviewed frequently to ensure compliance since the penalties can be severe. Many, if not all, employers will be impacted by the Cadillac tax eventually since the excise tax threshold is indexed at a much lower rate than current health-care trends. Employers should begin now to build plan design, disease management, and wellness strategies to positively bend the cost curve and minimize the impact of the Cadillac tax.
Design, Production Printing Concepts Inc. & Printing printcon@erie.net
ON THE COVER: Don Moore and B. J. Lechner, managing partners of Decision Associates M&A, LLC, are pictured on the floor of Great Lakes Cast Stone, formerly Advanced Cast Stone and a recent client. The two consultants, both with more than 40 years of experience in manufacturing and business development, have been facilitating the sale of businesses in the region since 2008. For full story, see page 9. Mission Statement The Manufacturer & Business Association is dedicated to providing information and services to its members that will assist them in the pursuit of their business and community interests. – Board of Governors Manufacturer & Business Association 2171 West 38th Street Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org © Copyright 2015 by the Manufacturer & Business Association. All rights reserved. Reproduction or use of editorial, pictorial or advertisements created for use in the Business Magazine, in any manner, without written permission from the publisher, is prohibited. Unsolicited manuscripts cannot be returned unless accompanied by a properly addressed envelope bearing sufficient postage. The magazine accepts no responsibility for unsolicited manuscripts or artwork. The Business Magazine and Manufacturer & Business Association do not specifically endorse any of the products or practices described in the magazine. The Business Magazine is published monthly by the Manufacturer & Business Association, 2171 West 38th Street, Erie, Pa. 16508. Phone: 814/833-3200 or 800/815-2660.
November 2015 > www.mbabizmag.com > 3
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4 < www.mbabizmag.com < November 2015
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Our Mission Pro-Business
1
Pro-Growth
Pro-Opportunity
Visit us at www.mbausa.org
,
As businesses continue to battle rising health-care costs, high energy prices and complex legal compliance issues — the challenge to compete, grow and succeed is greater now than ever before. That’s why our mission is resolute — to deliver services that lower the cost of doing business, ease the burden of compliance and increase productivity for our members. And we have.
Make a list. Check it twice. Forget the naughty, invite the nice. Whether you’re planning an intimate celebration with business associates or a fun ’n festive gathering with family, friends or co-workers – we’ll make sure the holiday spirit is on full display. So get ready to party, you’ve come to the right place! Visit www.mbausa.org or call Norm Zymm at 814/833-3200 or 800/815-2660 to book your holiday gathering today.
2171 West 38th Street • Erie, Pa. 16508 Phone: 814/833-3200 • 800/815-2660 Fax: 814/833-4844
EDITORIAL > By Debi Vieceli, RN
Health Matters Workplace Initiatives Can Help Employees With Chronic Conditions For an estimated 125 million Americans, living with a chronic condition — that is, any illness that lasts three or more months — is a day-to-day reality. Millions of people live “normal lives” while dealing with heart disease, diabetes, kidney disease, an autoimmune disorder, lung disease, multiple sclerosis or another ailment, and normal living, naturally, includes being part of a workforce. For people who need to go to work every day, living with a chronic illness can be especially difficult, and employers need to know how they can help their employees, as much as possible, to lead normal, productive work lives. Ways to Assist an Employee With a Chronic Condition First, an employer needs to recognize the fact that a chronic illness can disrupt a person’s life. It can affect a person’s appearance, their physical abilities and independence. The employee might be tired quite often and in pain. Among things an employer can do is to encourage employees with chronic conditions to seek out support groups where they can share experiences and learn about coping mechanisms. If possible, an employer could enable such a group to be established in the workplace or
facilitate communication between employees who live with chronic conditions. Advice From an Employer to an Employee It’s essential that persons with chronic conditions be personally involved in their own treatment. Becoming an active participant in your treatment is one way to decrease the stress of the situation. Exploring treatment options and developing relationships with your caregivers is also a positive step for a person with a chronic condition. Following a healthy diet is important because good nutrition can result in better health. Follow all special dietary instructions and be aware of the food decisions you make on a daily basis. For everyone, exercise is important, but that is especially true for persons living with chronic conditions. Walking or working out at a gym is good for the whole body, and being able to do this can help you to feel better about yourself. For any employee choosing to start on an exercise program, it is imperative that they talk to their doctor about what works best for them and what would help them develop a proper level of fitness.
good to develop some sort of reminder system. This will enable people to be sure they are taking the right medications and at the right time. Nothing is more important to a person with a chronic condition than making healthy choices. To prevent the exacerbation of existing chronic conditions, they need to stop smoking, eat a healthy diet and get regular exercise. To learn more about the UPMC Health Plan care management program visit https://www. upmchealthplan.com/pdf/2012_ ProviderManual_G.pdf
Debi Vieceli, RN, is a care manager with UPMC Health Plan, which is part of the UPMC Insurance Services Division. The UPMC Insurance Services Division offers a full range of insurance programs and products and also includes: UPMC WorkPartners, UPMC for Life, UPMC for You, UPMC for Kids, Community Care Behavioral Health, LifeSolutions, EBenefit Solutions, and Askesis Development Group.
