2009 Economic Outlook for California Businesses
Four keys to getting started

By Jack Kyser, Senior Vice President & Founding Economist – The Kyser Center for Economic Research at the LAEDC

Since our state’s economy is tied into the U.S. economy, we will start this discussion with a national outlook for the coming year.

National
The nation’s economy had been struggling in 2008, but the roof fell in during the fourth quarter of the year. The country’s financial system wobbled precariously, and this exacerbated ongoing problems in the housing and auto industries. With few signs of improvement in the banking sector, lending will continue sluggish in 2009. This is a critical problem for California, which has a small- to medium- sized business base.

Retailing must be added to the problem industry list. Several retailers closed in the last months of 2008, and more closures are expected during the first half of 2009. For smaller cities, this loss of sales tax revenue could be a severe problem. For real estate developers, the growing amount of vacant space could be a real millstone.

Housing will continue to struggle over the course of 2009. U.S. housing starts will drop to the 700,000-770,000 unit range during the year. The resale housing sector will see another increase in unit sales, but the median price will continue to decline. This reflects the overhang of foreclosed properties in large troubled markets. When can a recovery be expected? Most markets will be searching for a bottom by the end of 2009, but some markets could take longer to recover.

Scared consumers and a dearth of financing have produced a sales collapse in the auto industry, with just 13.5 million light vehicle sales in 2008. The situation has gotten so bad, there is talk of government bailouts, or assisted mergers. This has enormous employment implications for the U.S. Midwest. California’s car and truck dealers are trimming head counts as well, and many are shutting their doors.

The U.S. dollar should continue to run at low levels in 2009, which ought to provide some support for exports. However, slower growth and recession have spread around the world, dampening demand for U.S. -made goods and commodities.

The economic turmoil has caused oil and commodity prices to decline, and this will translate to much lower inflation. In 2008, the Consumer Price Index rose by 4.4%, while the forecast for 2009 is for an increase below 2%.

People are watching a new administration take shape in Washington, DC. President-elect Obama wants to move quickly to start the economic recovery process. A second economic stimulus package is being discussed, but what might be included is still fuzzy.

California
While the problems of the housing industry garner much of the media attention in California, there are other big challenges. One is the state budget deficit, which is estimated at $10 billion-plus. There could be fee and tax increases as well as cuts in services. The state’s budget problems are already trickling down to counties, cities and education. Another challenge is water supply. There will be significant cutbacks in water supply if the winter of 2008-09 is dry.

What is the outlook for some of California’s major industries in 2009?

• Agriculture: This sector should have decent results in 2009. Water supply is a key issue, especially in the San Joaquin and Sacramento valleys. A concern is that permanent crops (tree stock, etc.) may have to be destroyed to conserve water. Labor availability is OK, due to workers moving back from the construction industry Fertilizer and fuel costs have been coming down. The outlook for dairy and cattle is OK, but is more mixed for citrus and crops.
  
  
• Housing: New homebuilding in the state should continue to decline in 2009, after falling to 65,000 units permitted in 2008. The resale housing market also will continue to struggle in 2009, with unit sales up while median prices continue to decline. This reflects the still-large overhang of troubled properties around the state, especially in the inland areas. When will the situation stabilize? Many industry observers are looking to the end of 2009, though for some inland areas it could take until 2010.
  
  
• International trade: Trade has been a reliable engine of growth for the state, but activity, as measured by containers handled, peaked in 2006 (15.8 million TEUs at Los Angeles/Long Beach and 2.4 million TEUs at Oakland). Since then, activity has declined due to declining imports (autos and parts, and housing-related items). Exports have been growing, helped by the weakness in the value of the U.S. dollar. However, growth will be weaker in 2009. Continued declines in containers handled are expected during 2009, with Los Angeles/Long Beach slipping to 13.4 million TEUs, while Oakland should come in at 2.3 million TEUs. The ports are implementing “clean truck” programs, but are being bedeviled by lawsuits.
  
  
• Motion picture/TV production: This industry got off to a rough start in 2008, due to the 100-day Writers Guild strike, which severely disrupted the television industry. In mid-2008, the industry’s contract with the Screen Actors Guild (SAG) expired. While other major industry contracts were agreed upon, the negotiations with SAG dragged on. A SAG board election in September saw more moderate members gain an advantage, and a federal mediator was brought in. His efforts failed, and SAG is discussing a strike vote. In the meantime, the major studios began to ramp up production of feature films. Both domestic and international box office receipts in 2008 were even with 2007. The entertainment industry conglomerates are concerned about the impact of the economy on their business, especially on advertising revenues.
  
  
• Technology/aerospace: The 2009 outlook for this sector is varied. Consumers will be cautious in their purchases, except for cell phones and small electronic devices. Businesses will also be careful in their purchases of both equipment and software. Small start-up firms in Silicon Valley have been hit by the drying up of financing. On the classic “aerospace” side of the business, it seems to be “steady as she goes.” A lot of major programs (including intelligence gathering) are underway in the state. The industry is waiting to see how a new administration, under pressure from the financial rescue package, responds. The feeling is that not much will happen in 2009, but there could be some major changes (including program terminations) in 2010 that would impact the state.

Nonresidential real estate outlook mixed
By year-end 2008, activity in the state’s commercial real estate industry had ground to a halt due to a lack of financing. This condition will probably hold for much of 2009.

At the street level, the situation around the state was quite mixed in both office and industrial markets. The highest office vacancy rates as of the third quarter 2008 were found in the Inland Empire (19.9%), Orange County (16.1%), and San Diego (15.0%). The Inland Empire and San Diego County warrant more attention as significant amounts of new space are under construction. Another metro area that needs watching is Silicon Valley, where the office vacancy rate is moving up while over 2.4 million square feet of new space is under construction.

The outlook for the state’s industrial real estate market is extremely varied. Los Angeles County as of the third quarter of 2008 had a 2.3% vacancy rate, the lowest in the nation. Just over 2.3 million square feet of new space was under construction. At the other end of the spectrum was the Inland Empire, where the industrial vacancy rate has shot up to 8.6%, while 12.6 million square feet of new space was under construction. This reflects the slowdown in international trade.

Trends by area in California
At year-end 2008, almost all larger metro areas in the state were posting year-over-year job losses and rising unemployment rates. The strongest performance was found in the San Francisco metro area, where 15,000 jobs could be added in 2008. The San Jose metro area was just about flat employment-wise, while all the other larger metro areas in the state were shedding jobs.

