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Pair Of Port-A-Potties Departs This Earthly Plane

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Kinja is in read-only mode. We are working to restore service.

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What's Really in Those New Executive Orders? : FedSmith.com

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View this article online at https://www.fedsmith.com/2018/05/30/whats-really-new-executive-orders/ and visit <a href="http://FedSmith.com" rel="nofollow">FedSmith.com</a> to sign up for free news updates

Book on a desk labeled 'HR Policies and Procedures'

Late on Friday afternoon, the White House announced that President Donald Trump had signed 3 Executive Orders that will affect the civil service. They are:

OPM Director Jeff Pon issued a statement saying:

These Executive Orders are about protecting taxpayers’ dollars, including those of our dedicated federal employees, and putting those resources to use in the most efficient and effective way possible. By holding poor performers accountable, reforming the use of taxpayer-funded union time, and focusing negotiations on issues that matter, we are advancing our efforts to elevate the federal workforce. The vast majority of our employees are dedicated public servants who are dedicated to their missions and service to the American people. It is essential that we honor their commitment, and these measures reflect just that. Looking ahead, our focus will be on continuing to leverage technology to digitize our federal human resources infrastructure, build modern public human resources systems for the 21st century, and celebrate the hardworking federal employees who serve our great Nation each and every day.

Reactions to the Executive Orders

The new Executive Orders got a quick reaction from others, with American Federation of Government Employees President J. David Cox saying, “Our government is built on a system of checks and balances to prevent any one person from having too much influence. President Donald Trump’s Executive Orders will undo all of that. This administration seems hellbent on replacing a civil service that works for all taxpayers with a political service that serves at its whim.”

Virginia Congressman Gerry Connolly tweeted, “Trump continues his assault on the federal workforce with today’s executive orders. Attacking unions and demagoguing federal workers won’t help morale. Show the federal workforce that serves all Americans the respect it deserves, Mr. President.”

Heritage Foundation President (and former OPM Director) Kay Coles James tweeted, “Encouraged to see POTUS executive orders for our civil service. These are important reforms and will make our government work more efficiently for taxpayers!”

Impact of the Executive Orders

So what are these Executive Orders? The death of democracy? The salvation of our nation?

Those extremes overstate the impact these orders will have, both good and bad.

With that in mind, this is the first of 2 posts I will write to go through the provisions of the orders. This post will focus on the order streamlining removal procedures, while the next will cover the 2 orders that address union issues. I will highlight key provisions of each order, along with my take on what it means and how it might affect federal workers.

Executive Order Promoting Accountability and Streamlining Removal Procedures Consistent with Merit System Principles

Let’s start with the order titled “Executive Order Promoting Accountability and Streamlining Removal Procedures Consistent with Merit System Principles.”

Section 1 — Purpose.

This section outlines the requirements in the Merit System Principles that employees be held accountable for performance and conduct (Merit System Principles 4, 5 and 6). It goes on to say that employees, via the Federal Employee Viewpoint Survey, have said their agencies do not do enough to deal with poor performers.

Those are both facts, so I do not have anything to add, other than that I agree with the employees.

Section 2 — Principles for Accountability in the Federal Workforce.

This section requires that “removing unacceptable performers should be a straightforward process that minimizes the burden on supervisors” and “agencies should limit opportunity periods to demonstrate acceptable performance under section 4302(c) (6) of title 5, United States Code, to the amount of time that provides sufficient opportunity to demonstrate acceptable performance.”

It goes on to say “Supervisors and deciding officials should not be required to use progressive discipline. The penalty for an instance of misconduct should be tailored to the facts and circumstances.”

After a brief discussion of the reason why discipline should be tailored to each employee’s circumstances, the order states “Suspension should not be a substitute for removal in circumstances in which removal would be appropriate. Agencies should not require suspension of an employee before proposing to remove that employee, except as may be appropriate under applicable facts.”

It goes on to say that agencies should make decisions on proposed removals within 15 days of the end of the employee reply period, and that agencies should use Chapter 75 (adverse action) procedures where appropriate rather than the more common Chapter 43 (performance) procedures when dealing with poor performance. It also reminds agencies that the probationary period is the final step in the hiring process.

A final paragraph says agencies should “prioritize performance over length of service when determining which employees will be retained following a reduction in force.”

There is a lot in this section. The statement about progressive discipline does not actually change anything. There is no requirement to use progressive discipline when it is not appropriate. For example, if an employee physically assaults another employee, and agency could go directly to a removal.

There are other offenses for which removal on the first offense is appropriate. Most agency tables of penalties have numerous offenses where the prescribed penalty for a first offense is “reprimand to removal.”

