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The Rise of the Worker Productivity Score

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The Rise of the Worker Productivity Score

In lower-paying jobs, the monitoring is already ubiquitous: not simply at Amazon, the place the second-by-second measurements turned infamous, but in addition for Kroger cashiers, UPS drivers and tens of millions of others. Eight of the ten largest non-public U.S. employers monitor the productiveness metrics of particular person staff, many in actual time, in line with an examination by The New York Instances.

Now digital productiveness monitoring can be spreading amongst white-collar jobs and roles that require graduate levels. Many staff, whether or not working remotely or in individual, are topic to trackers, scores, “idle” buttons, or simply quiet, always accumulating data. Pauses can result in penalties, from misplaced pay to misplaced jobs.

Some radiologists see scoreboards exhibiting their “inactivity” time and the way their productiveness stacks up towards their colleagues’. At firms together with J.P. Morgan, monitoring how staff spend their days, from making telephone calls to composing emails, has develop into routine apply. In Britain, Barclays Financial institution scrapped prodding messages to staff, like “Not sufficient time within the Zone yesterday,” after they triggered an uproar. At UnitedHealth Group, low keyboard exercise can have an effect on compensation and sap bonuses. Public servants are tracked, too: In June, New York’s Metropolitan Transportation Authority advised engineers and different staff they may work remotely in the future per week in the event that they agreed to full-time productiveness monitoring.

Architects, tutorial directors, docs, nursing residence staff and attorneys described rising digital surveillance over each minute of their workday. They echoed complaints that staff in lots of lower-paid positions have voiced for years: that their jobs are relentless, that they don’t have management — and in some instances, that they don’t even have sufficient time to make use of the toilet. In interviews and in lots of of written submissions to The Instances, white-collar staff described being tracked as “demoralizing,” “humiliating” and “poisonous.” Micromanagement is turning into commonplace, they mentioned.

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However probably the most pressing grievance, spanning industries and incomes, is that the working world’s new clocks are simply flawed: inept at capturing offline exercise, unreliable at assessing hard-to-quantify duties and susceptible to undermining the work itself.

UnitedHealth social staff had been marked idle for lack of keyboard exercise whereas counseling sufferers in drug remedy services, in line with a former supervisor. Grocery cashiers mentioned the strain to shortly scan objects degraded customer support, making it tougher to be affected person with aged customers who transfer slowly. Ms. Kraemer, the chief, mentioned she generally resorted to doing “busywork that’s senseless” to build up clicks.

“We’re on this period of measurement however we don’t know what we must be measuring,” mentioned Ryan Fuller, former vp for office intelligence at Microsoft.

The metrics are even utilized to religious take care of the dying. The Rev. Margo Richardson of Minneapolis turned a hospice chaplain to assist sufferers wrestle with deep, looking questions. “That is the massive take a look at for everybody: How am I going to face my very own dying?” she mentioned.

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Allina Well being

The Rev. Margo Richardson Hospice chaplain

Every morning, Ms. Richardson and her colleagues needed to mission what number of “productiveness factors” they might accumulate throughout the day’s work. However dying defied planning.

Tamir Kalifa for The New York Instances

However two years in the past, her employer began requiring chaplains to accrue extra of what it referred to as “productiveness factors.” A go to to the dying: as little as one level. Taking part in a funeral: one and three-quarters factors. A telephone name to grieving relations: one-quarter level.

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As these practices have unfold, so has resistance to what labor advocates name one of the crucial important expansions of employer energy in generations. TikTok movies supply recommendations on outsmarting the techniques, together with with a “mouse jiggler,” a tool that creates the looks of exercise. (One in style mannequin is known as Liberty.) Among the most carefully monitored staff within the nation have develop into a number of the most restive — warehouse staff making an attempt to unionize, truckers forming protest convoys.

However many employers, together with makers of the monitoring expertise, say that even when the small print want refining, the apply has develop into invaluable — and maybe inevitable.

Monitoring, they are saying, permits them to handle with newfound readability, equity and perception. Derelict staff will be rooted out. Industrious ones will be rewarded. “It’s a technique to actually simply deal with the outcomes,” quite than impressions, mentioned Marisa Goldenberg, who ran a division of the corporate Ms. Kraemer joined, and mentioned she used the instruments carefully.

Some employers are making a commerce: “If we’re going to surrender on bringing folks again to the workplace, we’re not going to surrender on managing productiveness,” mentioned Paul Wartenberg, who installs monitoring techniques for shoppers together with accounting companies and hospitals.