San Francisco was being supported by tourism and technology. However, there is concern that the chaos in the financial services industry could hurt the area over the course of 2009.

Net results
Nonfarm employment in California will decline by 1.1% in 2009, and make an extremely modest recovery in 2010. Job losses will continue to be recorded in construction, financial services, manufacturing and retailing. Government employment will have to be monitored as almost all levels of government will feel the financial pinch. The unemployment rate, which averaged 7.1% in 2008, will shoot up to 8.8% in 2009.

Total personal income will increase by a modest 2.9% in 2009. One piece of good news; inflation will ease down to under 2% for the year.

2009 will be a difficult year for California’s economy, with the pain more intense in areas where there was a housing boom and bust. The situation should start to look a little better by the end of 2009, and the economy should begin to recover in 2010.

Why are Healthcare Costs Rising?

Healthcare costs, and consequently the amount employers pay for employees medical premiums, have been rising at almost double the rate of inflation over the last several years. Most employers simply cannot avoid facing vastly increasing premiums with their medical plans, year after year.

Why are healthcare costs rising so high, so fast? This article explains the factors leading to the continuing onslaught of rising healthcare costs.

National healthcare costs
Unpredictable and uncontrollable health insurance rate increases are having a serious financial impact on most employers. To begin to understand why employee medical plan rates are rising so dramatically, you must first understand that the overall costs of healthcare are skyrocketing across the United States – reflecting the biggest surge in medical inflation since the early 1990s. For example, from 1994 to 1998, average yearly healthcare cost increases hovered around 2%. From 1999 to 2000, however, costs leapt 9.4%, and increases have entered and stayed at or near double digits ever since.
As healthcare costs rise, the amount employers must pay for employee health benefits rises. Health benefit costs continue to rise faster than the rate of inflation. This trend is expected to continue. In 2007, the average cost of health benefits in the United States was $4,479 per employee and $12,106 for family coverage. That’s in addition to salaries and hourly wages, and any other benefits employers already provide.

Why are healthcare costs rising?
Why are U.S. healthcare costs skyrocketing? Several market conditions working together have led to this onslaught of steep increases. To help employees understand these factors will help them be aware of the reasons behind any benefit or employee contribution (the amount employees are required to pay out of their paychecks) changes you decide to make.

• The aging of Americans
It is an inescapable fact: the U.S. population is aging. While the number of older Americans is increasing, the number of children and younger people is remaining stable and even decreasing for some age groups.

According to the U.S. Census Bureau, from 1990 to 1994 the elderly population increased 9-fold. During the same period, the number of people under the age of 65 rose only 3-fold. The growth rate of elderly persons is expected to be modest from 1990 – 2010, and is then expected to ascend dramatically from 2010 to 2030 as the Baby Boom generation enters the 65 and older category. About one in five U.S. citizens will be elderly by the year 2030.

As the American population ages, there is a subsequent rise in the occurrence of chronic diseases like asthma, heart disease, and cancer, and a resultant need for more resources to fight these diseases. This leads to elevated utilization of prescription drugs and other medical services, and an overall rise in healthcare spending.

• Dramatic rise of prescription drug costs
Rising prescription drug costs are a primary cause of escalating overall spending on healthcare. Pharmaceutical research is continually providing treatment breakthroughs that should not be impeded, but the costs associated with this progress are undoubtedly having an impact on insurance companies and managed care organizations, and consequently on employers who sponsor employee health plans. Prescription drug costs have become a major component of health plan costs, with employers who provide managed care plans (HMOs) being hit especially hard because of the generous drug benefits those plans tend to offer.

The Centers for Medicare and Medicaid Services (CMS) report that prescription drug expenditures make up 11% of our overall national healthcare spending, and project that figure to reach 14.5% by 2012. Recognizing this trend, insurance companies and employers are moving towards more cost-effective benefit designs, such as higher copayments for prescription drugs than in previous years, or plans with three copayment levels (e.g. $10/$20/$30) for various drugs, rather than the traditional two-level plan (e.g. $10/$20).

The reasons for the increase in spending on prescription drugs are many, and include the following:

• Introduction of new brand-name drugs to the marketplace. These new drugs are often more effective than the old ones they replace, but this kind of innovation bears a hefty price tag for insurance companies, employers, and you — the consumer.
  
  
• A general increase in the number of prescription drugs being used. Basically, more people are using more prescription drugs, thereby driving overall spending upward.
  
  
• Individuals with insurance are more likely to use prescription drugs than those without, and the growing prevalence of managed care plans – which often offer generous drug benefits – has fueled increased prescription drug use.
  
  
• With the general aging of the population, there is a higher incidence of chronic disease, and a resultant increase in the use of pharmaceuticals to treat those conditions.
  
  
• Pharmaceuticals play a primary role in increasingly aggressive diagnoses and treatment methods.
  
  
• Direct-to-consumer advertising of prescription drugs – outlawed by the FDA until 1985 – has grown by leaps and bounds over the last decade. Critics of this practice feel that promotion of drugs directly to consumers, rather than to doctors, creates inappropriate consumer demand and utilization of certain medications. In addition, many feel that drug prices could be lower if drug manufacturers did not spend huge sums of money on advertising.
  

• Consolidation of insurance companies
During the managed care boom of the 1990s, competition among insurance carriers and managed care companies was fierce. In order to gain market share, many large insurance companies acquired smaller, weaker firms and kept their rates low in order to stay competitive. This practice has taken its toll, leading to dips in profitability and stock prices for a large number of insurance carriers. Now, those companies that have survived are faced with much less competition and are committed to returning to profitability, which has ultimately resulted in increased rates for employers.

• Expansion of providers
One of the major factors driving up the cost of healthcare is the growth of healthcare providers. Expansive healthcare systems that offer acute care hospitals, specialty facilities, clinics, labs, physician practice groups, and other services are becoming prevalent. While these systems provide many benefits to the communities they serve, they also require a great deal of money to fuel their growth — and ultimately place upward pressure on the costs of many medical services.

• Political environment and government regulation
Health insurance, and more specifically, managed care, is one of the most regulated insurance sectors on both the state and federal levels, and has become one of the most highly debated topics in the political arena. State and federal mandated benefits have increased 25-fold over the last three decades. Often, these mandates duplicate or conflict with each other, and usually come with increased costs for the healthcare system. For example, the Health Care Portability and Accountability Act of 1996 (HIPAA) continues to influence the operations of many health plans seeking compliance. According to an April 2002 study by PricewaterhouseCoopers, HIPAA alone is responsible for adding billions of dollars of new compliance costs to the healthcare system.