The part about probationary periods is right on target. Many agencies do a poor job of using the probationary period to weed out employees with conduct or performance problems and probation is, in fact, considered to be the final step in the hiring process. If agencies made better use of probation, many problem employees would go away long before they could become problems.

One of the most interesting provisions in this section is the requirement that OPM rewrite the regulations for reduction in force to “prioritize performance over length of service.” My first thought was that they could not do that because the law requires the current hierarchy of tenure group (career or career-conditional), then veteran preference, then length of service, and finally, performance, in determining RIF retention standing.

The RIF provisions in the United States Code do not appear to specify that those factors be considered in that order. They are listed in that order and OPM regulations prioritize them in that order.

It appears the administration does have the authority to rewrite the regulations to place performance higher in the list of considerations. Putting performance first has already been done in the Department of Defense, based on provisions in the 2016 National Defense Authorization Act.

Section 3 — Standard for Negotiating Grievance Procedures

This section requires that “Whenever reasonable in view of the particular circumstances, agency heads shall endeavor to exclude from the application of any grievance procedures negotiated under section 7121 of title 5, United States Code, any dispute concerning decisions to remove any employee from Federal service for misconduct or unacceptable performance.”

The idea here is that removals would not go through a negotiated grievance procedure (and arbitration), but rather would go to the Merit Systems Protection Board.

This one is much easier said than done. Negotiated grievance procedures are exactly that — negotiated. Unions may not want to agree to such provisions and agencies will not be able to impose them unilaterally. What the president ordered is within his rights as chief executive, but refusing to go along is within the rights of unions. Getting anywhere on this one is going to take a long time.

The bigger question is whether it will actually make a big difference, even if fully implemented. In reality, unions often encourage employees to appeal to MSPB rather than going through the grievance/arbitration process. That is because typically because the union and agency split the cost of arbitration. What we may find is that this provision of the executive order may have little real impact.

Section 4 — Managing the federal workforce

This section lays out a number of things agencies cannot do, including subjecting ratings and awards to a grievance or arbitration process, agreeing to limits on the agency’s ability to use Chapter 75 rather than Chapter 43 procedures, and giving employees more than 30 days notice before a removal.

Like the changes in Section 3, most of this is negotiable. That means nothing will change quickly in response to the executive order.

Section 5 — Ensuring integrity of personnel files

This section says “Agencies shall not agree to erase, remove, alter, or withhold from another agency any information about a civilian employee’s performance or conduct in that employee’s official personnel records, including an employee’s Official Personnel Folder and Employee Performance File, as part of, or as a condition to, resolving a formal or informal complaint by the employee or settling an administrative challenge to an adverse personnel action.”

There are 2 sides of this issue. The first is the idea that agencies should not agree to let a problem employee walk out with a clean record and go to work in another agency. The second is the idea that settlement agreements can save a lot of time and money and get a problem employee out of the agency for good with no risk of being overturned by a third party.

Both arguments have merit. In an ideal world, settlement agreements would include language that an employee would not seek federal employment again, but agencies tend to think about the problem in front of them rather than the problem they might be creating for another agency a year from now. The president has the authority to issue this direction to agencies, but may find that getting them to abide by it is more difficult.

Sections 6, 7 and 8 — Implementation guidance

These sections state that the executive order will need implementing guidance and regulations and that the order does not abrogate collective bargaining agreements.

What does it really do and what does it miss?

This order is unlikely to result in immediate changes that will affect most federal employees. Agencies do not fire large numbers of people and are unlikely to start doing so now.

We may see fewer settlement agreements and agencies taking a harder line on contract negotiations. Employees with performance problems may find they have less time to improve, or, if the agency elects to use Chapter 75 procedures, no time to improve before receiving a notice of proposed removal.

There are a few things that this order could have included that might have made a more immediate difference. For example, rather than getting into a discussion of the merits of progressive discipline (which often works in the agencies’ favor), agencies could have been ordered to update their tables of penalties to make removal the preferred penalty on the first offense for some particularly egregious offenses. For example, if an employee physically assaults another employee, uses certain illegal drugs, or commits other severe offenses, the agency would consider those as mandatory removal offenses in the absence of some compelling individual circumstances.

Another more consequential change would be to focus on the time between the offense and the proposed discipline. The executive order focuses on the time between the proposed notice and the decision, when the reality is that much of the time is often in the gap between an employee doing something and the agency issuing a proposal letter.

It may be months after an offense before the agency gets around to doing something about it. The time lag makes discipline less effective because it is so long after the offense occurred. That time is not typically governed by law, regulations or collective bargaining agreements. Significantly reducing the gap would have the dual benefits of reducing the time to take an action and making actions such as reprimands and suspensions more effective by reinforcing the cause-and effect nature of misconduct and discipline.

