AOL had significant earnings in the fourth quarter of 2013, but chose, despite that fact, to find ways to cut employee benefits. The new proposal — to not provide 401(k) matches to employees until the end of the year in order to not accidentally give contributions to anyone who leaves for a different company — didn’t cause much controversy.
What did was AOL CEO Tim Armstrong’s reasoning for the cut: High risk pregnancies and subsequent births were a drain on the insurance pool.
“We had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general,” he told employees. ”And those are the things that add up into our benefits cost. So when we had the final decision about what benefits to cut because of the increased healthcare costs, we made the decision, and I made the decision, to basically change the 401(k) plan.”
Blaming the babies didn’t sit well with many, especially not one of the women who gave birth to one child, whom she said barely survived a one month early birth. “I take issue with how he reduced my daughter to a ‘distressed baby; who cost the company too much money,” wrote Deanna Fei, wife of one AOL employee, in Slate. “How he blamed the saving of her life for his decision to scale back employee benefits. How he exposed the most searing experience of our lives, one that my husband and I still struggle to discuss with anyone but each other, for no other purpose than an absurd justification for corporate cost-cutting.”
Fei added, “Let’s set aside the fact that Armstrong—who took home $12 million in pay in 2012—felt the need to announce a cut in employee benefits on the very day that he touted the best quarterly earnings in years. For me and my husband—who have been genuinely grateful for AOL’s benefits, which are actually quite generous—the hardest thing to bear has been the whiff of judgment in Armstrong’s statement, as if we selfishly gobbled up an obscenely large slice of the collective health care pie.”
Armstrong has responded to the controversy by reversing the 401(k) policy. He’s also reached out to Fei, who said she has accepted his apology which she characterized as “heartfelt.” Perhaps Armstrong did feel genuinely bad about singling out pregnant women for somehow being a drag on the health of his company, but it appears this wasn’t the first time he discriminated against one.
According to Gawker, when Armstrong was with Google in 2005, he was sued for allegedly discriminating against a pregnant employee, whom he first demoted then fired because she said she couldn’t travel for a few weeks due to her condition of being pregnant with quadruplets. “He demoted [Christina] Elwell the same month that she lost two of her unborn children. He told colleagues she was moved to operations because she could not travel, he called her an ‘HR nightmare; and said he no longer wanted her in the New York office, and eventually fired her over the phone. To inform her about the demotion, ‘Armstrong showed Elwell an organizational chart from which Elwell’s position had been deleted.’”
The lawsuit was dismissed due to a rule in the contract stating all disagreements must go through arbitration, but the case shows a disturbing history of a man that sees pregnancy and birth as an economic drain on businesses that must either be avoided or compensated for by employees through some other means.
It is because of employers like this that we need to continue to focus on passing more laws prohibiting discrimination against pregnant people in the workplace, such as the one that just passed in New York City. It’s also why, no matter how much better insurance coverage becomes under Obamacare, we need to work towards real insurance reform that disassociates our health insurance from our employment. When employers see a rising expense, regardless of its necessity, they are going to cut somewhere else to try to keep a large profit intact. Our health, and the health of our families, should never come at the expense of other employee benefits.
“Distressed babies” should never be able to be used as an excuse to roll back employee assistance, either legitimately or as a smoke screen.
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