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However in-person workplaces have embraced the instruments as properly. Tommy Weir, whose firm, Enaible, supplies group productiveness scores to Fortune 500 firms, goals to finally use particular person scores to calibrate pay. “The actual query,” he mentioned, “is which firms are going to make use of it and when, and which firms are going to develop into irrelevant?”

Captured on Digicam

Ms. Kraemer, the finance govt, thought she had seen all of it. Years after working at Enron, the power big turned enterprise blowup, she and former colleagues nonetheless held reunions to commemorate what they’d been by. However she had by no means encountered something just like the practices of ESW Capital, a Texas-based group of enterprise software program firms.

She and her co-workers may flip off their trackers and take breaks anytime, so long as they hit 40 hours per week, which the corporate logged in 10-minute chunks. Throughout every of these intervals, at some second they may by no means anticipate, cameras snapped pictures of their faces and screens, creating timecards to confirm whether or not they had been working. Some bosses allowed a number of “unhealthy” timecards — exhibiting interruptions, or no digital exercise — in line with interviews with two dozen present and former staff. Past that, any snapshot through which they’d paused or momentarily stepped away may price them 10 minutes of pay. Generally these playing cards had been rejected; generally the employees, realizing the foundations, didn’t submit them in any respect.

Whereas the tracker was on, “you couldn’t select these lavatory or espresso moments — you simply needed to wing it,” she mentioned.

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Matthew Phillp, Copywriter


Matthew Phillp Copywriter

Mr. Phillp misplaced a contract job after refusing to put in Time Physician, software program that might have taken screenshots of his work. He mentioned he discovered it intrusive — and probably deceptive, since he usually works on paper.

Sarah Blesener for The New York Instances

Although Ms. Kraemer didn’t realize it, that software program had been created with a way of promise about the way forward for the office.

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It was a part of a daring plan for streamlining and “redefining the way in which folks work,” as one of many creators put it. Workplace settings had been choked with pointless interruptions, they believed, and constrained by geography from hiring the perfect expertise worldwide. Smartphones and their fixed pings had been a rising risk to focus.

If expertise may optimize productiveness, everybody would profit, the executives mentioned. The corporate would accomplish extra. Staff would carry out higher, then sign off to stay their lives.

To hold out this imaginative and prescient, ESW deployed a agency referred to as Crossover, based in 2014, to rent and handle staff. Wages had been excessive, and advantages sparse: Practically everybody can be contractors, utilizing their very own computer systems. The executives tailored an current tracker into WorkSmart, the software program that positioned Ms. Kraemer and others underneath a dome of digital supervision.

The system drew adherents, as a result of the productiveness good points had been exceptional. Goofing off was excised. In interviews, former supervisors described having newfound powers of close to X-ray imaginative and prescient into what staff had been doing apart from working: watching porn, taking part in video video games, utilizing bots to imitate typing, two-timing Crossover by programming for different companies, and subcontracting their assignments out to lower-paid staff.

Different staff, they mentioned, turned extra environment friendly. “When you see these metrics, these insights, one thing modifications: You notice how a lot you waste doing nothing, or simply multitasking and never engaging in stuff,” mentioned Federico Mazzoli, a co-creator of WorkSmart. Some abroad staff mentioned the intrusions had been well worth the U.S. salaries that enabled them to purchase houses or begin companies.

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However Ms. Kraemer, like lots of her colleagues, discovered that WorkSmart upended concepts she had taken as a right: that she would have extra freedom in her residence than at an workplace; that her M.B.A. and expertise had earned her extra say over her time.

Workdays grew longer for her and others, partially as a result of offline work didn’t depend, but in addition as a result of it was practically not possible to work on-line with unwavering focus. Taking time to mull or bantering with colleagues turned out to be essential to each doing her job and getting by the day, even when these moments went unpaid.

“You must be in entrance of your pc, in work mode, 55 or 60 hours simply to get these 40 hours counted and paid for,” Ms. Kraemer mentioned. Although WorkSmart allowed cost requests for offline work, staff mentioned managers didn’t at all times encourage them. (Executives from ESW and Crossover didn’t reply to repeated requests for remark together with written questions on whether or not any of those practices have since been up to date. However Crossover defends its practices on its web site, saying that its “‘Fitbit’ of productiveness” spurs motivation, accountability and “distant freedoms.”)