The bottom line is that this Executive Order may make a small dent in the problem of dealing with poor performers and misconduct. It may result in changes to collective bargaining agreements at some point in the future.

For the vast majority of federal workers who do their jobs and do not have performance or conduct problems, there is likely to be no impact at all. With respect to this Executive Order — in the words of the British Ministry of Information during World War II, Remain Calm and Carry On.

This column was originally published on Jeff Neal's blog, ChiefHRO.com, and has been reposted here with permission from the author. Visit ChiefHRO.com to read more of Jeff's articles regarding federal human resources and other current events along with his insights on reforming the HR system.

© 2018 Jeff Neal. All rights reserved. This article may not be reproduced without express written consent from Jeff Neal.

Tags: DisciplineDonald TrumpExecutive Order

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Please Pray For The Ukrainian Military Dolphins Who Are Now Dead

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<a href="http://news.bbc.co.uk/2/hi/uk_news/3588465.stm" rel="nofollow">http://news.bbc.co.uk/2/hi/uk_news/3588465.stm</a>

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BBC NEWS | UK | Cold war bomb warmed by chickens

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Bomb shell

The mine would be kept warm by chickens

Plans to fill a nuclear landmine with chickens to regulate its temperature were seriously considered during the Cold War.

Civil servants at the National Archives say it is a coincidence the secret plan is being revealed on 1 April.

The Army planned to detonate the seven-tonne device on the German plains in the event of having to retreat.

Operation Blue Peacock forms part of an exhibition for the National Archives, in Kew, London, on Friday.

Professor Peter Hennessy, curator of the Secret State exhibition, told the Times: "It is not an April Fool. These documents come straight from the archives at Aldermaston. Why and how would we forge them?"

The Civil Service does not do jokes

Tom O'Leary, National Archives

The bomb was designed to stop the Red Army advancing across West Germany during the height of the Cold War.

But nuclear physicists at the Aldermaston nuclear research station in Berkshire were worried about how to keep the landmine at the correct temperature when buried underground.

In a 1957 document they proposed live chickens would generate enough heat to ensure the bomb worked when buried for a week.

The birds would be put inside the casing of the bomb, given seed to keep them alive and stopped from pecking at the wiring.

The landmine would be remotely detonated.

Tom O'Leary, head of education and interpretation at the National Archives, told the paper: "It does seem like an April Fool but it most certainly is not. The Civil Service does not do jokes."

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Businessweek - Bloomberg

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Roberta Blevins likes to talk to strangers. If you’re next to her on an airplane or behind her at the grocery checkout, she’ll notice something about you that she finds interesting and ask you about it. “I’ll be like, ‘Oh, you’re buying apples? I love apples! What’s your favorite kind?’ ” she says. “My husband makes fun of me for it, but it’s like, ‘Sorry I’m so friendly, OK?’ ”

Blevins is 37 and lives with her husband and two kids in Alpine, Calif., a suburb of San Diego. Her chattiness is what led her, in October 2015, to ask a woman she knew through a motherhood-themed Facebook group about the leggings she was advertising online. “I was like, ‘What’s LuLaRoe? I’ve never heard of this company,’ ” Blevins says. The woman explained that she bought clothes wholesale from LuLaRoe and then sold them at roughly double the price. It was a multilevel marketing company, or MLM, sometimes called direct selling. Perhaps she’d heard of the most successful examples: Amway, Herbalife, or Mary Kay?

LuLaRoe makes colorful, patterned clothes—lots of chevrons, stripes, geometric shapes—in benign, loose-fitting styles young mothers might wear to playdates or on a Starbucks run. Mark and DeAnne Stidham say they founded it as a way for women to stay at home and still support their families. Unlike the old Tupperware party days, most of LuLaRoe’s “independent fashion consultants” sell on Facebook.

Blevins was intrigued. She’d been looking for a way to supplement her hairstylist’s income, so she bought a few tunics and pairs of leggings. “I liked them,” she says. “A lot of the styles were stuff I was buying at Target, but this way I felt like I was supporting a real person, a small business.” In March 2016 she paid $9,000 to become a LuLaRoe consultant.

When Blevins talked to people about her new job it didn’t feel like a sales pitch; she just gushed about the clothes. There were only a few thousand consultants back then, and Blevins made money easily. Then LuLaRoe exploded. It declined to say how many people sold its clothes at its peak, but at one point, according to several sellers, it had an estimated 150,000 consultants across all 50 states. The company hit $2.3 billion in sales last year, making the five-year-old brand about the size of J.Crew.