Because people with chronic conditions are usually on a medication regimen, it’s always November 2015 > www.mbabizmag.com > 7
EVERYONE MAKES PROMISES, BUT AT INSURANCE MANAGEMENT COMPANY WE DELIVER IMC has provided us with excellent service since our relationship began in 1999 and has performed admirably for MFG in every respect. Richard Morrison, President/CEO Molded Fiber Glass Companies 2100 Teammates, Fiber Glass Reinforced Plastics
IMC plays a vital role in our global risk management program. I enjoy working with the team because I always receive prompt, reliable, and accurate advice. They are committed to providing quality service with integrity and a client-driven approach which delivers peace of mind every single day. Joe Fisher, Director, Business Analysis and Assistant Treasurer LORD Corporation 3000 Employees, Adhesives, Coatings, Motion Management Devices,and SensingTechnologies
IMC consistently provides us quality, personal service with world-class resources that support our growth, both domestically and internationally. Michael J. Dzurik, Vice-President Finance/CFO Plastek Industries, Inc. 1081 Employees, Plastic Injection Molding,Tool & Die Mfg.
Managing your business in an efficient, effective way creates opportunities for continuous improvement and profitability--another reason we have IMC on our team. John Hilbert, President & CEO PHB, Inc. 504 Employees, Die Casting, Machining, Plastics & Rubber
IMC has done an excellent job in handling our property and workers’ compensation insurance needs. Given the constantly changing insurance market, we rely on their experience and expertise to bring us the best possible options in insurance coverage as well as keeping us current as to any new products that might be beneficial to our Company.
We are happy with our relationship with IMC! We feel they are a true partner by helping us manage our business risk in a very professional and friendly way.
John T. Johnson, President Port Erie Plastics 450 Employees, Plastic Injection Molding IMC’s highly dedicated and well qualified team has consistently delivered on its commitment to provide the best value and service to our company for over thirty years. Simply put, they are best in class.
Robert Marut, CPA, Vice President of Finance C&J Industries 325 Employees, Plastic Injection Molding and Contract Mfg.
The Bloomstines
Doug Currie, President Erie Press Systems 68 Employees, Manufacturer of Hydraulic & Mechanical Presses IMC has been our insurance partner for over 20 years and continues to provide professional guidance for our insurance needs. Robert A. Johnson, Treasurer Ridg-U-Rak, Inc. 250 Employees, Mfg. of High Density Storage Rack and Specialized Rack Systems
IMC guys are nuts about risk management…so I don’t have that worry. Tim Shuttleworth, President & CEO Eriez Manufacturing Company 1,000 Employees, Magnetic, Vibratory and Metal Detection Solutions IMC continues to help us in innovative ways to save on insurance costs without sacrificing coverage/value. David K. Galey, Vice Pres. Greenleaf Corporation 325 Employees, Ceramic & Carbide Cutting Tools
Commercial, Industrial & Institutional Property, Liability & Workers’ Compensation Insurance Agents Lloyd’s London Correspondents and Correspondent Brokers Worldwide
123 West 9th Street Erie, PA 16501 814-452-3200 Fax 814-454-5598 www.imcerie.com e-mail: john.bloomstine@imcerie.com
Don Moore and B. J. Lechner (center and far right), managing partners of Decision Associates M&A, LLC, handled the April 2015 sale of Stefanelli’s Candies from former owners Frank and Marilyn DeDionisio to Joe and Kathy Stainbrook. Moore and Lechner recently checked in with Stacy Kessler (left), one of four Stainbrook siblings involved in the business, to hear about Stefanelli’s preparation for the busy fall season.
Firm helps business owners find the right buyers Is now the best time to sell your business? For most business owners, there comes that time when you ask yourself, “is now the best time to sell my business?” And while that question is challenging enough, it is often followed by the even more difficult tasks of understanding the true valuation of the business and identifying prospective buyers who will continue to grow the company you have built. “What owners often need most is a trusted adviser who can work with their accounting and legal teams to evaluate the potential of their business and then develop a negotiating strategy that is realistic,” says Don Moore, managing partner of Decision Associates Mergers & Acquisitions. “Our approach is to build a profile of the business and its assets so that we can match up buyers who value those same characteristics. You don’t need a list of 20 prospective buyers, but rather a highly qualified few.”
Finding the Right Buyer
Moore and B.J. Lechner, his partner in the consulting firm, both have more than 40 years of experience in manufacturing and business development and have handled the sales of a wide range of entities in the region — from machine shops and manufacturers to architectural firms and candy companies. Among their recent clients are Abbatron, Forquer Group, Great Lakes Cast Stone, Performance Castings, Pulakos Chocolates, Rechtenwald Architects and Stefanelli’s Candies. “The majority of our clients live where their companies are located, in communities with family and friends who rely on the business for their livelihood,” adds Lechner. “Our experience and referral networks position us well to find the right buyers, that is, prospective owners who will keep the company at its current location and sustain jobs for loyal employees.”