Two years after serving to to construct WorkSmart, Mr. Mazzoli began utilizing it. He turned awash in anxiousness and uncertain about its accuracy. “Some days you had been simply shifting the cursor round only for the sake of it,” he mentioned. The device was highly effective however harmful, he concluded. (He left the corporate a 12 months later.)

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Terrence Wise, Inventory department manager with McDonald’s


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Terrence Sensible Shift supervisor

When Mr. Sensible labored at a Kansas Metropolis McDonald’s, he mentioned, stations had been carefully monitored and staff feared “going pink,” or not shifting shortly sufficient.

Chase Castor for The New York Instances

Crossover’s popularity as an employer started to slip, with on-line critiques that warned towards working there. The corporate heard so many complaints in regards to the digital camera skilled on every employee that they eliminated it as a default characteristic, in line with Mr. Mazzoli. Ms. Kraemer left ESW and sued Crossover for unpaid wages for work that its system didn’t monitor. The case was settled for an quantity she is barred from disclosing.

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However WorkSmart’s creators had adopted an concept that was going mainstream. Human sources, as soon as reliant on extra subjective assessments, was turning into extra of an analytics enterprise. Employers had at all times sought to get probably the most out of staff, and a few fields had lengthy recorded billable consumer hours, however this was totally different. “The folks information revolution, predicted for years, has lastly arrived,” proclaimed a 2018 Deloitte report.

Software program makers competed to ship worker rankings, app-activity experiences and color-coded charts exhibiting who was doing what. Even software program that wasn’t designed for productiveness surveillance contributed to it. Microsoft Groups, launched in 2017 and brought up by lots of of tens of millions of individuals, signaled which customers had been “energetic” (inexperienced dot) or “away” (yellow). Salesforce, the main advertising, gross sales and customer support program, logged emails despatched and telephone calls made to prospects. At monetary companies, monitoring software program arrange for compliance causes additionally served up insights on how staff spent their time.

Upwork, a contract market now utilized by podcast producers, accountants and lots of of hundreds of different expert staff, supplied a time-tracking characteristic just like WorkSmart’s that took screenshots throughout each 10-minute billing window. (That is no coincidence: The tracker that impressed WorkSmart is now a part of Upwork.) Freelancers may attempt to clarify screenshots exhibiting moments of inactivity, however as with WorkSmart, some mentioned they submitted solely the unblemished ones, in impact forgoing pay for a few of their labor.

The arrival of the pandemic, spurring companies to maintain tabs on staff at residence, hastened a shift that was already underway. As extra employers adopted the instruments, extra staff shared Ms. Kraemer’s expertise: The software program was warping the foundations of time and belief of their work lives.

Within the spring of 2020, Patrick Baratta graduated from the College of Virginia and started working remotely for AlphaBrook, which supplies analysis on authorities contracting. Quickly the corporate started gauging its staff’ productiveness utilizing a program referred to as Monitask, in line with Mr. Baratta and several other former colleagues.

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As soon as, he mentioned, a supervisor requested why his rating had dropped throughout a specific 10-minute increment. “Generally I’ve to make use of the toilet,” he replied. (Matthew Hastings, AlphaBrook’s founder and chief govt, mentioned the corporate “would by no means assess an worker over simply 10 minutes of their time.”) In interviews and written submissions to The Instances, staff throughout a wide range of jobs — pharmaceutical assistants, insurance coverage underwriters, staff of e-commerce firms — additionally mentioned productiveness strain had led to issues with lavatory breaks.


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Patrick Baratta, Research Analyst with AlphaBrook


AlphaBrook

Patrick Baratta Analysis Analyst

Mr. Baratta, who had not too long ago graduated from faculty, discovered his pc use tracked so carefully that managers inquired a couple of interval when he had been within the lavatory.

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Hilary Swift for The New York Instances

Some firms that adopted monitoring instruments throughout the Covid-19 shutdown maintained them even after returning to work in individual. CoStar Group, a Washington-based actual property information firm the place a good friend of Mr. Baratta took a job, continued maintaining intricate data of how staff spend their time. (One report seen by The Instances had over 20 entries in a single hour of an worker’s day.) CoStar mentioned that these numbers weren’t used as stand-alone instruments and that a greater measurement was the month-to-month rankings of particular person worker output displayed on screens within the workplace.