LuLaRoe grew so big so quickly because, right now, there are a lot of women who want to sell leggings on Facebook. According to a 2012 Pew Research Study, the majority of women under age 34 aspire to high-paying careers, but the lack of parental leave policies and the cost of day care often make it difficult for single mothers to hold full-time jobs and lead many two-parent families to drop to one income. Tradition and stunted earning capabilities dictate that most of the time the decision to stay home falls to the woman. Fewer mothers work now than in the late 1990s.

Blevins in the garage of her Alpine, Calif., condo, aka her LuLaRoom.

Photographer: Damon Casarez for Bloomberg Businessweek

It’s not easy, abandoning a career and relying on your spouse (if you have one) for everything. A side business can look appealing. According to the Direct Selling Association (DSA), the industry’s primary trade organization, the number of Americans participating in direct selling jumped from 15.6 million to 20.5 million from 2011 to 2016. Three-fourths of those people are women. You may have seen their pitches on social media. They’re out there hawking skin care (Nu Skin, Rodan + Fields), jewelry (Stella & Dot), fingernail art (Jamberry, Color Street), makeup (LipSense), fragrances (Scentsy), and weight loss plans (Team Beachbody, It Works!). The DSA estimates that the median income for someone participating in these kinds of businesses is $2,500 a year. From the beginning, LuLaRoe pitched itself as the exception: “What does your dream home look like? What car do you dream of driving? What schools do you envision your children attending?” the Stidhams wrote in their From the Founders letter, printed in LuLaRoe’s welcome guide for new retailers. “Where else can you make $50,000 to $100,000 yearly working part time?” Mark, who’s CEO, said in a video talk with consultants last year.

“I didn’t care about the leggings, I just wanted to make money again,” says consultant Adrianne Merkling, a former analytical flavor chemist who had to give up her career when one of her three children was diagnosed with apraxia of speech and needed therapy four times a week. She started selling LuLaRoe clothing in 2016.

Now, she, along with Blevins, are two of thousands of women who claim they’ve been duped by LuLaRoe. In the past year the company has faced more than a dozen lawsuits. The largest, a proposed class action, calls LuLaRoe a pyramid scheme focused on recruiting consultants and persuading them to buy inventory rather than actually selling clothing. Since the lawsuits were filed, consultants have fled LuLaRoe by the thousands. Many say the company owes them millions of dollars in promised refunds. Women have garages, closets, guest rooms—and, in one case, a farm shed—filled with LuLaRoe clothes they say they can’t sell.

As DeAnne often tells it, LuLaRoe began in 2012 when she sewed a maxi skirt for her daughter, then took orders and made skirts for her daughter’s friends, too. “I sold 300 skirts in three days,” she said in a 2015 promotional video. “It was Mark that said, ‘Why don’t we put our heads together? Let’s come up with a business plan that can help other women make money.’ ”

DeAnne, 59, favors bright, girlish clothes and raspberry-colored lipstick. She keeps her Barbie-blond hair long and curled. Mark, her second husband, maintains a trim goatee. Their large, Mormon family, spread across Southern California, can trace its lineage back to one of Joseph Smith’s brothers. DeAnne has 10 siblings, including a twin sister named Dianne Ingram who has her own direct selling clothing company, Piphany, and, confusingly, the same inspirational origin story, right down to the daughter and the style of skirt.

“I don’t know why she tells that story,” DeAnne says. Sam Schultz, their nephew, who was LuLaRoe’s event manager before he grew disenchanted with the company and quit, says Ingram made the skirt. “Dianne was the seamstress. She actually made the first maxi,” he says. DeAnne had the direct selling experience; for years she’d made money selling girls’ Christmas and Easter dresses. Schultz says the sisters briefly worked together but had a falling out and decided to form separate companies instead.

The Stidhams founded LuLaRoe as an MLM in 2013. It was a logical choice; a disproportionate number of MLMs are started or run by Mormons. The church’s members’ familiarity with pitching something to strangers as well as their preference that women remain at home have helped make direct selling Utah’s second-largest industry, after tourism. From the beginning, Christian phrases permeated LuLaRoe’s culture. “Through fashion we create freedom, serve others and strengthen families,” proclaims an introductory booklet given to new consultants. The Stidhams sometimes quote Mormon elders and like to talk about using the company to “bless people’s lives.”

Boxes of unsold inventory Reece is hoping to send back and receive a refund on.

Photographer: Damon Casarez for Bloomberg Businessweek

The company’s blessing and strengthening message hit a chord with non-Mormons, too. LuLaRoe launched amid a cresting wave of female empowerment that seemed at odds with many women’s reality. After all, how could they lean in if they didn’t even work? Maybe selling LuLaRoe was their answer. “I’d look at pictures of these women in these crazy-patterned leggings and looking so confident,” says Kimie Flynn, a stay-at-home mom in Florida who was inspired to join LuLaRoe in December 2016.

