To Corporate America You May Be Better Off Dead Than Alive

[Guest guest]

T

Sat, 23 Apr 2005 21:01:14 -0700 (PDT)

 

 

 

To Corporate America You May Be Better Off Dead Than Alive

 

 

 

 

 

To Corporate America You May Be Better Off Dead Than Alive

 

You may be worth more to your employer dead than alive. Workers are

now learning that with some companies, the phrase " our people are our

greatest resource " might be more accurate than they would have us

believe. Hundreds of employers have taken out, sometimes secretly and

in at least a few cases, illegally, life insurance policies on

thousands of rank and file employees. Wal-Mart Corporation loves its

employees so much that it takes out life insurance on them. But this

is not an insurance policy that pays death benefits to the family of a

deceased employee—instead, it pays the benefit money to Wal-Mart! The

coverage is called broad-based insurance, or corporate-owned life

insurance, usually shortened to COLI or " dead peasant " life insurance.

 

Unlike executive insurance on key management personnel, which is

disclosed to the investor and to shareholders, so-called " dead

peasant " insurance is generally kept hidden from view. Three states

(Florida, Oregon, and Texas) plus Washington, D.C. have statutes that

would seem to bar employers from taking out policies on lower-level

workers. Eight other states require employees consent. Six other

states require the employee to be notified of the insurance policy.

Employers and insurers tried to get around those laws by taking out

the policies in insurer-friendly states. In Texas where Wal-Mart is

being sued for the practice, employees effectively can " consent "

without knowing it, or they can be forced to " consent " as a condition

of getting the job. Wal-Mart is reported to have taken out 350,000 of

these death policies.

 

Given the average mortality rate, Wal-Mart could be " earning " more

than $10 million annually from the deaths of its Texas employees.

Another Texas company took out accidental death policies on its

employees, then reaped a $250,000 windfall when just one was killed in

an accident.

 

What is even worse, corporations like Wal-Mart keep these policies in

effect after an employee leaves the company. So if you work for

several major corporations during the course of your working life, you

might have accumulated-without your knowledge or consent- several life

insurance policies that would benefit your former employers. The way

the companies find out if a former employee dies, is to have the firms

who manage the insurance policies for them run sweeps of Social

Security numbers or " death runs " to uncover who has died every

quarter. The death certificates are located and forwarded to the

insurance company.

 

This is corporate welfare at its most loathsome. Millions of current

and former workers at hundreds of large companies are worth a great

deal to their employers dead, as well as alive, yielding billions of

dollars in tax breaks over the years. Until recently, the premiums

for these policies were considered a tax-deductible business expense,

as with any other employee benefit. This means that the cost was

partially underwritten with tax dollars collected from the same

employees who were working and never saw any of the benefits from the

" dead peasant " policies.

 

And there is more. Proceeds from the insurance policies are not

considered taxable income to the person (or corporation) who receives

it, which means that after taking a generous break for the cost of the

policy, the corporation receives a tax-free gift after its employees

pass away.

 

Representative Gene Green (D-TX) is working to stop these secret

death polices. He has introduced legislation in the U.S. House of

Representatives regarding COLI's. Fifty members of the House have

signed on as cosponsors of H.R. 4551. But the bill lies dormant in the

Commerce, Trade and Consumer Protection Sub-Committee of the House

Energy and Commerce Committee.

 

To mobilize our rank and file members on this issue, the Pacesetter

will have several articles about " dead peasant " insurance and a

postcard for PACE members to mail to the Legislative Office. The

Legislative Department will deliver the cards to the House members in

Congress. We need our Locals to contact their Representatives in

Congress and ask them to support H.R. 4551. Your International

Representative will send an information request to your employer to

determine whether this type of insurance policy is covering your Local

membership.

 

Insurers have so far declined to reveal how many " dead peasant "

policies they have written. Recent lawsuits have turned up evidence

that rank-and-file policies have been purchased by the who's who of

corporate America.