Aside from HIPAA, there are over 1,500 mandated benefits at the state and federal level. Each of these has a cost associated with it, and together they have had a significant impact on healthcare costs.

• Increased use and consumer demand
The use of many healthcare services has risen over the last decade. A number of factors such as improvements in medical technology, the influence of managed care, elevated consumer awareness and demand, and a boost in the number of practicing physicians caused health services like the number of surgical procedures, and the number of prescription drugs dispensed, to rise significantly. Other services, such as breast cancer screenings, immunizations for children, and diagnostic procedures like CT and MRI, have also experienced sharp utilization increases.

• New medical technology
Life expectancy and mortality rates in the U.S. are steadily improving. Developments in medical technology, including methods for early detection of disease and the introduction of new treatments and medications for acute illness, have played a major role in enhancing these statistics. Old techniques are being replaced with new, often expensive treatments using new medical devices, diagnostic products, drugs, and surgical procedures. It is not surprising that these new procedures come with hefty price tags and are influential in driving overall costs of healthcare – and the cost of healthcare benefits – upward.

Employers are trying to determine how to keep accelerating health plan rates from having a serious financial impact on their companies. Many firms absorbed the increasing costs for years to avoid further burdening their employees. Now, most are realizing that they will have to pass portions of the costs on to employees in the form of greater contributions from their paychecks, or benefit designs that require them to pay more out of pocket for the medical services they use (increased coinsurance, co-payments, or deductibles). These measures go a long way toward keeping employees and companies healthy for the long term.

E-Verify Myths Dispelled

In 2009, employers in all industries, small or large, must make critical decisions regarding their new hire screening techniques. Since the passage of the Immigration Reform and Control Act (IRCA) in 1986, all employers have been obliged to complete a new hire form I-9 recording identity and work authorization documents. If the documents are discovered to be fraudulent, one could always blame the government for failing to provide the tools to decipher a good green card and Social Security card from a $50 forgery. Slowly, but methodically, the government has been building a robust database called E-Verify, which is increasingly being thrust on employers – not only for all new hires, but also for current employees who work on federal contracts.

This article will address and dispel many of the myths regarding E-Verify and related issues.

Myth: E-Verify is an online tool that is entirely voluntary, which enables employers to verify the legitimacy of new hire work authorization documents.

Truth: Increasingly, the federal government is mandating E-Verify to gain government benefits, and various states are requiring that all new hires be run through E-Verify. For example:

• Effective January 15, 2009, new federal regulations require E-Verify for certain federal contractors. Not only will federal contractors and certain subcontractors be required to use E-Verify for all new hires; they also will be required to update I-9s and use E-Verify for existing workers “directly performing” work on federal contracts. (See www.uscis.gov, pressroom 11/13/08.)
  
  
• In order to hire foreign students graduating from U.S. universities to work in STEM-related jobs (Science, Technology, Engineering and Math) for 29 months after graduation, an employer must be registered in E-Verify. (See www.uscis.gov, pressroom 4/4/08 and 5/23/08.)
  
  
• New H-2A agricultural regulations for seasonal foreign farm workers permit employees to transfer to different employers without awaiting lengthy approvals – as long as the new employer is using E-Verify. (See www.uscis.gov, pressroom 12/11/08.)
  
  
• The list of states that mandate E-Verify usage for all new hires continues to grow (GA, CO, OK, AZ), while other states only mandate usage for employees working on state contracts (ID, NC, PA, MO,).

Myth: A correctly completed I-9 form is an employer’s affirmative defense to a charge of employing unauthorized workers. As long as an employer has an I-9, it won’t be charged with federal immigration violations if it’s discovered that the employee’s documents were fraudulent.

Truth: While an I-9, completed in good faith, is an affirmative defense against a charge of knowingly hiring an unauthorized worker, it isn’t a defense against a charge of knowingly continuing the employment of unauthorized workers. With the availability of E-Verify to screen the legitimacy of documents, ICE (Immigration and Customs Enforcement) will increasingly hold employers to a higher standard, and will investigate more thoroughly when it discovers the presence of numerous unauthorized workers.

Myth: A company is more at risk of being visited by ICE if it participates in E-Verify.

Truth: Although there have been instances of E-Verify companies that were raided by ICE, these companies were investigated because of widespread employee use of false identities. Nevertheless, companies must sign a Memo of Understanding when signing on for E-Verify, agreeing to share their records with ICE. Unquestionably, this does have a chilling impact on program participation. Until the government clarifies under what circumstance it shares employer records with ICE, it’s unclear whether E-Verify will lead to more government intrusion.

Myth: The E-Verify database is highly inaccurate and will result in an inability to hire lawfully authorized workers.

Truth: Program improvements have been made to E-Verify to increase the reliability of its database. A small percentage of the verifications do result in a “tentative non-confirmation,” which requires the employee to follow up either with DHS or Social Security to resolve the discrepancy. The new hire remains employed until the discrepancy is resolved, or there is a final non-confirmation. Improvements include fewer referrals of newly naturalized U.S. citizens, and a photo screening tool that displays immigration document photos to decrease the likelihood of identity theft.

Myth: We sponsor foreign nationals and often these employees don’t obtain a Social Security card for weeks or possibly months after arrival in the U.S. I won’t be able to employ these workers because a social security number is required.

Truth: While an I-9 must be completed within three days of hire, the E-Verify process can be delayed for work-authorized employees who do not yet have a Social Security number. The I-9 must be annotated to indicate the reason for the delay, and the E-verification should be conducted at the first opportunity.

Myth: We have operations in many states and in different locales. If we participate in E-Verify, we will be required to use it for all locations.

Truth: An employer with multiple locations has several options: It may choose to complete the E-Verify process for all hiring sites from one location; each site can conduct the verification for its own workers; or some locations may be excluded – either initially or permanently.

Myth: E-Verify requires a minimal amount of resources and staff commitment.

Truth: A company that participates in E-Verify does commit resources to ensure that each E-Verify user completes an online tutorial; carefully inputs all data; and follows up on each verification through final resolution within the required time frame. A savvy employer will also ensure that those involved in the I-9 and E-Verify processes are provided with I-9 and document identification training.