The Stidhams hired a designer named Patrick Winget, who’d been recommended by one of their sons-in-law, to create low-priced apparel. LuLaRoe’s clothes are manufactured in Asian and Central American factories owned by a Los Angeles company called MyDyer, which also makes clothes for major retailers such as Urban Outfitters Inc. and North Face Inc. “When they told me what they planned to do,” says Dan Kang, MyDyer’s CEO, “I thought, This is going to be explosive.”

LuLaRoe’s clothes weren’t innovative—can you really claim a scoop-necked T-shirt as a proprietary design?—but they came in so many sizes, colors, and patterns that customers browsing online rarely saw the same item twice. DeAnne made an early decision to order only 2,500 of any one pattern (later changed to 5,000). “I watched women go out of their minds with grab-it-while-you-can deals,” she explains.

LuLaRoe consultants couldn’t choose what patterns they’d get, and starting inventory packages cost thousands of dollars. A survey of 215 current and former consultants, conducted by Flynn, the consultant in Florida, puts the typical initial investment at about $7,000. This is unusually high for a direct selling company; Mary Kay, for example, offers a $100 makeup starter kit. “We have real strict controls so people don’t end up with the proverbial garage full of inventory,” says Joseph Mariano, president of the DSA, of which LuLaRoe is not a member. “That’s the hallmark of a pyramid scheme.”

By definition, multilevel marketing companies are pyramid-shaped, with a few people at the top level, some in the middle, and the majority toiling at the bottom. This kind of hierarchical structure is legal as long as the company’s main goal is to sell a product; it becomes a scam when the goal is to lure people into buying inventory regardless of whether they can sell it. There are state laws against pyramid schemes, but at the national level the job of spotting them falls to the U.S. Federal Trade Commission. It primarily does this by checking to see if a company abides by a standard established in the wake of a 1972 lawsuit against a now defunct beauty products company called Koscot. The Koscot standard, as it’s known, says that while a company can compensate people for recruiting new sellers, it can’t base that compensation on how much inventory the recruits buy. Most state laws, including California’s, also require compensation plans to be based on sales.

It’s a simple rule. The DSA requires it of all its members. LuLaRoe didn’t follow it for the first four years of its existence, instead basing its bonuses on wholesale orders. For a while it apparently neglected to track what types of clothing actually sold. “If we make 40 different products, I know what I’ve sold, but I don’t know if those have moved through into the consumer,” Mark said last year in a deposition during a breach of contract dispute between LuLaRoe and a software provider. In this same deposition, he affirmed that he had received communications from the FTC about his business. “Basically the Federal Trade Commission looks at direct sales and marketing businesses like ours, [...] one of the primary criteria is, does the product move to an end user or is it a pyramid scheme.” (When asked about this, LuLaRoe denied the FTC was in touch and said Mark had been referring to the FTC’s general guidelines.)

Not tracking retail was a strange decision, since the couple worked with direct selling consultants to set up their business. One of them was Terrel Transtrum, who’s been advising MLMs for more than two decades. “They literally were selling skirts and little girls’ dresses out of tubs in the back of their Suburban,” he says. Transtrum says that while for the first couple of years the Stidhams listened to most of his recommendations, they ignored his advice to base bonuses on retail sales; the high buy-in requirements also made him uneasy. “There’s a major shift of risk to the consumer and to the business builder,” he says. Mark disagrees. “We don’t want that casual participant,” he says. “We wanted people who looked at this as a business opportunity.”

Courtney Harwood, 38, lives in Greenville, N.C., with her three children. When she joined LuLaRoe in March 2015, she and her husband were thinking about separating. “I think I was maybe consultant No. 1,100,” she says. Harwood made thousands of dollars a month selling clothes. After seven months, she quit her marketing job. “It was the scariest thing I ever did,” she says, “but I was making too much money. DeAnne took a liking to me. I felt like I’d found my tribe.” Then in January 2016, Harwood’s sponsor—the woman who’d enrolled her—asked for a favor. She needed Harwood to up her recruiting.

LuLaRoe’s army had four tiers: regular consultants, trainers, coaches, and, at the top, mentors. There were different wholesale, retail, and recruitment requirements for each. Additional caveats and rules made things even more complicated. A coach with four trainers working underneath her, for example, would get a larger bonus than one who had just three. “You sign people up in a way to move up the fastest,” says Blevins. “It’s called stacking.” Harwood says her sponsor offered her $2,500 if she could hit coach status within a week, which would boost the sponsor up to mentor. Similarly, Blevins says the coaches and mentors above her—referred to within the company as an “upline”—stacked people underneath her, which is how she became a trainer within four months.