 

The crackdown has already sparked Wal-Mart, Winn-Dixie, Proctor &

Gamble, and other big employers to cancel their policies.

 

Corporate hostility toward universal health care suddenly makes a lot

more sense. It's not just that corporations don't want to pay the

premiums for health insurance, it's because if you are living a longer

healthier life you are bad for their bottom line.

FOR IMMEDIATE RELEASE

October 1, 2002

 

Contact:

Scott Gunderson Rosa, Congressman Gene Green's press secretary, (202)

225-1688

 

Lynne Baker, PACE Intl. Union communications (cell) 615/828-6169

 

PACE International Union Urges Congress to Take Action on Life

Insurance Employee Notification Act

 

Nashville, Tenn.—At a press conference in Washington, D.C. today,

Representatives Gene Green and Martin Frost of Texas and supporters of

the Life Insurance Employee Notification (LIEN) Act urged Congress to

force employers to let their employees know when companies have taken

out insurance on their lives. They also urged the public to ask

congressional candidates whether or not they support the full

disclosure of these corporate-owned life insurance (COLI) policies to

employees.

 

" Most workers don't know if their company has taken out a policy on

their life, " said James " Kip " Phillips, vice president and director of

governmental affairs for the Paper, Allied-Industrial, Chemical &

Energy Workers (PACE) International Union. " The company is the

beneficiary of these policies, so that when the employee dies, the

employer receives tax-free benefits that can be used for anything from

enhancing CEO compensation to boosting corporate profits. "

 

One-quarter of the Fortune 500 companies purchase COLI policies,

which also are known as " dead peasant " or janitor's insurance. A legal

tax shelter, " dead peasant " policies also can earn the corporation

tax-free income as the policies accrue in value.

 

These COLI policies do not have exclusion clauses for war, so that if

an employee covered by such a policy also is a reservist called to

serve in the possible war on Iraq and dies, his or her employer would

still collect tax-free death benefits.

 

Representative Gene Green (D-Texas) has introduced H.R. 4551--the

Life Insurance Employee Notification Act (LIEN)--that would force

corporations that take out life insurance policies on their employees

or the employees' family members to inform the worker of the existence

of the policy and its value. Employers also would be required to

notify former employees or family members of any policy dating back to

January 1, 1985 and to tell existing employees within 90 days of

enactment of the bill.

 

" I support the free enterprise system and I want companies to make

money, but they shouldn't be reaping profits from the deaths of their

employees or former employees, " said Green. " In some cases,

corporations engaged in this activity have as much as 16 percent of

their profits generated through the holding of `janitor's insurance.' "

 

Democratic Caucus Chair Martin Frost (D-Texas) is one of the 51

cosponsors of LIEN, which includes both Republicans and Democrats.

" Our state of Texas has banned these policies entirely, and several

states require employee consent for a company to take out a policy on

their lives, " said Frost. " Requiring disclosure of these policies is

the least we owe American workers, and it's time for the House to act

on this legislation. "

 

Attorney Scott Clearman of Houston, who brought the COLI issue to

light, has argued successfully in court that employees and their

families are entitled to the proceeds of these policies. " If a company

can profit from the death of its employees, will it have sufficient

incentive to protect those employees by investing in adequate safety? "

he asked.

 

Ex-Camelot Music employee Scott Mayo would like to know why his

former employer took out a policy on his life after he actually left

the company. " My first reaction was astonishment, " said Mayo. " I was

astonished that somebody could get away with this. I was under the

impression that if someone has a policy on you, you have to sign off

on that.

 

" It's an unethical breach of business conduct. It's just not the

right way of doing business and treating employees, " said Mayo.

 

Headquartered in Nashville, Tenn., PACE International Union

represents over 320,000 workers in the paper, oil, chemical, atomic,

pharmaceutical, corn milling, kaolin and auto parts industries.

Website: www.paceunion.org.

 

http://www.iplexingtonplant.org/better_off_dead.htm