Myth: There are no fines or penalties if an employee is allowed to continue to work after receiving a final non-confirmation.

Truth: An employer can be fined in the range of $500-$1,000 for each failure to notify DHS of continuing to employ an individual after a final non-confirmation.

Myth: E-Verify is 100% foolproof. If we participate we never have to worry that we employed someone who presented false documents or that there is a lapse in anyone’s work authorization.

Truth: Identity theft remains one of the employer’s biggest challenges. The photo tool is a first step in preventing identity theft but only some immigration documents are inputted and photos for driver’s licenses are not available. Additionally, although an employer must update section three of the I-9 whenever work authorization expires, it isn’t allowed to use E-Verify to check the validity of these documents. Overall, many employers consider E-Verify a good deterrent that will decrease the number of unauthorized workers.

Equal Employment Opportunity Best Practices
These companies won, and so can yours!

Just last month, the Department of Labor honored employers for their best practices in equal employment opportunity. The winning companies have demonstrated exemplary and innovative efforts through programs or activities to increase the employment opportunities of employees, including minorities, women, individuals with disabilities, and veterans.

Johns Hopkins Health System, Baltimore, Maryland, received the Secretary of Labor’s Opportunity Award; University of Texas Southwestern Medical Center, Dallas, Texas, received the Exemplary Voluntary Efforts (EVE) Award; and F-E-G-S Health and Human Services System, New York, New York, received the Exemplary Public Interest Contribution (EPIC) Award.

Impressive, but attainable! It may not be as complex as you think to qualify for one of those awards. At minimum, you can avoid tumultuous audits and consequential conciliation agreements and other sanctions. Let’s sort out how those companies achieved this milestone, being the best in compliance. The focus will be on the following practical, yet innovative, initiatives that were responsible for separating these companies from the rest of the pack.

Fostering inclusiveness
The purpose of having an affirmative action program (AAP) in place is to provide an atmosphere where everyone feels valued and empowered to perform at a maximum potential, regardless of the differences among people, including, but not limited to, age, race, gender, sexual orientation, family history, or physical ability.

For example, some of the winners use diversity initiatives to build relationships and enhance employee understanding about cross-cultural differences. The initiatives enable participants to illustrate the power of an inclusive culture, enhance internal support for diversity, and help participants become change agents.

Others embrace Employee Diversity Councils (EDC) to offer a forum where people can build networks and share dialogue. In addition to helping individuals meet their personal goals, the groups work to help the company achieve its business objectives. The EDC utilizes partnership between senior leaders and representatives of the EDC to energize the activities of groups such as: Asian Pacific Association, American Indian Network, Black Employee Network, Hispanic Employees Association, and Women’s Network.

It is worth noting that the key to inclusiveness is open communication. Some of the winning companies launched extensive advertising campaigns to inform business partners, employees, potential job candidates, and the media about their commitment to diversity.

Talent retention and acquisition strategy
There were some programs developed to provide a pipeline of diverse talents for the involved organizations.

Most winning companies utilize a variety of educational programs to inform employees about why diversity matters to business and how to achieve it in the workplace. Some also supports partnerships with universities and community colleges to create a pipeline of talents.

It is clear that a significant number of companies face a shortage of skilled workers as Baby Boomers are beginning to retire. To meet this challenge, some companies developed a Degree Program. The program’s business objective was to develop a continuous pipeline of diverse talent for employment in entry-level technical trade positions at those companies and establish a commitment to education that would generate renewed interest in technical trade careers. This program, in partnership with community colleges, combines classroom instruction with technical apprentice-level training at participating companies’ Training and Developmental Centers. Employees also mentor students on the job and in the classroom.

Other innovative initiatives were designed to engage middle-school students in math by illustrating the connection between math, their passions and interests and “cool” careers: for example, an engaging website like Raytheon’s MathMovesU.com website, targeted toward students. The goal of the website is to stimulate interest in everyday math through compelling and relevant content and prize-winning contests and events.

Other initiatives

1. Creation of an AAP that includes diversity and work/life considerations;
   
   
2. Establishment of a discrimination complaint procedure;
   
   
3. Employee diversity training opportunities including online training, diversity recruitment training, and a new supervisor program with a diversity module;
   
   
4. Work/life/family programming that incorporates diversity;
   
   
5. Increasing the outreach efforts to the women and minority vendors and contractors;
   
   
6. Implementation of workplace accommodation programs for employees with disabilities.

Applying the above measures to your workplace should be reasonable and achievable to eventually attain the goals of both your business and employees.

Governor’s Proposals Impact Unemployment Insurance

When the original Social Security Act was enacted in 1935, the weekly amount of unemployment compensation was intended to be fifty percent (50%) of the average weekly earnings. Effective with new claims filed on or after January 1, 2002, and prior to January 1, 2003, the maximum weekly benefit amount in California increased to $330. The following year, the amount increased to $370 and for new claims filed on or after January 1, 2004, and before January 1, 2005, the maximum weekly amount rose to $410. For new claims filed with an effective date beginning January 1, 2005, the maximum weekly benefit amount increased to $450.00, where it remains today.

In 1976, the unemployment taxable wage base was raised to $7,000 per employee per year. It has remained at that level to the present.

In normal times, or times of prosperity, when the unemployment rate is low, this strategy works to the benefit of employers and employees. With few individuals receiving benefits, employers’ reserve accounts can still grow. The same is true for the state and federal general unemployment insurance fund accounts.

How it stands today
Common sense, and basic accounting principles, indicate that when outgo exceeds income something has to change. For too many years, the state unemployment fund has been depleted without sufficient replenishment of the money. The fund is headed toward record deficits, estimated now at $2.4 billion in 2009 and $4.9 billion in 2010. These numbers can change in response to the economy.

Governor’s plan for UI
To bring the California fund closer to solvency, Gov. Schwarzenegger is proposing major revisions to the unemployment insurance program. He is calling for an increase in the taxable wage base from the current $7,000.00 to $10,500.00. This would put California more in line with other states. He also wants to increase the maximum tax rate from the current 6.2% to 8.1%. Remember, each 0.1% increase amounts to $7.00 in additional tax paid for each employee.