Harwood in her Greenville, N.C., house with a LuLaRoe boutique on the top floor.

Photographer: Damon Casarez for Bloomberg Businessweek

In the fall of 2015 the Stidhams hired Schultz, DeAnne’s nephew, who had some experience as an event planner, to host a series of conferences to draw in new consultants. In theory they’d teach women how to be successful salespeople, but Schultz says there was no practical business advice. “I thought, Look, these women don’t want to feel like they’re getting recruited. … They’re probably desperate housewives, vulnerable, they want to feel more beautiful, more confident—what woman doesn’t, you know?” he says. “It was just promising them a dream of making money.” His first event, in January 2016, was held at Disneyland. There was cheering, flashing pastel lights, oonce-oonce dance music, and a paid appearance by Mario Lopez. Women shook DeAnne’s hand and listened to her maxi skirt story. “The Monday after it was over we woke up and there were 11,000 people in the queue,” says Schultz. “We had no idea what to do.”

LuLaRoe started to balloon. “We had to build new infrastructure just to manage their business,” says Kang, at MyDyer. He scaled back his work with other brands to give LuLaRoe more attention. Prices for initial inventory packages went up.

The consultant craze was great for those who’d joined LuLaRoe early. By mid-2016, Harwood was making $30,000 in bonus checks each month simply because the people below her were buying so many clothes. Another mentor, Lindsey Wheeler, who’s still active in the company and says she has 2,000 people underneath her, was able to pay off her mortgage. This kind of success was highly unusual; according to the company’s income disclosure statements, the median bonus payment earned by consultants then was $526 per year. The newer recruits, and the 75 percent of consultants who didn’t qualify for bonus checks, were starting to struggle. Harwood and Schultz say they both voiced concerns about signing up too many people, only to be brushed off. Lainie Cotell, a stay-at-home mom in Myrtle Beach, S.C., says last year she went from selling $12,000 worth of clothes every month to just a few thousand; there was no one left to buy them. “At one point there were 70 consultants in Myrtle Beach,” she says, “and those were just the ones I knew about.”

While Cotell made decent money for a while, she didn’t keep much of it. “Leave that money in your business! Continue to turn that money over and freshen your inventory,” DeAnne told consultants in May. Since consultants couldn’t pick their patterns, stale styles piled up. “Every penny we made went right back into ordering more clothes,” says Amy Jo Reece in Culpepper, Va. “That’s what they told us to do.”

Shelves of leggings among Blevins’s clothing racks.

Photographer: Damon Casarez for Bloomberg Businessweek

In January 2017, with 3,500 consultants working underneath her, Harwood became the 25th person to hit the coveted mentor status at the top of LuLaRoe’s pyramid. At the company’s request, she flew to California to meet with the Stidhams. “They asked me to bring my husband,” she says. “We were basically separated, sleeping in separate beds. But he came.” LuLaRoe often urged women to bring husbands to events. Stacy Kristina, a mentor who quit LuLaRoe, says she was once disinvited from a conference because she was single.

After discussing the business, Harwood says, the Stidhams urged the couple to stay together. “They said that if he quit his job to help me sell LuLaRoe, it would bring us together. That I should focus on being subservient to my husband,” she says. Harwood was humiliated. “I was like, ‘What am I doing here? This is crazy.’ My husband was like, ‘But look at your paycheck.’ ” Thanks to the wholesale orders of those beneath her, she’d made hundreds of thousands of dollars the previous year.

It wasn’t the first time things at LuLaRoe had gotten weird for her. In November 2016, Harwood had traveled with DeAnne to a handful of conventions to talk about her success at the company. At dinner in Detroit one evening, DeAnne asked if she had any interest in getting gastric surgery. “She’s like, ‘Courtney, oh my God, you have got to go get it. I’ll have my sister call you next week,’ ” Harwood says. Four people I spoke with for this story say that they’d been approached by either DeAnne or her sister Lynnae Knapp, who offered to take them to a Tijuana clinic called Obesity Not 4 Me so they could get a gastric sleeve. “Lynnae charges $5,000, but it only costs $4,000. You pay her through PayPal, she gets a cut, then takes you to Mexico,” says Schultz, who got the surgery himself. “I was told by DeAnne herself that she likes her leaders to be a size small or medium,” says Kristina. Harwood says the sisters referred to themselves as the Tijuana Skinnies.