Knowing What Your Company is Worth
Moore said that one of the biggest challenges is that business owners sometimes have unrealistic expectations of what their company is worth.
Steve Henderson, owner and CEO of Great Lakes Cast Stone (far left), discusses his plans for process improvement with Don Moore and B. J. Lechner (center and standing), managing partners of Decision Associates M&A, LLC. Moore and Lechner facilitated the sale of the company, formerly Advanced Cast Stone, to Henderson in 2013.
“Often, their initial valuation is based on anecdotal information,” Moore notes. “We help them understand that what matters most are earnings and company assets that a buyer can leverage. We engage a certified valuator to get this information for them.” Moore and Lechner agree that most buyers know what they want in a business as well as how the economy affects the value of the companies that are for sale. “Right now, we have more prospective buyers than we do owners ready to sell,” remarks Lechner. “Part of the reason for this is that owners are underestimating the timeframe needed to prepare for a sale. Sometimes it can take an owner two to three years to address weaknesses that may be barriers to potential buyers or subtract from the value of the business.”
Planning Now to Sell
Moore adds that he and Lechner expect the market to get crowded in the next few years. “In this part of the country, we are seeing a changing of the guard, of sorts,” explains Moore. “A generation of owners is ready to retire and buyers will have plenty of options to consider. So the question becomes how your company compares to the opportunities available in the market so that you maximize the value of what you have built. Our job is to ensure you get to that answer.”
WHAT DO REAL BUYERS REALLY WANT? According to Don Moore and B.J. Lechner of Decision Associates M&A, LLC, the top priorities for qualified buyers with ready capital who are actively seeking to acquire a business include: • Strong Earnings • Proprietary Product/Intellectual Property or Process for Proprietary Product/Intellectual Property • Diverse Customer Base and Strong Market Presence • Deep Management Team • Sales & Marketing Team and Processes • Updated Facility and Technology • System and Technology Infrastructure • Environmentally Sound Site
1540 East Lake Road, Suite 100, Erie, PA 16511 814/528-9400 | www.DecisionAssociates.net November 2015 > www.mbabizmag.com > 9
OntheHill
DEPARTMENTS > Contact: Lori Joint
Finding a Solution to Rising Health-Care Costs State Senator Don White of Indiana County is the majority chairman of the Pennsylvania Senate Banking and Insurance Committee.
Ask business owners what keeps them up at night and many will tell you it’s the uncontrollable cost of health care. Rising healthcare costs can be devastating to companies, taking money away from hiring, salaries and investments to drive growth. This is not only a problem for business owners; it impacts all Pennsylvanians. It can result in higher taxes to pay for increased Medicaid costs, meaning less money for private and public investments. As a policymaker, I’m interested in understanding what’s driving up the costs of health care and working to find a solution. I have found that one of the leading cost drivers is the rapidly rising price of many prescription drugs. In 2014, prescription drug spending in the United States increased by more than 13 percent, according to a report by Express Scripts. That increase is largely attributed to a 30-percent rise in specialty drug spending. Specialty drugs are complex medicines that often represent breakthrough treatments. However, they come with higher prices than older drugs. Specialty drugs, such as Sovaldi, a new hepatitis C medication, cost $1,000 per pill and $84,000 for a 12-week treatment. John Rother, president of the National Coalition on Health Care, said if the estimated 3.2 million Americans infected with hepatitis C took Sovaldi at its current price, the total cost would top $268 billion. He explained that when you add the cost of other drugs prescribed with Sovaldi, the total is well in excess of $300 billion — more than what we spent on every other brand name prescription drug in 2013 combined. The problem is getting worse. The Pittsburgh Post-Gazette reports that the estimated number of Americans whose medication costs reached $50,000 increased by 63 percent over the previous year. The number of Americans whose yearly medication costs reached at least $100,000 nearly doubled the previous year’s number.
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The specialty drug market is expected to quadruple, going from an estimated $100 billion in revenues last year to $400 billion by 2020. If something is not done to control these costs, everyone will be paying more in insurance premiums and taxes. The question I’m asking is: Why do these drugs cost so much? To help find the answer, I have introduced transparency legislation in the Pennsylvania Senate that asks drug companies to tell us how they arrive at their price for these drugs. My legislation asks the companies to tell us how much they spend on research and development, clinical trials and manufacturing, as well as marketing and advertising costs. I believe the first step is to require more transparency regarding drug prices. I have seen plenty of evidence that suggests big pharmaceutical companies arbitrarily price their drugs and place an incredible and unjustified financial burden on patients. This approach, which has bipartisan support, will truly help vulnerable patients by giving them affordable access to essential, life-saving medications. I recognize that drug manufacturers are large employers in Pennsylvania, and I applaud the positive economic impact they have made. However, rising health-care costs, including increasing drug costs, are affecting all employers statewide. I am a proud champion of our free-market system. I believe that drug companies should be rewarded for creating advanced treatments, but not at the cost of threatening to bankrupt our entire health-care system while endangering jobs all across Pennsylvania. To learn more about Senator White’s legislation, Senate Bill 893, visit www.senatordonwhite.com.