Bigger, extra established firms are taking related steps. UnitedHealth Group has 350,000 staff, a perch excessive on the Fortune 500 listing and annual revenues of lots of of billions of {dollars}. It additionally has strict techniques for measuring “idle time” that some staff say are deeply flawed.

Jessica Hornig, a Rhode Island social employee who supervised two dozen different UnitedHealthcare social staff and therapists seeing sufferers with drug dependancy and different critical issues, mentioned their laptops marked them “idle” after they ceased keyboard exercise for greater than a short time. They had been labeled derelict throughout delicate conversations with sufferers and visits to drug remedy services.

“This actually killed morale,” Ms. Hornig mentioned. “I discovered myself actually struggling to clarify to all my group members, grasp’s-level clinicians, why we had been counting their keystrokes.”

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In recent times, she mentioned, the scores have develop into much more consequential: On efficiency evaluations, social staff had been rated 1 to five based mostly on the period of time they had been digitally engaged — numbers that affected compensation. Ms. Hornig mentioned her group spent hours every week piecing collectively alternate data however had bother maintaining with out compromising core elements of their job.

Different UnitedHealth staff described related issues. For Linda Eusebi, who works on insurance coverage letters from her residence in Backyard Grove, Calif., compensation is tied to “idle time.” On the finish of the workday when her company-issued pc is shutting down, it generally will get caught in “idle” mode all night time, throwing off her numbers. (She mentioned her managers, conscious of the issues however unable to repair them, started reminding her and others to jiggle their mice throughout conferences and coaching classes.)

Isaac Sorensen, a spokesman for Optum, a division of UnitedHealth Group, acknowledged that the corporate monitored staff however declined to say what number of, and mentioned it thought of a number of elements in evaluations. “We all know there is no such thing as a single measure to completely assess group productiveness or particular person efficiency,” he mentioned.

For pissed off staff, or for firms navigating what to speak in confidence to staff or easy methods to deploy metrics in pay or firing selections, the legislation supplies little steering. In lots of states, employers have “carte blanche in easy methods to implement these applied sciences to surveil staff,” mentioned Ifeoma Ajunwa, a legislation professor on the College of North Carolina.

Lots of at the moment’s office laws, together with the Honest Labor Requirements Act of 1938, had been written lengthy earlier than “backside performer” dashboard shows had been conceivable. A New York legislation that took impact this spring requires employers to reveal the kind of data they acquire. However efforts to enact an analogous rule in California stalled amid opposition from enterprise teams.

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“The expertise is simply rising and enhancing so shortly,” mentioned Brian Kropp, the pinnacle researcher for Gartner, a human sources consulting agency. “It’s shifting sooner than staff notice it’s, and an entire lot sooner than authorities can regulate it.” Funding in new office applied sciences has been hovering, in line with Jason Corsello, a enterprise capitalist, who referred to as “efficiency administration” one of many fastest-growing classes, with an eightfold improve in funding within the final 5 years.

However the march towards ever-tighter monitoring can be encountering some limits. Some firms have rejected the strategy outright, and earlier this 12 months, Amazon quietly eased again on the best-known, and most criticized, productiveness metric within the American office.

For years, Amazon’s “break day process” coverage recorded warehouse staff’ each pause and resulted within the firing of extremely praised staff after one unhealthy day. With unionization efforts underway on Staten Island and new California laws on warehouse metrics, Amazon reformulated its guidelines. The corporate nonetheless calculates each employee’s “price,” or tempo. However the time period “break day process” has been retired, in line with Kelly Nantel, a spokeswoman, and managers have been directed to look solely into “idle” intervals longer than quarter-hour. The up to date guidelines, she mentioned, are supposed to acknowledge that staff might have to consult with a colleague or spend a number of further minutes within the restroom — in different phrases, to raised replicate folks’s pure habits and cadences.

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‘Non secular Care Drive-Bys’

Within the first month after becoming a member of the group of hospice chaplains in Minnesota, the Rev. Heather Thonvold was invited to 5 potlucks. To endure the fixed sorrow of the work, the greater than a dozen clergy members ministered to 1 one other. Generally the cantor within the group performed guitar for his largely Protestant colleagues. There was consolation in relating to their work as a calling, a number of of them mentioned.

In August 2020, the productiveness revolution arrived for them in an e mail from their employer, a nonprofit referred to as Allina Well being.