Back in San Diego, Blevins saw none of this. She flew around the country to attend company events. She joined a clique of top-selling consultants who claimed to be her friends but mostly just fed her insecurities as if LuLaRoe were a high school popularity contest. She quit her job. Then one day in July 2016, she walked into her LuLaRoom—the nickname consultants give to the room in their house where they store all their inventory—popped the lid on a plastic storage container full of leggings, and gagged. “The smell hit me like, woosh,” she says. “It smelled like someone pooped in a bathing suit, put it in a Ziploc bag, and left it for a week.” The stench’s source turned out to be four pairs of leggings that had never been worn. Then some leggings arrived in the mail soaking wet along with a pale mint-colored pair with black spots that looked like mold. She sent LuLaRoe’s customer support team an email. She got one back saying that customer support emails were no longer monitored and to use a special software system to put in a formal ticket. So she did. Her ticket was closed. She opened it again. Closed again. Opened. Closed. It took more than a month of this, but eventually the company credited her account $42. “That’s the first time I realized things at the company were off,” Blevins says.

Leggings that ripped after one wearing.

Photographer: Damon Casarez for Bloomberg Businessweek

LuLaRoe was straining under the growth. Its warehouses were too small, its customer service line perpetually busy. Designers had to come up with hundreds of new patterns every day so the company could maintain its small production runs. Soon, there were more misses than hits. Flower patterns looked like wallpaper. Animal prints resembled commonly available clip art. The more ridiculous mishaps—like a pair of leggings covered with flesh-colored Leaning Towers of Pisa—circulated on social media. By January 2017 consultants were increasingly reporting that they’d had to issue refunds to customers who said leggings were ripping after one or two wears. Several customers went so far as to file a class action, claiming the company sold defective clothes. In February 2017 a former customer in Pennsylvania, which doesn’t collect sales tax on clothes, sued the company for charging her tax. (Within a week of the filing, LuLaRoe identified about $6 million in improperly collected taxes it says has since been refunded to customers, faulting software for calculating tax based on the seller’s, rather than the buyer’s, location.) A few months later the company was hit with copyright infringement lawsuits from designers who claimed their artwork had been printed on LuLaRoe’s clothes. (They have since been settled out of court.) Angry customers started a Facebook group nicknamed Defective. Soon, LuLaRoe sellers started joining, too. “Once the consultants found us,” says Heather Blithely, who co-runs the group, “it was like the floodgates opened.”

For a lot of them, selling LuLaRoe’s clothes was becoming more trouble than it was worth. Schultz says the vibe of his tours also changed. “There was a little more desperation,” he says. “You could feel it in the air.” To ease the tension, LuLaRoe announced in April 2017 that if someone wanted to quit, it would buy back their inventory at the full wholesale cost.

Instead of providing reassurance, the buyback policy backfired. People at the bottom of LuLaRoe’s pyramid used it to cut their losses and get out. Within a few months, the number of people underneath Blevins dropped from 75 to about 40. Then, when LuLaRoe switched to an FTC-friendly sales-based compensation plan in July, her bonus checks dried up. Apparently those 40 people weren’t actually selling much. Blevins’s husband made just enough from his construction job to cover the family’s mortgage and utilities, but Blevins had always been responsible for groceries and kids’ needs. Those bonus checks were all she’d had. Like so many others, she’d used the profits from her own LuLaRoe sales to buy more clothes. She’d heard of the Defective group. She asked to join.

On a warm September evening, Blevins sat on her sofa, iPad in her lap, scrolling through post after post from women who felt they’d been swindled by LuLaRoe. Reece, in Virginia, was in there. She’d resigned in August but couldn’t get the company to send her the proper forms so she could return roughly $40,000 worth of inventory. Merkling, in Michigan, was there, too. Her inventory orders were often missing items, and she couldn’t get anyone at the company to explain why. Other women said they’d been able to send back clothes but were fighting with LuLaRoe over how much they were worth. Some talked about being bullied by mentors. A few said their husbands had been pressured to quit their jobs so the family could devote more time to LuLaRoe. A woman posted several pictures of what appeared to be piles of unsold inventory sitting in the parking lot of LuLaRoe’s warehouse, then asked if anyone had ever received moldy or smelly clothes. Blevins started crying. (The company calls the stinky legging allegations unfounded. It says that during its “explosive growth,” products were kept briefly on loading docks but were covered and that it maintains strict quality control.)

Blevins had stopped selling LuLaRoe but hadn’t formally quit when, on Sept. 13, the company canceled its 100 percent buyback policy. “I had people who’d made over $200,000 turn around and send me back $30,000 worth of inventory,” Mark says. “I hadn’t anticipated that.” Now when someone quit LuLaRoe, it would pay out only 90 percent of the wholesale value of clothes purchased within the past year. But even that didn’t seem guaranteed. Many women say LuLaRoe offered them much less.

Racks of LuLaRoe shirts, dresses, and skirts.