Legal Brief
EDITORIAL > By W. Patrick Delaney
Employee Agreements, Protecting Trade Secrets: It’s Not Personal, It’s Just Good Business Increasingly we see protections and benefits being provided to employees under the mandate of statutes or regulations. The Affordable Care Act, Employee Retirement and Income Security Act, and Family Medical Leave Act are a few that have been added to older protections such as the Workers’ Compensation Act. The rationale for these benefits varies. Some involve a trade-off: The Workers’ Compensation Act gives the injured employee automatic medical and monetary relief but prohibits the worker from suing the employer for injuries. Other benefits amount to a “safety net” for the laid-off employee but frees up the employer to reduce the labor force “at will” when the economy contracts. Finally, some benefits are simply imposed because policy makers determine that this is what a just-and-civilized society should require. With so much focus on these employee benefits, we sometimes forget that there are obligations that flow in the other direction. Specifically, the employee is considered, in the legal sense, to be an agent of the employer. The employee’s duty will be limited to the defined scope of his or her work, but within that scope the employee is a fiduciary. Essentially, that means that the employee owes to the employer a duty of care and a duty of loyalty. So, How Stringent or Restrictive Is This Duty Of Loyalty? Certainly an employee cannot lawfully act to intentionally harm or sabotage the employer’s business or transactions. Likewise, a nearly universal rule is that an employee, especially an Officer of a corporate employer, cannot take for himself a business deal or opportunity that his or her employer would want.
But there is an interesting niche of case law involving employee responsibilities and a fact pattern that occurs with some frequency. These are cases where an employee or a group of employees leave their jobs to start a business and compete with the former employer. Invariably, the employees plan their departure and new business while still receiving paychecks from the original employer. Can the original employer do anything to protect against this?
Lesson Learned Absent the taking of some trade secret or the commission of fraud/ misrepresentation by these departing employees, and given the absence of restrictive agreements signed by the employees, they were free to go and could even plan their departure (and subsequent competition) while they were still in the employment of Spring Steels, Inc. Spring Steels, Inc.’s failure to obtain relief is instructive.
Spring Steels, Inc. v. Molloy, 400 Pa. 354 (1960) is an often-cited case that deals with the issue and is instructive. Mr. Molloy was a vice president of Spring Steels, Inc., a manufacturing business in Philadelphia. Without apparent warning, he resigned and set up a competing business four city blocks away, taking with him four key employees of Spring Steels, Inc. Clearly, Molloy had conspired with these departing employees while they were all still employed by Spring Steels, Inc. Steel Springs, Inc. sued, claiming that Molloy should be prevented from competing.
Carefully drafted Employee Restrictive Covenant Agreements are enforceable when they are reasonable in terms of duration and geographic scope. Also, identifying and protecting proprietary information about markets, customers, and processes can deter departing employees from taking that information and may form the basis for a court granting the kind of relief Spring Steels, Inc. was unable to obtain.
Justice Musmanno, writing for the Pennsylvania Supreme Court, questioned the morality of Molloy’s tactics, but ultimately agreed that Spring Steels, Inc.’s case should be dismissed. The reasons were simple: There were no agreements in place restricting competition by these former employees from competing; there were no agreements restricting Molloy from soliciting other employees to work for him in a competing business; there was no evidence that Molloy had taken secrets concerning a manufacturing process; and, while customer lists had been taken, there was no evidence that such lists were developed from anything other than public sources.
For more information, contact W. Patrick Delaney at 814/870-7658 or pdelaney@mijb.com.
W. Patrick Delaney is a partner in the law firm of MacDonald, Illig, Jones & Britton LLP, where he is chairman of the firm’s Commercial Litigation Group. He is a Fellow of the American College of Trial Lawyers. His practice focuses on issues of business litigation in the state and federal courts throughout western Pennsylvania.
November 2015 > www.mbabizmag.com > 11
Events Blue Ocean Strategy Center
2015 Training Graduates
The Manufacturer & Business Association recently held a series of luncheons to recognize the more than 200 graduates of its professional development and computer training programs. Visit www.mbabizmag.com for complete photo coverage. For upcoming training courses, visit www.mbausa.org.
HR Essential Certification Series — Erie
From left: Alexis Erdely, Plastikos Inc., and Manufacturer & Business Association HR specialist Robyn Hopper.
HR Essential Certification Series — Erie From left: Debbie Danowski, Ali Orbanek and Judy Gerhard, Erie Insurance Group; and Manufacturer & Business Association HR specialist Robyn Hopper.
HR Essential Certification Series — Meadville
HR Essential Certification Series — Erie From left: Richard Gorski, Merit Tool Company, and Manufacturer & Business Association HR specialist Robyn Hopper.