At the current rates, the least amount an employer can pay in unemployment taxes (at 1.5%) is $105 per employee per year and the maximum (at 6.2%) is $434. At the proposed maximum rate, the tax paid would increase to $567 per employee, per year. This figure is based on the current $7,000 taxable wage base. If the new tax rate is applied to the proposed tax wage base of $10,500, the taxes would increase the minimum tax to $157.50 per employee, and the maximum tax would rise to $850.50 per employee, per year. The governor’s office states the increase of the taxable wage base to $10,500 will result in increased contributions from $56 to $427 per employee. Multiply these amounts by the number of employees and one can understand employers in California are facing a substantial negative impact upon their financial resources.

Government loan ramifications
If the state has to secure a loan from the federal government to keep the state unemployment fund solvent, there can be severe ramifications if the loan is not repaid as agreed. If the loan is outstanding at the end of the second year, the tax credit usually received for the federal unemployment tax (FUTA) paid over the year is reduced. This creates the potential for a thirty percent (30%) increase in taxes for each employee. Increases in the tax rate, and corresponding decreases in the tax credit, can occur in each year the loan remains unpaid.

If the governor’s plan becomes a reality
With significant changes under consideration, and the likelihood that they will become reality, it is imperative that employers do everything correctly when an employee voluntarily quits or when thinking about discharging an employee. This is when a 3rd party administrator can help control unemployment insurance costs. The expertise to train managers in the disciplinary process and to advise about the questions to ask when an employee quits, along with the correct terminology to use when responding to claims, will increase the probability of successfully defending the employer’s position and winning at the initial level.

A UI audit can help
A UI service provider will also audit benefit charge statements and tax rate notices for accuracy on the part of the state. Checks are made to ensure individuals paid were really employees and that all benefits charged to the reserve account are correct. When auditing the tax rate notice, the amount of contributions and charges to the reserve account are verified.

Two other important numbers that are reviewed in this process are the UI taxable payroll for the three years used in the state’s calculations and the UI taxable wages for the applicable fiscal year. If these audits are not being done, or not being done in a thorough manner, the employer stands to lose hundreds, or thousands, of dollars in unrecovered credits to the reserve accounts. Recovering credits can result in a lower tax rate, something that will be critical in light of the governor’s proposals.

Editor’s Note: For information about EG’s UI Services, call 800.748.8484, and ask for Ahmed Younies, Director of Specialty Services.

HR in the City
New laws for 2009 – and other assorted changes

Hello, 2009! We welcome you with open arms and hope for the best because what a year 2008 has been for many of us. Of course, 2008 did provide us with some history-making memories, such as Michael Phelps winning eight gold medals in Beijing, and the election of our 44th President, Barack Obama. But the year has also provided us with a significant economic meltdown that we will be dealing with in the years ahead. Not to mention that California faces its own challenges with a state budget.

This year has been a true test for Human Resources professionals. We would like to take this moment to thank all of our hardworking HR folks. Maybe no one has taken the time to notice your creativity in keeping staff on board, or just keeping your companies compliant. But we have. Being helpline consultants, we are your silent partners who try to assist you in making sound decisions. Some of the decisions you have had to make this past year have been extremely hard, but significant, for the company.

Unfortunately as of late, the hot topic that our members have been calling about is reduction is work schedules or reduction in workforce and the Employee Free Choice Act. If you have questions, please call us. We are here to assist you through these difficult times. We hope that things do start turning around for all of us in 2009. We would like to address some changes California will be facing in 2009.

No driving while texting
Effective January 1, 2009, the law states, “A person shall not drive a motor vehicle while using an electronic wireless communications device to write, send, or read a text-based communication.” However, it is not considered a violation of the law if one “reads, selects, or enters a telephone number or name in an electronic wireless communications devise for the purpose of making or receiving a telephone call.” The law does not apply to emergency services professionals operating authorized emergency vehicles in the course and scope of their duties. Although the new law does not impose any specific requirements on California employers, you should still consider putting together a policy on text-messaging while driving and conducting company business. In the policy, you should state clearly that any fines or penalties for violating the new law are the employee’s responsibility.

Computer profession overtime exemption
The Labor Code has been amended to exempt from overtime pay eligibility only those computer software professionals who earn at least $75,000 annually. The previous law exempts a professional employee in the computer software field from overtime compensation requirements if the employee is primarily engaged in work that is intellectual or creative, the employee’s hourly rate of pay is not less than $36, and the employee meets other requirements. The difference is that the previous exemption did not contain an annual income restriction. This amendment can affect quite a few professionals. So if the employee is paid on a salaried basis, the employee earns an annual salary of not less than $75,000 for full-time employment, which is paid at least once a month, and in a monthly amount of not less than $6,250.

New disability access legislation
Inconsistent interpretations of state law have made compliance with disability-access standards in California difficult. The business community has complained for quite a while about the disability access lawsuits filed by plaintiffs who seem to be more interested in monetary gain than in promoting access for individuals with disabilities. Now the new provisions directly provide damages to plaintiffs only for violation of their personally encountered denial of access, and by offering early court evaluation of the claims’ merits. Plaintiffs will no longer be able to profit by suing establishments they do not intend to use. This is definitely good news for employers in California.

Paycheck rule for temporary workers
Temporary staffing firms that do business in California will now be required to pay temporary employees on assignment at least once a week, regardless of when their temporary assignment ends. Under the new law (California Labor Code Section 201.3), employers also must pay the wages for work performed during any calendar week no later than on the regular company payday during the following calendar week. If an assignment for a temporary worker ends, or is involuntarily terminated, this does not qualify as a termination or discharge. This means that the employers are not required to pay final wages immediately. This new law reverses a California Supreme Court decision stating that under the Labor Code, employers must issue a final paycheck to temporary employees who are involuntarily terminated or discharged on the employees’ last day of work.

Family and Medical Leave Act
Final regulations of the federal Family and Medical Leave Act (FMLA) pertaining to military families and qualifying exigencies have been published. Some of the changes are: “qualifying exigency” is now defined for up to 12 weeks of FMLA leave, and families with active military personnel, such as attendance at official military events or activities; arranging or providing childcare; attending school or daycare meetings; short notice deployment; handling financial and legal matters; and rest and recuperation visits when the soldier is on leave. Additionally, a broader entitlement (up to 26 weeks) to military caregiver leaves.

Americans with Disability Act Amendments Act of 2008 “ADAAA”
Effective January 1, 2009, the ADAAA expands the ADA offering greater protection for disabled employees. More employees will qualify as disabled under the act. ADAAA will have minimal effect on California employers because of compliance obligation under the Fair Employment and Housing Act, which is more favorable to employees than the ADAAA. Nevertheless, multi-state employer operations should still consider the ramification of ADAAA to their operations.