Photographer: Damon Casarez for Bloomberg Businessweek

Blevins didn’t want to fight with LuLaRoe anymore. When she formally quit in January, she just sold what she could. The rest of it, about $10,000 worth, is still sitting in her garage. Harwood did the same thing. “We were told ahead of time that if a mentor tried to send inventory back,” she says, “LuLaRoe would not pay on it.” She says she has $40,000 worth of clothes stashed in a spare room and has hired a lawyer to help her get a refund as well as about $20,000 in bonus checks she believes she’s owed. LuLaRoe says it has “long-running disputes” with Harwood and is “unable to discuss them publicly.”

Last fall, several former consultants sued the company, alleging LuLaRoe is a pyramid scheme. The suit grew to 22 people seeking $1 billion in damages on behalf of thousands of sellers. But they may never get a chance to argue their case in court; last week a California judge ordered the case be moved to arbitration on the grounds that consultants’ contracts require legal disputes to be decided that way. “I think the easiest way to look at this case is by what the intent of the parties is,” says Peter Pearlman, one of the attorneys representing the former consultants. “The law requires that if you are going to encourage people to sell a product, that you have made a legitimate effort to satisfy yourself that they can do what it is you tell them they can do.” The FTC declined to say whether it was aware of the lawsuits.

LuLaRoe still has roughly 63,000 consultants, whom it now calls retailers, but it owes an untold amount of money to those who’ve quit and sent back their clothes. It’s found a way to sell their returns off, though. “In 2018 you could be receiving something from 2015. How could that happen?” designer Winget asked consultants in January. “It’s called curating.” In April the company set bins of clothes outside its warehouses and invited consultants to purchase anything they wanted.

In February, several hundred LuLaRoe die-hards put on their perkiest, most colorful outfits and went on a Royal Caribbean cruise. “I’m not profitable yet, but I think you can set yourself apart from other sellers by just being a really good person,” says Joanne Black, a mother of two in Greensboro, S.C., who joined LuLaRoe last year and is only vaguely aware of the allegations against it. Black plans to quit her job as an assistant professor of sociology and criminal studies at Salem College in May so she can focus on LuLaRoe. Right now she’s making about $2,500 a month in sales but has mostly been reinvesting it in her business. She hopes it’ll double when she goes full time. “There were, for sure, challenges,” says Wheeler, in Seattle, who’s still one of the top-selling consultants in the company. “I think people just got into this and realized it was more work than they wanted to do.”

In chats with consultants, the Stidhams say that all big companies face lawsuits and not to worry. They also note that some disgruntled sellers now pitch other MLMs’ products and have a reason to make LuLaRoe look bad. “You can never predict outcomes of litigation, but I’m comfortable that we acted honorably and legally,” says Mark. “This is the best time ever to be a part of LuLaRoe,” he told consultants in January. “If you haven’t thought about building a team yet,” DeAnne said, “this is the time to do it.”

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jbasirico
54 days ago
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The hands did the talking during Macron's visit

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(CNN)It was all-hands-on-deck for a full day of events celebrating French President Emmanuel Macron's state visit to the White House. It was all-hands-on-shoulders-and-other-people's-hands, too -- French might be the language of love, but body language is the native tongue of diplomacy.

Here are some of the more GIFable moments:

Macron and President Donald Trump spent the day

touting their tight bond

, a bromance that they showcased starting with Tuesday morning's arrival ceremony.

This GIF is the most suspenseful one you will watch all day. It actually reminded me of a first date. You're not sure if someone's hand brushed yours by accident, so you try to play it cool. Then it happens again and you realize maybe it was on purpose. Until finally you just awkwardly pull the trigger. Gotta make them work for it, even when you're married. Keep them (and everyone watching) on their toes, Melania.

Back to the bromance du jour. Trump and Macron greeted the press outside the Oval Office, but it was their exit that was truly a talker. Hand-holding was the theme of the day.

Inside the Oval Office, briefly addressing the press again -- today seemed like the most we've seen of President Trump in quite some time -- Trump showcased his "very special relationship" with Macron once again. In a rare moment of the audio being just as iconic as the visual, Trump said he was

brushing the dandruff off of Macron's shoulder

.

Instead of getting offended, Macron took it up a notch during their

joint press conference

, giving the President a cheek kiss and a strong handshake.

Capping things off before the

state dinner

, Trump and Macron finished with another strong handshake that could give their

iconic first handshake

a run for its money. It had it all! A low-five, a back pat, a shoulder clasp and a very subtle tug-of-war. Do you think it's their secret handshake?

The Point: Life, hats, friendship, relationships and diplomacy are awkward.

CNN's Donald Judd contributed to this story.

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jbasirico
58 days ago
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