Leadership for Team Leaders — Erie
Front row, from left: Lucrietia Fuhrer, Pittsburgh Plastics Mfg., Inc.; Catherine Pierce, Ainsworth Pet Nutrition; and, Ashley Kurinko, C&J Industries Inc.
Front row, from left: Jeff Rogers, Eriez Manufacturing Company; Tim Mello, WICU/WSEE; Zach Smith, ACUTEC Precision Machining Inc.; Melissa Furr and Christine Cole, Maple Donuts Inc.; and, Andrew Bisbee, Modern Industries, Inc.
Back row, from left: Tara DiMaria, Mercer County State Bank; Nicole Carone, Ellwood City Forge; and, Sheila Rogers, Family Service & Children’s Aid Society.
Back row, from left: Stephen Cain and Anthony Homansky, Maple Donuts Inc.; Rick Taylor and Matt Stanley, ACUTEC Precision Machining Inc.; Daniel Osterberg, Maple Donuts Inc.; Jason Bradley, Ridg-U-Rak, Inc.; and, Tim Fogle, Eriez Manufacturing Company.
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Computer Software Specialists — Erie
Front row, from left: Martin Chaney, H & H Aero Inc.; Lisa Guertin, CMI Energy LLC; Amelia Matthers, Airborn; and, Miranda Karns, Erie Insurance.
Certified Supervisory Skills Series — Butler
Front row, from left: Brian Schuster and Kevin Castelli, Ellwood City Forge. Back row, from left: Anthony Podbielski and Wes Cunningham, Ellwood City Forge; Mark Columbus, North American Forgemasters; and, Evan Fennell, Ellwood City Forge.
Back row, from left: Steve Guertin, Kinder Morgan; Jason Keith, H & H Aero Inc.; David Donahue, Walker Filtration; Cassandra DeJoy, Roberts Trucking Company LLC; Domenic Divito, Walker Filtration; and, Jennie Wells, Erie Insurance. Not pictured: Five graduates from five companies.
Certified Supervisory Skills Series — Erie
Front row, from left: Joel Marz, Ameridrives International; Kim Vickey, Erie County Domestic Relations; Lori Cote, Ameridrives International; Emily Forish, Larson Texts, Inc.; Judy Bitters, Erie County Juvenile Probation; Lorrie Kowalski, Eriez Manufacturing Company; Frank Balzer, Community Blood Bank of Erie County; Lorine Boboshko, Erie Homes for Children and Adults; Melissa Damico, Manufacturer & Business Association; and, Cynthia Crosby, Erie Insurance Group.
Certified Supervisory Skills — Meadville
From left: Kelly Carr, Channellock Inc.; Josh Shoaff, Advanced Cast Products; Casey Rickerson, Ellwood National Steel; and, Ronni Jessup and Mike Redding, Channellock Inc.
Back row, from left: Jason Morrell, Quest Diagnostics; Stuart Patton, McInnes Rolled Rings; Thomas Ebisch, PHB Inc.; Justin Moyer, Erie Community Credit Union; Jacob Gresh, McInnes Rolled Rings; Jason Keith, H & H Aero, Inc.; Jesse Downes, McInnes Rolled Rings; Dante Battles, Eire County Adult Probation; Adam Schlosser, Lake City Industries Inc.; and, Jonathan Dunlap, Signal Technologies Inc.
Certified Supervisory Skills Series — Erie
Front row, from left: Erika Atkinson, Monica Murdoch, Marvina Davis, Keri Fohner, and Lisa Fickenworth, Erie Homes for Children and Adults Inc.; Kristina Streed, Gaudenzia Erie, Inc.; Jason Pettinato, Eriez Manufacturing and Kelly Pratt, Marquette Savings Bank. Back row, from left: Jessica Watkins, Saint Mary’s Home of Erie; Ed Lippert, C & J Industries Inc.; Jerome Adamus, Erie Homes for Children and Adults Inc.; Brian Beers, Erie Insurance Group; Kody Chamberlain and Brandon Fabela, C & J Industries Inc.; and, Antonio Achille, Quest Diagnostics.
Certified Supervisory Skills Series — St. Marys
From left: Katrina Miller, Bluewater Thermal Solution; Rhonda Cherry and Javin Howell, Alpha Sintered Metals, Inc.; and, Eric Mahovlich and Matthew Mahovlich, Bluewater Thermal Solution.
November 2015 > www.mbabizmag.com > 13
HR Connection SURVEY: FAMILY HEALTH PREMIUMS RISE AN AVERAGE OF 4 PERCENT IN 2015 Single and family premiums for employersponsored health insurance rose an average of 4 percent this year, continuing a decade-long period of moderate growth, according to the Kaiser Family Foundation/ Health Research & Educational Trust (HRET) 2015 Employer Health Benefits Survey.
Since 2010, both the share of workers with deductibles and the size of those deductibles have increased sharply. These two trends together result in a 67-percent increase in deductibles since 2010, much faster than the rise in single premiums (24 percent) and about seven times the rise in workers’ wages (10 percent) and general inflation (9 percent).