Release of wages claim
Effective January 1, 2009, Labor Code §206.5 was amended, prohibiting release of any wage claim unless payment has been made. The bill added subpart (b), defining “release” to include “requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.” Employers who require employees to certify hours worked prior to receiving pay must confirm the reported hours are correct and allow employees the opportunity to correct their time if necessary.

Physicians paid on hourly basis exemption
Effective January 1, 2009, a licensed physician or surgeon is exempt from overtime if he/she is paid at least the minimum hourly rate of $69.13. These professionals must be primarily engaged in performing duties for which licensure is required.
Passport cards for identification on I-9
The Departments of State and Homeland Security have begun to issue “passport cards” for non-air, international travel. It may be used as a “List A” document to verify employment in accordance with the I-9 form. The passport card attests to the U.S. citizenship and identity of the bearer.

San Francisco commuter benefits
San Francisco employers with 20 or more employees are required to provide commuter benefits, such as employer transportation to employees; up to $110 pre-tax election; and employer-provided transportation pass starting at $45 per month.

Minimum Wage in San Francisco
Effective January 1, 2009, the San Francisco minimum wage increases from $9.36 to $9.79 per hour.

USCIS finalizes Form I-9 documentation regs
The U.S Citizenship and Immigration Services (USCIS) released an advanced copy of the interim final regulation revising the list of documents acceptable for completing Form I-9, on December 12, 2008, to take effect 45 days after publication. A revised Form I-9 will be provided after the regulation is published with the current Form I-9, dated June 5, 2007, no longer being available. Furthermore, the M-274, Handbook for Employers, will be revised and posted on the agency’s website.

We look forward to assisting you in 2009 and, as always, appreciate about your continued membership with us. And maybe one day, we will have the opportunity to meet you or facilitate one of your trainings.

By Mia Husfeld,
Senior Consultant and Trainer
and Kimberly Nwamanna, SPHR,
Sr. Staff Consultant and Trainer

Out-of-State Residents and California’s Wage Law

Colorado and Arizona residents who performed some work in California claimed that the more generous California overtime law should be followed when determining their hourly pay for all work performed in California. The employees were originally classified as exempt instructors, but were later reclassified to non-exempt instructors eligible for overtime pay. The Ninth Circuit Court of Appeals sided with the employees and applied California law to their overtime claims, see Sullivan v. Oracle Corporation (2008).

Oracle Corporation employs hundreds of instructors to train customers in the use of the company’s computer software. Oracle originally classified the employees as teachers who were exempt from overtime under the federal Fair Labor Standards Act (FLSA) 29 C.F.R. §§ 541.303(a)-(b), and under California’s Labor Code and regulations, i.e., Industrial Welfare Commission Wage Order 4-2001, Section 1(A)(3)(a). In 2004, Oracle reclassified all of its Instructors working in the United States to non-exempt and started to pay them overtime under the FLSA.

According to the court, Oracle’s reclassification of its instructors may have resulted because of a class action suit decision in 2003. In that California case, Oracle’s instructors claimed they had been misclassified under the Labor Code and the FLSA, see Gabel & Sullivan v. Oracle (“Sullivan I”) (2005). The suit was settled, but payment for out-of-state instructors working in California was specifically not included in the settlement.

Donald Sullivan lived in Colorado and worked for Oracle as an Instructor from June 1998 to January 2004. In 2001 he worked 150 days in Colorado, and 32 days in California, and 52 days in other states. In 2002, he only worked 12 days in California, and in 2003 he worked another 30 days. Other instructors named in the suit from Arizona and Colorado worked similar amounts of time in California. Mr. Sullivan and the others brought suit in state court against Oracle to recover the unpaid overtime, and for other issues. Oracle had the case removed to the federal court in California.

Generally, overtime in California must be paid for work in excess of eight hours in any one day, and for work in excess of forty hours in any one week. Oracle argued that the overtime provisions of Colorado’s overtime law should apply for the Colorado residents and FLSA law for the Arizona resident, since Arizona does not have state overtime laws.

In determining what state law to apply, the federal court followed a 1941 U.S. Supreme Court decision Klaxon Co. v. Stentor Elec. Mfg. Co. In that case the Court decided that a federal court should use the ‘choice-of-law’ rules of the state in which the hearing is conducted; in this case it’s California.

The Ninth Circuit court determined that: “Under California choice-of-law rules, the analysis [in this case] proceeds in three steps. First, the court must determine whether the California law and the potentially applicable law of another state are ‘materially’ different. …As part of resolving this initial question, the court must determine whether each state’s overtime provisions are intended to cover Plaintiffs’ situations. If one state has overtime provisions that would apply to the pertinent situation and another state does not, then the applicable law in each state is materially different. …Second, if the laws are materially different, the court must determine ‘what interest, if any, each state has in having its own law applied to the case.’ …Even if there are materially different laws, ‘there is still no problem in choosing the applicable rule of law where only one of the states has an interest in having its law applied.’ …Third, if the laws are materially different and if each state has an interest in having its own law applied, the court must ‘take the final step and select the law of the state whose interests would be ‘more impaired’ if its law were not applied.’”

The court noted: “Contrary to Oracle’s assertions, the California Labor Code is clearly intended to apply to work done in California by nonresidents. The California Supreme Court has concluded that California’s employment laws govern all work performed within the state, regardless of the residence or domicile of the worker. In Tidewater Marine Western, Inc. v. Bradshaw, …(Cal.1996), the Court wrote, ‘Like the criminal laws ..., California employment laws implicitly extend to employment occurring within California’s state law boundaries[.]’ Oracle relies on two cases to argue that the Labor Code should not be construed to extend to Plaintiffs’ work in California. We find Oracle’s arguments unconvincing.”

The court reviewed Colorado and Arizona law and found that they were materially different than California law. For example, in Colorado the law only requires one and one-half regular pay when an employee works more than 12 hours in a day, or more than 40 hours in a week. Also, Colorado law does not impose a double-pay requirement, as California law does in some instances, nor does it require any overtime pay for work on the seventh consecutive day. Arizona does not have its own state overtime law. The FLSA provides the only overtime requirements for employees in Arizona.

Additionally the court found that Colorado law provides no protection whatsoever to workers performing work outside Colorado. And, protection is provided to Arizona workers by the FLSA, which operates uniformly, as federal law, throughout the country. Arizona has not declared an interest in the wages paid to its residents other than those expressed in the FLSA.

