The Good, the Bad, and the Ugly

Who else but Clint Eastwood could fairly describe the current state of the workers’ comp services industry’s relationship with its employees.

People like Sandy Blunt, Mark Walls, John Plotkin (and many others) and a few service companies are the Good; doing the right thing, serving their customers, working with their employees to continue to improve, grow, develop.  I single out Mark because he spoke to this yesterday, making a plea for service companies to hire as many recently-terminated workers as possible.

If that were only possible – but we’ll get to that in a minute.

There’s also a Bad side; the folks who suddenly find themselves out on the street after working for years to help build a company.  Sure, some of them deserve to be out of a job – not everyone’s a star, and there are certainly more than a few knuckleheads in our business (just as there are in every industry and profession). But this is an inevitable if really bad effect of our business economy, and one hopes these folks can move on and perhaps even move up.

Except there’s the Ugly.

And oh is it ever.

Scores if not hundreds of work comp professionals have become collateral damage from the recent spate of mergers and acquisitions.  Forced/required/strongly urged to sign non-competes after which some were summarily discharged, now unable to find work in a business they actually know something about, they are forced to seek employment in areas where they have few contacts, little knowledge, and less hope.

Why?

Does a billing clerk, or recruiter, or intake specialist, or sales rep or account manager really represent that much of a threat to mega-huge-giganta-enormous-corp?  Sure, a sales rep or account manager might be reasonable expected to sign a non-compete for a limited time in a narrowly-defined niche, and a senior exec with lots of stock and a generous severance package isn’t going to elicit much sympathy.

But the effort on the part of some companies to prevent regular staff workers from getting a job in this business is way beyond the pale.  Many don’t fully realize what they are signing, and shame on them (and sympathy for them, too).  Others feel like the have to in order to keep the paycheck flowing, not realizing that signing a non-compete doesn’t provide them any guarantee that they will keep getting those checks.

Regardless, this isn’t the right thing to do.

Nor is it the smart thing.

Those clerks, sales reps, account managers, billing folks, intake staff all work with payers’  adjusters, case managers and other folks all day every day.  Once they’ve been laid off and their former contacts find out what happened to them, how are they going to feel?  How are they going to relate to mega-huge-gigantic corp? How motivated will they be to do all the little things necessary to get cases referred, bills processed, invoices paid, authorizations completed?  Especially when their fellow staffers read every day about how much money is being thrown around by the bigwigs?

More broadly, society is going thru wrenching changes as the gap between the very wealthy and the rest continues to grow.  This will be even more ammunition for those that believe the moneyed class doesn’t give a rat’s rear end about the rest.

It’s wrong, it’s dumb, and it’s mean.

What does this mean for you?

How would you want to be treated?

26 thoughts on “The Good, the Bad, and the Ugly

  1. Well said, Joe. Kudos to you and to Mark for calling attention to this situation.

  2. Joe, you hit a home run with this article. Its just plain wrong what is happening to our industry. Someone needs to step in and stop the bleeding!

  3. Thanks for highlighting this issue Joe. There are so many great people looking for jobs right now.

    The issue of non-competes is definitely ugly. How can you possibly enforce those when you lay someone off? More often than not, the courts toss these out but it takes time and money to fight them and most employees won’t.

    • you beat me to it Mark.

      re fighting them, how many $45k a year employees can afford to fight those agreements, and how many employers would do so on their behalf?

      • Only the kindest ones. Those for which you work your buns to the bone. If they treat their employees that well, imagine how much their employees will work for them. And imagine how their customers are treated. Culture is everything!

  4. Agree 100% Joe!!!! There is enough business for everyone and you don’t have to harm your employees or ex employees to get it.

  5. Joe – Wiser words have not been spoken on this subject. Ugly is too nice. Look at one of the biggest vendor companies out there. I’m not going to name names. They are in the process of doing just this to a former employee who wanted out – and took the appropriate steps to get out. And the word on the street is the biggest payers out there have had it. It is ONE of the final straws. People look at what they are doing and talk. And talk. And then action is taken to move away from that company. It is happening before our eyes…

  6. And on a side note, any case managers or sales reps looking for work, let us know….and no one has ever signed a non compete here.

    ed. note – contact khillATintegratedcareDOTcom – I normally don’t advertise for others on MCM, but in this instance am only to happy to assist.

  7. So in the big scheme of things; do we know any more news on the pending sell out of Aetna’s/ Coventry Workers’ Comp business? If so, should we be worried at all about non-compete?

  8. Let’s cut to the chase here. With the help of private investment capital and expertise, the vendor services industry has evolved into an extremely efficient and profit-focused hydra. You, Mark, and others who are concerned about the quality folks who are out of work are bringing needed attention to talented folks who want to continue to contribute to the industry. If there is good news, it is that today’s environment will, no doubt, spur a whole new generation of problem solvers. Many of the companies that emerge will ‘do things right’ and will be looking to hire the very folks that you are referring to. In the near term, payers and brokers should mine that talent!.

    One last thing. The lack of transparency with respect to vendor services administrative costs (gross profit) and revenue sharing arrangements is creating a Greshem’s Law within workers’ compensation…the good is getting crowded out by the bad. Perverse financial incentives drive disproportionate profits which funds more vendor consolidation, more layoffs, and more protectionist practices. All the while, claims costs go higher and higher as employers are ‘saved’ and ‘managed’ to death by the hydras.

    • Les’ comment is timely. The comp services industry has become a “military industrial complex” all its own. The value of these services is often hard to quantify with the fees (and accompanying revenue splits) generally charged to the claim and thus the employer that has virtually no control whatsoever. Hydra indeed.