Since 2005, premiums have grown an average of 5 percent each year, compared to 11 percent annually between 1999 and 2005. The average annual premium for single coverage is $6,251, of which workers on average pay $1,071. The average family premium is $17,545, with workers on average contributing $4,955.
“With deductibles rising so much faster than premiums and wages, it’s no surprise that consumers have not felt the slowdown in health spending,” Foundation president and CEO Drew Altman said.
The survey also finds that 81 percent of covered workers are in plans with a general annual deductible, which average $1,318 for single coverage this year. Covered workers in smaller firms (three to 199 workers) face an average deductible of $1,836 this year. That’s 66 percent more than the $1,105 average deductible facing covered workers at large firms (at least 200 workers).
The 17th annual Kaiser/HRET survey of nearly 2,000 small and large employers provides a detailed picture of the status and trends in employer-sponsored health insurance, costs and coverage, including employers’ responses to provisions of the Affordable Care Act. REPORT: LIFESTYLE, FAMILY CARE BENEFITS IMPACT EMPLOYEE PERFORMANCE, PRODUCTIVITY Results of a new survey show a direct correlation between family-care benefits
and workplace performance, as well as employee recruitment and retention. The Care.com Workplace Solutions Better Benefits Survey indicates that the lack of these benefits is affecting employees’ overall work performance and impacting companies in lost productivity. The largest part of today’s workforce is composed of Millennials (age 18 to 34), who represented 90 percent of new mothers in 2014. The survey also researched how family/ lifestyle benefits impact employee productivity and the bottom line. Of respondents, 35 percent think a lack of benefits related to family assistance has negatively impacted their work performance. This rises to 41 percent of those with children. According to the survey, 90 percent of employees have left work due to family responsibilities, with 39 percent indicating they did so “frequently” and 47 percent choosing “occasionally/often.”
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Cadillac Tax Expected to Drive Health-Care Costs Even Higher The Affordable Care Act’s tax on highcost employer health plans, better known as the “Cadillac tax” will affect an estimated one in four U.S. employers when it takes effect in 2018 and could jeopardize the ever-popular flexible spending accounts. The Cadillac tax is a 40-percent tax on the value of coverage above a $10,200 per individual and $27,200 per family ($11,850/$30,950 for pre-Medicare retirees). This is indexed at CPI-U (Consumer Price Index for All Urban Consumers) plus 1 percent for 2019 and CPI-U only after 2019. Although this is adjusted for high-risk industries, age and gender, and excludes dental and vision, the Kaiser Foundation has estimated that 26 percent of all employers will be hit with the Cadillac tax. The tax is allocated by the employer to the insurers for payment to the Internal Revenue Service. Coverage providers
are expected to charge back the cost to the employer. The calculation is based on the total cost of the plan (HRA contributions, FSA/HSA employee and employer contributions, onsite clinics, wellness programs, etc.) The intent of the tax was to discourage “extravagant” coverage. But is it really extravagant? Many critics say it is a tax on what is essential in a benefit plan. For instance, even measures that were put in place to help pay for medical costs are being threatened. Flexible spending accounts (FSA) allow employees to set aside tax-free dollars for annual insurance expenses like deductibles and out-of-pocket expenses. The money comes out of employees’ paychecks. The catch: Under this law, these employee contributions count toward the threshold that triggers the Cadillac tax.
DEPARTMENTS > Contact: Stacey Bruce
to this tax. So, too, will employers with unionized work forces who have bargained for better benefits. At risk are many job-based benefits for middleclass workers. Members on both sides of the Congressional aisle are calling for the repeal of this tax. For more information, contact me at psmith@mbausa.org or 814/833-3200 or 800/815-2660.
Patty Smith is the director of Employee Benefit Services at the Manufacturer & Business Association.
Companies domiciled in high medical cost areas will most likely be exposed
The Manufacturer & Business Association. We don’t sell energy. We represent you, our members – employers who face increasing energy costs in an increasingly competitive environment. Through our new service, called EnergyAdvisors, we analyze your specific energy use, your energy needs, your energy costs. And then we work with pre-qualified energy suppliers who bid on your business, offering long-term fixed-rate pricing, variable rates indexed to the Day-Ahead Market and blended rate programs. What you receive are the best energy buys for your business. If you want to save big-time on your energy bills, call us at 814-833-3200.
2171 W. 38th Street • Erie, PA 16508 • MBAenergyadvisors.com November 2015 > www.mbabizmag.com > 15
HR Q&A WHAT ARE SOME ITEMS TO CONSIDER WHEN OUTSOURCING 401(K) PLAN OVERSIGHT RESPONSIBILITIES? Many retirement plan sponsors are underinformed about their ongoing fiduciary duty when making decisions regarding their 401(k) plan. If the plan sponsor does not use its power to, in effect, outsource its fiduciary duty to monitor the plan’s administration and its investments, then the plan sponsor remains liable and at risk for any actions — or lack of actions — taken on behalf of the plan. As a fiduciary, plan sponsors are responsible for the following: • Making decisions that are in the best interest of members of the plan. • Following the summary plan description. • Diversifying investment options within the plan. • Minimizing expenses to defray the costs of the plan and its investments. • Monitoring the investment performance within the plan. • Replacing an investment that is no longer appropriate for the plan.