The court held that California’s Labor Code applies to work performed in California by nonresidents of California. This case poses possible costly unanticipated exposure to numerous employers. Employees working in California should be properly classified as exempt or non-exempt using California’s exemption rules. Also, care should be taken to pay overtime in accordance with California law.

A Job Evaluation Program can Save Money

As a weak economy forces companies to find cost-cutting opportunities other than layoffs, a job evaluation program may be the right solution. As labor costs are usually an organization’s biggest expense, a job evaluation system, when combined with an external market program, can help identify pay inequities and excess labor costs. Also, a job evaluation program helps ensure compliance with the Fair Labor Standards Act by allowing companies to rate jobs based on the position rather than the person occupying the position.

First, let’s review what a job evaluation program is – and what it’s not.

A job evaluation program is a systematic process by which companies assign a “value” or “worth” to a position within the organization; it is at the center of most compensation plans and it can help eliminate pay inequities and maintain a competitive pay structure.

Job evaluation is often confused with job analysis; thought intertwined, they are distinct processes. A job evaluation program is based on the results of job analysis – the process companies use to identify the particular job duties and their relative importance in a given job. Through job analysis, companies can identify and document internal and external elements where the job duties are being performed, as well as job complexity, contacts, interpersonal relationships, mental and physical requirements, experience, education, etc. A job evaluation, on the other hand, will use such information to assign value to of the factors identified. Then, from the values assigned, it will create a hierarchy matrix with respective pay levels that are generally derived from market pay data.

A job evaluation programs should not be confused with performance evaluation. As with job analysis, companies quite often confuse the concepts, and although an effective performance appraisal program is generally founded on the results of solid job evaluation, the focus of a job performance evaluation program is to rate how well employees are performing the functions of the job and not the actual evaluation of the position.

Quite often, companies are reluctant to undertake a job evaluation program, as the process requires significant time and commitment. However, the end result can help ensure sound financial discipline in how a company rewards its workforce.

Elements of a job evaluation program can be summarized as follows:

• First, choose the right job evaluation method: from simply ranking the existing jobs to the far more complex programs based on point-factor systems, there are many job evaluation systems. Which one is right for you? Ranking methods usually are easier and quicker – but they generally work in smaller organizations with few grades and job families where job functions are well understood and observed. However, for a larger, more complex and elaborate organization, ranking alone will not work. Most often, companies may want to use a combination of the two to obtain the necessary information to properly evaluate the position.
  
  
• Second, collect the necessary job information: either from the results of a job analysis program or, as is often done, from written job descriptions. In using job descriptions, extreme care should be exercised to make sure that the job description truly describes the actual position with detailed information about the position’s essential job duties and key requirements.
  
  
• Third, select an Evaluation Team: who will be responsible for evaluating the jobs? HR? Most often it is best to secure the assistance of various departments, as their expertise can help highlight essential job functions that if undetected, may undermine the results of the program.

As the jobs are evaluated and results reviewed, companies will immediately begin to find pay inconsistencies and other pay “issues” that will often lead the organization to restructure its compensation policy. For example, the process may determine that a position that may have been considered to require a college degree may actually only require an AA degree with commensurate compensation levels. In other cases, the organization may be able to identify critical skills that previously may have been obscured by improperly written or outdated job descriptions. Although companies usually abstain from making changes to an individual’s pay based on the results of the evaluation program, in most cases the company may have an opportunity to implement changes that could result in a more effective and fiscally sound pay policy.

In summary, job evaluation programs can help organizations evaluate the value of their jobs relative to other positions in the organization and detail the required knowledge, skills, and abilities needed to perform the jobs, including the difficulty in performing the job. Often with such information, companies are better equipped to set salary levels, monitor their existing compensation plan for competitiveness, and implement sound and effective pay policies.

For more information on Employers Group’s Total Rewards, Compensation or Employee Benefit programs, including consulting, research, surveys, and benchmark reports, please contact me via email at jgarcia@employersgroup.com. I am available to discuss your needs to determine how Employers Group’s services may help your organization.

By Juan Garcia,
Director of Research

EG’s Lean Institute Nets Results for 3 Companies

This past year, Employers Group introduced its Lean Institute, which allows members to streamline processes, increase productivity and add value to the customer while receiving state subsidies to pay for the program. Additionally, through the Institute, the company selects internal champions to become facilitators, thereby sustaining the gains and enabling them to continue identifying additional projects in which to make enhancements.

Of the companies who have used EG’s state-funded training program, there are three that are notable for the strides they have made in implementing lean.

Victory Foam
A manufacturer of foam products, Victory Foam is located in the city of Tustin in Orange County. They were outgrowing their facility at a rapid pace and space was scarce. Something needed to be done. After a lean orientation meeting with the operations team, it was decided that a workplace organization Five S (5S) project was needed to free up space, and to get things organized and improve overall workflow. In a three-day program, the team began the project in the receiving and inventory department.

The team focused on Sorting out all of the “stuff” that was laying around. The area was not in bad shape; however, when you live in a place day in and day out, you do not always recognize what is necessary and what is not. All the unnecessary “stuff” was moved out of the workspace (disposed of, sold or given to an employee).

The team then formally designated a storage or staging area for each of the items that were left. This step is called Stabilize. The locations for storage were clearly marked with a label so the next person would know where things were to be stored, and in some cases, what quantities should be stored. When they were done, it was a no-brainer: anyone could enter the area and within a few minutes know what belonged where, and at the same time, could easily identify what was missing.

The team then began cleaning; they cleaned, dusted, mopped, and scoured, which is the Shine, and third phase, of the Five S process. They also identified the sources of the grime and discussed how they could either eliminate it, or manage it so that it wouldn’t get out of hand again.

The Victory Foam team then launched the fourth phase, Standardize. They created a color code that would designate walkways, storage for tools and materials, staging areas for scrap or non-conforming product, etc. Lastly, the team developed a strategy to ensure that these changes stayed in place. They created ways to evaluate and self-police their areas to Sustain the gains, the fifth S. Before they knew it, the team’s involvement in this project moved throughout the facility and other departments began participating.

The company saved money, space, and time, and they learned that lean is a continuous process that never stops. They’re still at it, and always will be – because Victory Foam, is now a lean organization! Victory Foam was nominated for the EG Lean Institute Award for their efforts.