“The timing is just not preferrred,” the message mentioned, with the group already strained by the pandemic. However workloads diverse too extensively, and “the stark actuality at this level is we can not wait any longer.”


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Sara Cooksey, tktk with marketing agency


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Ms. Cooksey craves larger monitoring, she mentioned, as a result of she suspects {that a} colleague on her group is doing far lower than she is. “There’s no accountability after we’re working from residence,” she mentioned.

Eva Marie Uzcategui for The New York Instances

Allina was already maintaining monitor of productiveness, however now there can be stricter procedures with increased expectations. Each morning the chaplains would share on a spreadsheet the variety of “productiveness factors” they anticipated incomes. Each night, software program would calculate whether or not they had met their targets.

However dying defied planning. Sufferers broke down, canceled appointments, drew remaining breaths. This left the clergy scrambling and in a perpetual dilemma. “Do I see the sufferers who earn the factors or do I see the sufferers who actually have to be seen?” as Mx. Thonvold put it.

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On the chaplains’ conferences, they shared their apprehension. The kind of consideration and care that had drawn them to this work may impede their level totals, they advised their managers. The dying had been usually lonely, and the issue of journey throughout the pandemic left them extra remoted. Some requested questions with no brief solutions, like “What’s it prefer to die?” Ms. Richardson mentioned.

“Folks’s total life experiences come into play,” she continued. “You get all of it: the tears, the anger, the guilt.”


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Isaac Kohen, VP of R&D with Teramind


Teramind

Isaac Kohen Vice President for Analysis & Improvement

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Mr. Kohen’s firm gives surveillance for compliance causes — but in addition “stay montage” and “newest snapshot” views of staff’ screens.

Scott McIntyre for The New York Instances

Generally the chaplains sacrificed factors, risking reprimand or making an attempt to make them up later. However their jobs relied on assembly the requirements. So that they shifted whom they noticed when, the time they spent and the depth of their relationships with the dying, some mentioned. Group settings like nursing houses had been wealthy sources of factors. Single sufferers in houses dotting the larger Minneapolis-St. Paul space weren’t.

“That is going to sound horrible,” Mx. Thonvold mentioned, “however each once in a while I might do what I regarded as ‘religious care drive-bys’” to rack up factors. If a affected person was sleeping, “I may simply speak to the nurse and say, ‘Are there any considerations?’ It counted as a go to as a result of I laid eyes.”

However final summer time, Ms. Richardson and Mx. Thonvold got here to the identical conclusion: The metrics prevented them from fulfilling their calling. They give up.

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Allina’s director of hospice, Lisa Abicht, mentioned in an announcement that the corporate was “extraordinarily pleased with the high-quality and compassionate hospice care” its groups present. For the reason that productiveness modifications, she mentioned, staff’ targets and efficiency had been extra clear, workloads had been extra balanced, and “affected person satisfaction scores” and “worker sustainable engagement” scores had been up.

The productiveness mission, she mentioned, had been successful.

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Column: Good riddance to the merger of grocers Albertsons and Kroger, which would have cost you money

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Column: Good riddance to the merger of grocers Albertsons and Kroger, which would have cost you money

The inside stories of messy marriage breakups have been an entertainment staple since even before Tolstoy observed that “every unhappy family is unhappy in its own way.” So let’s thank the supermarket giants Kroger and Albertsons, whose $24.6-billion merger has collapsed amid mutual recriminations, for their outstanding contribution to the genre.

The proximate cause of the breakup was the granting of a preliminary injunction against the deal by U.S. Judge Adrienne Nelson of Oregon. Nelson’s ruling, issued Tuesday, was a response to a motion by the Federal Trade Commission, the District of Columbia and eight states including California. (A state judge in Washington also ruled against the merger the same day.)

Although the two companies had fought the challenges to the merger seemingly hand in hand, their accord dissolved within 24 hours of Nelson’s ruling. Boise, Idaho-based Albertsons sued Kroger on Wednesday, citing the latter’s alleged “failure to exercise ‘best efforts’ and to take ‘any and all actions’ to secure regulatory approval” of the deal.

The overarching goals of antitrust law are not met by permitting an otherwise unlawful merger in order to permit firms to compete with an industry giant.

— Federal Judge Adrienne Nelson, blocking the Kroger/Albertsons merger

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Kroger called Albertsons’ claims “baseless” and cited its would-be spouse’s “repeated intentional material breaches and interference throughout the merger process, which we will prove in court.”