• Using the “prudent person” rule when acting as the fiduciary of the plan. • Monitoring all contributions (employee and employer). • Educating plan members on investment options within the plan. • Making sure the plan document is being updated to incorporate any changes to the plan and changes in the law that would affect or influence the plan. As is evident from the above list, acting as a fiduciary brings added liabilities. As a fiduciary, plan sponsors must stay informed and act as needed to reduce their liability and keep the plan compliant. This is why many plan fiduciaries and trustees hire a registered investment adviser to take on some of their fiduciary duties. CAN WE REFUSE HEALTH INSURANCE TO AN EMPLOYEE WHO REFUSES TO PARTICIPATE IN A HEALTH RISK ASSESSMENT? The Americans with Disabilities Act (ADA) says that health and disability related inquiries and employee medical examinations must be “completely
voluntary” unless they are specifically job-related and consistent with business necessity. An informal Opinion Letter from the Department of Labor indicated that health reimbursement account (HRA) participation is not considered to be voluntary if its completion is required for an employee to be eligible for an employer’s health plan or to receive the employer contribution. Based on this information, denying an employee access to the employer’s health plan is not advisable for refusal to participate. CAN WE TERMINATE SOMEONE WHO IS OUT FOR A WORKERS’ COMPENSATION INJURY? Possibly. If the employee is protected by the Family and Medical Leave Act (FMLA), you must follow the provisions of that law. The FMLA can run concurrently with a workers’ compensation absence. Also, the injured employee might be considered “disabled” under the ADA and you may have to offer accommodations. However, the workers’ compensation laws do not normally require you to maintain someone on your payroll if they are unable to work.
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16 < www.mbabizmag.com < November 2015
DEPARTMENTS > Contact: Stacey Bruce
Executive Order Requires Federal Contractors to Give Paid Sick Leave Starting in 2017 President Barack Obama bestowed a Labor Day gift for workers on federal contracts and subcontracts, but some are calling it another burdensome benefits mandate on employers — and one that’s particularly likely to disadvantage small firms.
• Allow workers to use paid sick leave to care for themselves or for a family member, such as a child, parent, spouse or domestic partner, as well as for absences resulting from domestic violence, sexual assault or stalking.
The president signed the executive order, Establishing Paid Sick Leave for Federal Contractors, on September 7, 2015. The order, which is effective for new contracts starting in 2017, will:
The worker must give at least seven days’ prior notice of the need to take leave if the need for leave is foreseeable, or as soon as practicable if the need is not foreseeable. If the worker takes more than three consecutive workdays of leave, certifications supporting the need for leave must be provided within 30 days from the first day of leave.
• Give approximately 300,000 people working on federal contracts the ability to earn up to seven days of paid sick leave each year. Workers will earn a minimum of one hour of paid sick leave for every 30 hours worked, although contractors may offer more generous amounts at their discretion. A contractor may not set a limit on the total accrual of paid sick leave per year at less than 56 hours (seven days multiplied by eight-hour workdays).
The executive order states that it does not supersede other federal, state or local laws or collective bargaining agreements that provide greater benefits. A federal contractor’s existing policy can satisfy the executive order if it provides a sufficient amount of leave to meet the executive
order’s requirements and leave can be taken for the same reasons and under the same conditions as the executive order. The executive order states that the Secretary of Labor must issue implementing regulations by September 30, 2016. For more information, contact me at 814/833-3200, 800/815-2660 or sbruce@mbausa.org.
Stacey Bruce is the director of HR Services at the Manufacturer & Business Association.
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County from birth to age five. LIBRARYSponsor aEriechild: UnitedWayErie.org/Imagination Or $30 per year for one child - any gift equals more books!
The Imagination Library is a United Way of Erie County initiative in collaboration with The Erie Community Foundation and other funding and community partners.
November 2015 > www.mbabizmag.com > 17
2015 Corporate Gift Giving & Event Planning Guide Employers are always looking for creative ways to say thank you to their clients and employees during the holiday season. Here are a few companies to consider for your celebrations:
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ERIE DOWNTOWN GIFT CERTIFICATES accepted at MORE THAN 45 LOCATIONS Order yours today at
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Events
The Manufacturer & Business Association, its partners, and more than 30 sponsors, including major sponsors Ridg-U-Rak, Inc., PNC and Erie Insurance, recently held a two-day celebration in conjunction with Erie Manufacturing Day, starting on October 1 at the Erie Bayfront Convention Center. For more photos, visit www.eriemfgday.com.
More than 1,300 students and 500 manufacturing representatives packed the Exhibit Hall for Erie Manufacturing Day 2015.