  9. The “big vendor” in question has no qualms about reminding their employee’s during town hall meetings that they will come after you if you violate your restrictive covenant. Keep in mind that these meetings are largely made up of intake personnel and other internal personnel. This is just the tip of the iceberg. The only way to combat this type of behavior is to provide innovative solutions to the payors in the sector. This is the perfect time for a small to mid level ancillary company to take a gigantic leap forward with payors.

  10. Joe,

    You hit the nail on the head. Been there and had that happen. I know it’s just a phrase, and I know you understand, but there are actual people attached to the moniker “collateral damage.” They have real families and real talent and somebody above them may have sucked their means dry for a while, but they will come back. As you and Mark mention, their customers will likely have more insight than their ex-employers. Anyone who does real work and deals with real people, realizes that relationships and integrity are key in the service industry. In this regard size does not matter.

  11. Well stated. Let’s hope the big players see this and understand GOOD FAITH PRACTICES, ESPECIALLY IF THEY PREACH THIS AS THEIR CORE VALUES TO DO THE RIGHT THING! We are sorry to let you go and oh you also cannot get a job within a 50 mile radius or non- compete clause to work for a competitor. Sorry, you can’t pay your bills, keep a roof over your head and your family. Whatever happened to a company that holds integrity at it’s core, and lays you off but helps you find another job?

    SOME MAY REMEMBER A TV SHOW A.L.F.? Remember, “Wake up America!”….or has America forgotten?

  12. I understand the concerns around the “big vendor” in question, as I did have concerns as well. However, service and product offering continue to be solid from my perspective. Non-competes are always scary, but from what I have been told from the reps I work with there, things are good and there is no threatening of positions imminent. In fact, the “big vendor” was recently named “Best places to work” in their hometown, an accomplishment I learned is based on employee feedback. Not sure what that exactly means, but it seems people at home office seem to be happy. Maybe things are not always as they seem and time will tell.

    • Well, always good to hear another perspective, especially one from an “adjuster”.

  13. Maybe a WC defense attorney(s) with experience in employment law could step up and offer pro-bono work to anyone who signed one of these non-competes and was shortly thereafter laid off due to all these mergers and buy-outs. Seems like a great way for an attorney to create goodwill and market your services to the WC industry. And if that is asking too much then how about we put together a fundraiser golf tournament to be held at National WC to offset/cover the litigation costs of battling these suspect non-competes.

    Asking someone to sign a non-compete and then terminating them shortly thereafter without just cause is a great injustice whether allowed by law or not.

    • Great idea. But the real fight should be against the company or companies that doesn’t want good folks to earn a living just because they are fearful of their “secrets” getting out. Payers can take a stand and let them know their thoughts. People can voice their concerns. The big company in question needs to know that we are aware of what they are doing, and we don’t agree with it. Even individuals that choose to leave due to mergers and leadership changes should not be in fear that they will be chased down and possibly out of job. If someone wants to leave the company should let them leave. If they want their staff to stay, make the company worth working for and loving.

  14. It is easy to look from the outside and make assumptions on what has happened and why someone chose’s to leave or is let go for good reason in most instances. We will always hear the bad from those who are unfortunately one of these folks, and nothing good about their former employer. There are always two sides to every story. No one and no organization is perfect; people / companies will always protect their individual interest. I don’t think companies are worried about their secrets getting out, because let’s be honest we all know what everyone else is doing in this industry (Thank you Joe!) and it’s not much different than their competitors. A company wants to protect their relationships and does not want to have a former employee have access to a relationship that in most cases was developed when the employee was with the company. You have to wait a year like in 95% of all industries in the US, not just workers compensation.

    • Anon – thanks for the comment.

      I’d suggest that “trade secrets” don’t appear to be the motivation for this. Line employees – desk-level, if you will, don’t have much in the way of trade secrets – however they do have relationships, which in this industry are critical. In addition, preventing workers from taking jobs with competitors robs those competitors of a trained and experienced labor pool, putting them in a disadvantageous position.

      Reminds me of serfs swearing fealty to nobility back in the middle ages…

  15. Your piece on the non-compete dilemma facing an ever growing number of us in the space comes just days after Elon Musk took the extraordinary steps to level the playing field in his competitive market by releasing all previously patent pending technology to his competitors. This incredible selfless act can bring about true change and spark innovation leading to improved possibilities for all. Were the company in our space to reflect on this, perhaps they would not be fearful of competition but rather embrace it and the positive changes that could come from it. The benefits to customer and clients alike are a better legacy to create and leave behind than the disruption to individuals and families.

  16. There will be more people looking for work in the next 30 days as a result of a reorg with the company in question. More folks who were promised long term employment, signed a non comlete and then were let go. Shameful business practices.

  17. Non-competes are everwhere. It is a good idea to check each state’s stance on such contracts. As it turns out, there are states where a non-compete has no recourse as they are not recognized by state law and there is no federal jurisdiction over non-competes.

  18. Funny, in the course of my almost 20 years on WC as a sales rep, only 1 of my 4 employers required a non-compete…that was my least favorite sales position job and employer. . As a sales rep it’s all about relationships. Can I go in 1 day and say “we are the best” and the next week go into the same clients and basically say I lied last week and now we are the best? Credibility means everything to me. I value and expect great customer service and the owners at my favorite 2 employers never wanted anyone working for them that didn’t want to be a part of our environment – therefore no non-competes. I was made “CEO of my territory” and just “do the right thing”. Working as part of a team/family for the past 5 + year isn’t even like work, it’s what I get to do, not have to do. Yes, the environment is definitely changing around my “new” company – but as long as my customer service support stays the same and I enjoy what I do, I’ll continue to work hard and when that changes….so will I….but for now I’ll just continue to do the right thing. Non competes just make you keep looking over your shoulder and not feel as invaluable for your hard work in my opinion.