Those of us who have followed the deal from its inception in 2022 can add this: “Good riddance.”

The collapse of the supermarket merger may stand as the final antitrust success of the Biden-era FTC, which has taken a hard line toward industry consolidations under Chair Lina Khan. Donald Trump is planning to nominate Andrew Ferguson, an FTC commissioner and conservative lawyer, as the agency’s chairman. Khan will be stepping down.

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The two grocery chains maintained that they needed to merge in order to successfully compete with megastore chains such as Walmart and Costco, which have grown their grocery operations to the point that their sales approach those of Albertsons and Kroger or even exceed them.

The truth is, however, that the squalid nature of this transaction was always self-evident. As I wrote after the original announcement, the merger partners pitched it to the public as a boon to consumers. Merger partners always say this, but the consumer savings and service improvements generally prove elusive.

“We will take the learnings from each company to bring greater value and a better experience to more customers, more associates and more communities,” Kroger Chief Executive Rodney McMullen said then.

McMullen didn’t explicitly say that the deal would mean lower prices, but it would be a rare shopper who didn’t think that “greater value and a better experience” meant anything other than paying less at the checkout counter. Economists and antitrust experts predicted that the creation of a monopolistic supermarket giant would almost surely add inflationary pressure to food prices.

At the heart of the merger, as I further reported, was a $4-billion dividend to be paid to Albertsons stockholders. Six of the largest stockholders were corporate insiders, defined as holders of more than 5% of Albertsons shares each.

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The biggest shareholder was the private equity firm Cerberus Capital Management, which owns more than 26% of the shares and has four nominees on the company’s board of directors. The other five are investment and real estate funds that hold a total of an additional three board seats.

The six investors control about 75% of Albertsons shares. In other words, they voted themselves a multibillion-dollar handout.

Albertsons had claimed that the dividend wasn’t connected to the merger but was “part of Albertsons’ long-term strategy for growth,” which was “determined well before Albertsons’ discussions with Kroger began.”

Yet the companies’ own merger announcement had stated explicitly that the $4-billion dividend was “part of the transaction.” They counted the dividend as part of the merger price, accounting for $6.85 per share of the $34.10 per share payable to Albertsons shareholders. The dividend was approved by the Albertsons board at the very same meeting at which it approved the merger deal itself.

It should go without saying that funneling $4 billion to insiders off the top wasn’t going to make it any easier to bring consumers lower prices at the checkout counter.

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Then there was the issue of Albertsons’ corporate conduct. In October, Albertsons reached a $3.9-million settlement with the attorneys general of Los Angeles County and six other California counties as well as the FTC over accusations that the chain ripped off customers at hundreds of its Vons, Safeway and Albertsons stores in California. The company didn’t admit to liability in settling the case, but the terms of the final judgment suggest that the counties and the FTC had the goods — or at least had enough evidence that Albertsons thought it wise to make the case go away.

Albertsons says it has now implemented policies and employee training to ensure that its prices are accurate.

The principal issues raised by the FTC and the states concerned the prospects that the merger of America’s two biggest supermarket chains would allow them to dominate their markets as a monopoly or near-monopoly. That pointed to higher prices for customers and lower wages for workers, which are legitimate concerns for antitrust regulators.

Kroger, the largest chain, operates about 2,700 stores in 35 states and the District of Columbia, under brand names including Ralphs. Albertsons’ footprint encompasses about 2,300 stores under names such as Vons, Pavilions and Safeway. As Judge Nelson observed, the two chains have assiduously competed with each other for years, tracking each other’s prices in an effort to seize market share.

To meet the FTC’s objections, the merger partners proposed selling 579 stores to C&S Wholesale Grocers, a privately held supermarket supplier headquartered in New Hampshire that is a tiny fraction of the merger partners’ size — among other metrics, it has about 14,000 employees, compared with 430,000 employees at Kroger and 285,000 at Albertsons. The sale price was to be $2.9 billion.

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Such divestitures are common features of merger deals that face regulatory challenge. But they don’t always meet their goal of preserving competition. A good example is the outcome of a divestiture scheme the FTC ordered in 2014, to mitigate the anticompetitive effects of Albertsons’ takeover of Safeway.

The FTC ordered the divestiture of 168 stores. More than 140 were acquired by Haggen Holdings, an 18-store chain in the Pacific Northwest. As it happened, Haggen was utterly ill-equipped to grow nearly tenfold overnight. Within months it was laying off workers, and before the year was out it had filed for bankruptcy.