Erie Insurance was a major sponsor of Paul Teutul Jr.’s keynote address.
Hundreds of students gather in the Little Theater to hear the Biker Dude’s Careers in Manufacturing presentation.
Area students toured more exhibits and listened to the group M-4 perform before the lunchtime keynote address.
Major sponsor Ridg-U-Rak, Inc. President and CEO John B. Pellegrino Sr., P.E., and his wife, Mary, welcomed John Ratzenberger to Erie.
Bill Hilbert Jr., chairman of the Association’s Board of Governors, accepts a Manufacturing Day proclamation from Erie Mayor Joe Sinnott.
John Ratzenberger joined John B. Pellegrino Sr., P.E., for a tour of Ridg-U-Rak on Day 2 of the Manufacturing Day celebration.
Steve Shatrich of major sponsor PNC discusses the financial side of manufacturing, during a presentation in the Little Theater. Guests showed their Manufacturing Day pride at the MBA Photo Booth.
Thousands of students filled the Grand Ballroom to hear a Q&A by master bike builder Paul Teutul Jr.
Bill Hilbert Jr., MBA chairman and president of Reddog Industries, represented one of the 12 area companies that hosted open 20 < www.mbabizmag.com < November 2015 houses on October 2.
People Buzz ATHENA HONORS FORMER ERIE MAYOR, MERCYHURST GRADUATE ATHENA Erie honored Joyce Savocchio, former Erie mayor, as its ATHENA Award recipient and Mercyhurst University graduate Emily Francis with its ATHENA Young Professional Award, during the annual ATHENA Erie Awards Luncheon on September 17 at the Ambassador Banquet & Conference Center. The ATHENA Award was created in 1982 to encourage leadership opportunities for women. The award is presented to an individual who has attained, and who personifies, the highest level of professional excellence in his or her business and profession. Recipients have devoted time and energy to the community in a meaningful way and, most especially, have opened doors of leadership opportunities for women. The ATHENA Young Professional Award identifies and recognizes outstanding university students who have the potential to be our future leaders.
Shown are Joyce Savvochio, former Erie mayor (at left), and (at right) Linda Stevenson of ATHENA Erie, Emily Francis and 2009 award recipient Hannah Kirby of LORD Corporation.
MBA ANNOUNCES RECENT PROMOTIONS, HIRES The Manufacturer & Business Association (MBA) recently announced several key promotions and additions to its professional staff, including: Melissa Damico has been promoted to Client Services manager for the Manufacturer & Business Association Insurance Agency (MBAIA). A licensed insurance agent, Damico is responsible for working with employer groups on all of their insurance needs, including medical, dental, vision and life. In this role, she obtains health insurance quotes for prospective clients and helps them select the best plan for their employee needs; assists current clients on an ongoing basis; and assists subagents with quoting. Damico, who has been employed with the Association for 17 years, earned her associate’s degree from the Erie Business Center. She is a certified professional supervisor and has her resident producer
license for Accident & Health, Life & Fixed Annuities. Patty Welther has been promoted to manager of Member Engagement. In this position, Welther is responsible to contact existing members to inform and educate them of all of the services available at the MBA, as well as promote the MBA to new businesses to help companies recognize the value of membership. She also is responsible for managing the Professional Development Training Department. Welther has been employed at the Association for the past nine years, serving most recently as the account executive for the MBA’s Business Magazine. She earned her bachelor’s degree in business administration from Edinboro University. David Thornburg has been hired to replace Welther as account executive for the Business Magazine. In this role, Thornburg will be responsible for all advertising sales and marketing of the monthly publication. Thornburg previ-
DEPARTMENTS > Contact: Karen Torres
ously worked at Erie Institute of Technology where he served as Career Services coordinator and produced the school’s monthly newsletter. He has more than 20 years of sales experience in various industries, including education, technology and manufacturing. He earned his bachelor’s degree in photography from Edinboro University. In addition, Christine DeSantis has been promoted to graphic designer in the MBA’s Communications Department. DeSantis has worked for the Association for 16 years, most recently in the Administration Department. She attended Mercyhurst University. The Association also hired Judy Rosatti as an EnergyAdvisor for its member energy program EnergyAdvisors. Founded in 2009, the program assists member companies in shopping for energy, saving them millions of dollars in electric supply costs to date. Rosatti has more than 30 years of sales experience, the past 25 in medical device sales and consulting. She earned her bachelor in fine arts degree from Edinboro University. Sarah Vincent also has been hired as a coordinator for the MBA’s Conference Center, which hosts various meetings, seminars, briefings, trade shows and special events. In her position, Vincent is responsible for the service and execution of Conference Center customer requests. She previously worked at the Bayfront Convention Center in Erie. Christine DiLuzio has been promoted to Accounts Receivable specialist at the Association. She previously served in Vincent’s role as coordinator in the MBA Conference Center. DiLuzio has a bachelor’s degree from Slippery Rock University of Pennsylvania. November 2015 > www.mbabizmag.com > 21
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