Neyensch Printers
Located in San Diego, this printing company has been in business for more than 100 years, but today they are performing like a pup! Their plan was to conduct a pilot project and focus on their small press department. They went through the same processes as Victory Foam, and have received many of the same successful results of their implementation. They have everything it takes to be a successful lean company: the right attitude and fantastic employees.

Their results and attitude have been very impressive. Neyensch Printers was also nominated for the EG Lean Institute Award for 2008.

Intelligent Technologies (ITECH)
The company is a small manufacturer of power storage systems located in the Sorrento Valley area of San Diego. They embarked on a multi-stage lean initiative with a serious level of conviction. In fact, their company president received certification to be their internal champion and facilitator of lean initiatives. So far, ITECH has conducted three lean events.

The first was a 5S event in their Field Repair Department; that set the tone for the other departments who could not wait for their turn to participate. The supervisors from other areas were so impressed by what the pilot team had accomplished, that they “grilled” the participants from the pilot team for the What, Why, and How. So much sharing took place that they began to adopt and implement 5S in work areas. ITECH experienced firsthand that lean is contagious and that it should not be attempted if you don’t want better workflow and productivity to spread through the organization.

ITECH’s second event was focused on process-reengineering one of their product lines where they transitioned their production area from a traditional assembly line-type configuration to a continuous flow work cell. After the event, they had doubled their productivity and increased their overall efficiencies. Because of the significant gains, ITECH has planned for additional lean events to occur in the future. Best of all, they are using EG’s state-funded training program to pay for them. Because of their efforts and continuous commitment to improvement, ITECH has likewise been selected as the 2008 winner of the EG Lean Institute ETP Project Award.

If you are interested in learning more about lean, please email me (dburkhart@employersgroup.com) for a white paper to learn what lean can do for your organization.

By Dave Burkhart,
Senior Training Specialist

Spices, Legumes, and Employee Wellness

In the area of health, companies and employees are on the same page – both groups want employees to get healthier. Obesity and other health problems are costing American companies billions of dollars annually in medical expenditures and work loss. Two comprehensive scientific reviews identified 83 peer-reviewed research studies that all came to the same conclusion: Employees with unhealthy eating habits have higher medical costs. In the current economic crunch, HR needs to find creative and cost-effective ways to solve this problem.

At the same time, the struggling economy is having a powerful impact on the way Americans spend money during the workday, according to a new survey by Vault.com. It found that an estimated 80 percent of workers have changed their workday habits when it comes to food and drink in order to save money. Nearly two- thirds of workers (61 percent) are now bringing lunch from home.

A number of smart companies and HR professionals are seeing the convergence of these two health and money-saving trends as an opportunity to expand their corporate wellness programs – by offering programs known as “lunch and learn” or “brown bag seminars.”

Benefits of employee wellness programs
Employers, whether they are large corporations or small businesses, have realized that making employee health a priority will also make their companies financially healthier by reducing absenteeism and health care costs. In fact, 13 research studies that calculated benefit/cost ratios all showed the savings from employee wellness plans are much greater than their cost, with medical cost savings averaging $3.48 and absenteeism savings averaging $5.82 per dollar invested in employee wellness programs.

When my company, Alamelu’s Culinary Enterprises, began offering culinary consulting and wellness seminars to businesses as part of their employee wellness plans, it soon became apparent to us that blending cooking and eating with health education was an effective way to get employees engaged in new ways of thinking about their diet and fitness. Americans get drilled with health messages all the time in the media. We know what we’re supposed to eat, but the message becomes especially compelling when you prepare healthy ingredients, participate in the cooking of interesting dishes, and then eat them.

Our company's focus is South Indian cuisine. Not only is it my area of expertise, but it is also one of the healthiest cuisines in the world. Many cancer rates in India are lower than those in the U.S., and Alzheimer’s disease is four times lower in that country. A growing body of research suggests that the spices used every day in Indian food – including turmeric, curry, cinnamon, ginger, and cayenne – may have protective benefits against a host of common diseases, including cancer, heart disease, diabetes, arthritis, and Alzheimer’s.

We show employees how to prepare flavorful and aromatic foods that include a broad array of vegetables, legumes, spices, and lean meats. Along the way, employees learn about portions, variety, fats, fiber, nutrients, and a new way to eat.

New ideas for HR
An effective employee wellness program should include a section on food and eating. Here are some elements to consider:

• Do a culinary culture assessment. Have a culinary health consultant assess your corporate culinary culture. Have him or her visit the company’s lunchroom, vending machines, and local eateries to get an idea of what your employees consume on a regular basis.
  
  
• Present recommendations that hit home. Your employees may have already heard many of their eating habits are bad. They already know poor health leads to lower productivity, reduced performance, and higher absenteeism. Instead, ask your culinary health consultant to make specific recommendations to your employees, based on their habits, nearby restaurants and take-out joints, and in-house vending machines.
  
  
• Engage them in hands-on activities. Studies show that learning while engaging multiple senses makes the learner more likely to remember and use the information. That’s why hands-on cooking is such an effective way to teach employees about changing their diet. It’s one thing to tell people they need to eat several servings of fruits and vegetables a day. It’s quite another to show them brand-new, interesting ways to enjoy such vegetables as eggplant, broccoli, spinach, and cauliflower.
  
  
• Give them something they can use. Cooking – especially in a different culinary tradition – encourages teambuilding and gives employees a new skill. In our presentations, even novice cooks learn to prepare vegetables, lean meat, healthful legumes, and flavored rice dishes using a variety of spices. They learn about the health benefits of different ingredients. And they learn to prepare and enjoy a broad variety of vegetable dishes, and discover that vegetable dishes do not have to be bland and boring.

The results? We’ve found that employees report they are more motivated to cook at home, bring healthy lunches to work instead of relying on convenience snacks or fast foods lunches, and they have a new awareness of their dietary habits and the ramifications of making poor dietary choices. Culinary education seminars are part of a growing new trend in corporate wellness offerings to employees, and a smart option for HR professionals to consider.

Alamelu Vairavan conducts corporate culinary wellness seminars and team-building events for such companies as GE Healthcare, Northwestern Mutual Insurance, and Manpower International with her company, Alamelu’s Culinary Enterprises. A leading authority on South Indian cuisine, she is coauthor of a new book, Healthy South Indian Cooking – Expanded Edition (Hippocrene Books, 2008). You can find out more about her at www.curryonwheels.com.