Haggen put 100 of the stores back on the block, and 54 of them were reacquired by Albertsons as part of a deal to purchase Haggen outright. Even with the repurchases, the merger resulted in the elimination all competition in some communities.

That history gave Nelson pause when she assessed the new divestiture plan. C&S, she noted, didn’t have very happy experiences when it “dipped its toes into the grocery retail industry before.” The wholesaler bought 220 retail stores between 2001 and 2003, but had sold 190 of them by 2005. The company operates about 25 retail stores under the Piggly Wiggly and Grand Union brands; unlike Kroger and Albertsons, which incorporate pharmacies and gasoline stations into many of their locations, C&S operates only one pharmacy and no gas stations.

In short, Nelson observed, “there are serious concerns about C&S’ ability to run a large-scale retail grocery business that can successfully compete” with a merged Albertsons/Kroger. Among other issues, she wrote, C&S would have to re-brand about half the stores, a process that is “effectively the same as opening a new, unfamiliar grocery store in the eyes of consumers.” C&S didn’t respond to my request for a comment on Nelson’s take, though a spokeswoman told me by email that the firm is still committed to a “transformation strategy, which includes expansion into retail.”

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As for the merger partners’ assertion that their deal was a defensive move against competitors such as Walmart and Costco, Nelson was unmoved. “The overarching goals of antitrust law are not met,” she wrote, “by permitting an otherwise unlawful merger in order to permit firms to compete with an industry giant.”

With the merger dead, the squabbling between the former partners is just beginning. Under their original deal, Albertsons is entitled to a $600-million breakup fee. But it says it will be seeking billions of dollars in costs, due in part to “the extended period of unnecessary limbo Albertsons endured as a result of Kroger’s actions.” Among other things, Albertsons’ asserted that Kroger dithered on divestiture deals that might have met the FTC’s objections.

In response, Kroger said it “went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear.”

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Van Nuys landscaping company fined for 'serious' and 'willful' heat violations

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Van Nuys landscaping company fined for 'serious' and 'willful' heat violations

A Van Nuys-based landscaping company has been fined more than a quarter of a million dollars for “deliberately and knowingly” failing to follow state heat protection rules.

The company, Parkwood Landscape Maintenance, must pay $276,425 for failing to provide employees with access to water, shaded area and proper training on preventing heat-related illness, according to the California Division of Occupational Safety and Health, known as Cal/OSHA.

The landscaping company lacked written procedures for how to protect employees in high temperatures that often exceeded 95 degrees, and employees were forced to purchase their own drinking water, in violation of the rules, which require that employers provide fresh drinking water free of charge, the Cal/OSHA citation said.

The citation marks the first time the workplace safety agency has issued its most severe charge for a heat safety violation, determining the violations were “serious” and “willful.”

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A violation is categorized as serious if it could result in injury, illness or death and classified as willful if the employer knew there was a health hazard and took no action to protect against it or had been previously cited for failing to take action, said former Cal/OSHA investigator Garrett Brown, who retired in 2014 after 20 years with the agency.

Parkwood Landscape was cited previously, in 2022, for failing to meet heat safety requirements. Despite being provided with information on how to change its procedures, the company did not implement necessary preventative measures, Cal/OSHA said.

“Employers have a responsibility to protect their workers from the dangers of extreme heat. It is unacceptable for any business to blatantly ignore safety protocols, putting their employees at serious risk,” Cal/OSHA Chief Debra Lee said in a news release from the agency.

Parkwood Landscape will have the opportunity to appeal the citation. The company did not immediately respond to a request for comment.

Cal/OSHA began its investigation in June after receiving a complaint about Parkwood Landscape employees working outdoors without access to water or heat illness training.

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The citation represents an effort by Cal/OSHA to better enforce heat standards after fielding criticism that the agency been beset by inadequate staffing and claims of ineffectiveness. The criticisms come as scorching conditions have intensified in recent years due to climate change, endangering farmworkers, construction workers and others who toil in extreme temperatures.

Cal/OSHA is grappling with high vacancy rates and faced condemnation from lawmakers at a February hearing, during which farmworkers testified that they’d been exposed to extreme heat and pesticides on the job. The agency has begun recruitment efforts to fill those positions but remains understaffed and slow at hiring, even as it seeks to enforce a growing list of heat and other safety regulations.

In 2006, California became the first state in the nation to implement heat standards for outdoor work, requiring employers to provide access to shade and water, and cool-down rests when workers need them. In high heat conditions, defined as temperatures of 95 degrees or higher, employers are required to remind workers of safe practices, encourage breaks and drinking water, and observe them for signs or symptoms of heat illness.

Earlier this year the agency adopted new heat protections that apply to indoor workers, expanding safety measures for more than a million workers laboring in warehouses, kitchens, laundry rooms and other hot indoor settings.

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California issues landmark rules to improve home insurance market

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California issues landmark rules to improve home insurance market

Landmark regulations intended to encourage insurers to write more policies in risky wildfire neighborhoods through the use of complex computer models were released Friday by the state.

Under new rules intended to stabilize California’s troubled home insurance market, insurers will be able to set rates by drawing on a wide swath of meteorological, geographic and other data in establishing rates, rather than largely relying on historical losses.

The insurance industry argued the change was imperative given global warming’s role in a number of wildfires, including in 2017 and 2018 when thousands of homes burned down. In setting their rates, insurers also must account for efforts to make properties fire resistant.

“With our changing climate we can no longer look to the past. We are being innovative and forward-looking to protect Californians’ access to insurance,” Insurance Commissioner Ricardo Lara said in a statement.

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The new regulations — a central element of Lara’s Sustainable Insurance Strategy — drew support from the industry and others, including farm and environmental groups, but a mixed response from consumer advocates. Los Angeles group Consumer Watchdog contends that the computer models will be a “black box” that will lead to sharp premium hikes.

The regulations that take effect Jan. 2 arose out of a broad agreement Lara reached with the industry that gave insurers regulatory concessions, including the use of the computer models, in exchange for a commitment by large insurers such as State Farm, Farmers and Allstate to write policies in neighborhoods prone to wildfires equivalent to 85% of their statewide market share. That would mean, for example, an insurer with a 10% share of the state’s homeowners insurance market would have to cover 8.5% of the homes in riskier neighborhoods as identified by the department. No such requirement currently exists.

The changes come as residents living in mountainous and hillside neighborhoods have found insurance harder to come by, forcing them to buy bare-bones policies from the FAIR Plan, the state’s insurer of last resort, which has seen its risk exposure mushroom from $153 billion in 2020 to $458 billion as of September.

The regulations establish a process by which the computer models, which are developed by companies such as publicly traded Verisk Analytics, can be reviewed by the state and the public. The department also said it has hired an expert in a newly created position to oversee the process of “examining model integrity and ensuring public review.”

Consumer Watchdog has argued that the review process will still allow the modeling companies and their client insurance companies to keep essential elements of the proprietary models out of the public’s eye, violating the public review provisions of Proposition 103, the 1988 initiative spearheaded by the group that rewrote the state’s insurance regulations.

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It also contends there are loopholes that will allow insurers to skirt the 85% coverage threshold.

“Consumers should expect large rate hikes but not more insurance policies sold under the new rules,” Carmen Balber, executive director of Consumer Watchdog, said in a statement.

Michael Soller, Lara’s chief spokesperson, disputed the criticisms and said the department’s regulatory review process gives it the authority to prevent unwarranted rate hikes and to ensure that insurers are making progress in meeting the 85% coverage goal.

“We don’t get this done unless we have companies writing policies. If you don’t write the policies, you don’t use the tools,” he said.

Amy Bach, executive director of San Francisco group United Policyholders, acknowledged there was “wiggle room” in the regulations regarding the coverage threshold, but she expected there would be negotiations as insurers file for rate hikes and are pushed to meet the 85% figure.

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“The principle is there, the concept is out there, the deal is out there, and honestly, there’s no other solutions on the horizon that are anywhere close,” she said.

The department noted support from the Environmental Defense Fund, which was quoted stating the models “are essential for modeling perils like flood and wildfire that are now worsening as the planet warms.” Also cited was the California Farm Bureau, which said the models should increase insurance access for farmers.

The American Property Casualty Insurance Assn., a national trade association representing home, auto and business insurers, released a statement that called California’s current insurance regulations “outdated” and “too slow to respond to rapidly evolving conditions.”

“California will continue to have a robust regulatory and rate approval process that guarantees that rates reflect the actual cost of covering claims. We look forward to working with [the department] to implement these new regulations and make sure they are efficient and workable,” it said.

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