Downsizing and Related Issues
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Transcript of Downsizing and Related Issues
DIFFICULT TIMES, TOUGH DECISIONS:DOWNSIZING AND RELATED EMPLOYMENT LAW ISSUES
David DubberlyCertified Specialist in Employment and
Labor Law
February 5, 2009
Alternatives to Involuntary Terminations
• Pay freezes or reductions• Shorter work weeks or work days• Reductions in authorized overtime• Voluntary LOAs• Temporary shutdowns• Reduce temporary personnel• Hiring freezes• Voluntary separation programs
WARN Act Coverage
• 100 full-time (20 hours or more) employees (add all facilities) (count employees on lay-off or leave if they have reasonable expectation of recall)
OR
• 100 full-time plus part-time employees if the part-time employees work at least 4,000 hours per week
AND
• private sector (even if non-profit)
Employees Counted/Entitled to WARN Act Notice
NoNoForeign Employees Employed Outside the U.S.
NoYesU.S. Employees Employed Outside the U.S.
YesYes, if the employees have a reasonable expectation of recall
Employees on Layoff or Leave
Depends whether they are “part-time” or “temporary”
Depends whether they are “part-time” or “temporary”
Seasonal Employees
NoYesTemporary Employees
YesNoPart-time Employees
Entitled to Notice?Counted in Applying WARN Act? Category
When Does WARN Act Apply?
• Plant closing• permanent or temporary “shutdown” of “single
site of employment” or one or more “facilities or operating units” within single site of employment
• results in “employment loss” for 50 or more employees, during either a 30-day or 90-day period
When Does WARN Act Apply?
• Mass layoff– layoff that does not involve plant closing – results in employment loss at single site of
employment, during either 30-day or 90-day period, for:
• 50 or more employees if they constitute 33% or more of active employees
• 500 employees regardless of whether they constitute 33% of the workforce
“Employment Loss” Defined
• An employment loss occurs if an employee – is terminated other than for cause– is laid off for six months or more – has his hours reduced by more than 50%
during each month of a six-month period
What is Required When WARN Act Applies?
• 60 days notice to:– full-time and part-time
employees– Dislocated Worker Unit of the
state government– certain local government
officials
What is Required When WARN Act Applies?
• Notices to non-unionized employees must contain: – statement of whether action is permanent or temporary– expected date when closing or mass layoff will occur– date when each individual employee will be separated– statement of whether or not bumping rights exist– name and telephone number of company official
• Notices to state and local government officials must contain:– same information provided to employees– list of job classifications of separated employees and number of
employees in each classification
WARN Act Exceptions
• 60-day notice requirement may be wholly or partially waived if:– closing temporary facility– “faltering company”– “unforeseeable business circumstances“– natural disasters– sale of business
• Employer bears burden of proof
Remedies and Penalties
• Violations can lead to: – civil penalties, including back pay and lost benefits for up to
60 days– attorney’s fees
• If required notice not provided to appropriate government officials:– fine of up to $500 per day for each day of violation for up to
60 days
• Offsets may be allowed for voluntary severance pay
State Notice Requirement (S.C. Code § 41-1-40)
• Employers requiring notice prior to quitting must give employees notice of intent to stop work– Notice must be at least two weeks in advance or equal to
time of notice employer requires– Notice is given through posting
• Exceptions: unforeseen accident to machinery or act of God or of a “public enemy.”
• Penalties: fine of up to $5,000 plus damages to each employee
Waivers and Releases
• Older Workers Benefit Protection Act – “knowing and voluntary” waivers of ADEA claims– strict requirements:
• plain language• refer to ADEA• no waiver of claims after signing• consideration in addition to current entitlement• advised to consult with attorney• single individual 21/7 days to review/revoke; group 45/7
days• special rules for exit incentive programs
Federal Wage Issues
• Exempt employees must still be paid on “salary basis” – Full week shutdowns– Reduce pay in connection with adopting
formal reduced workweek schedule
• Non-exempt employees must still be paid minimum wage and time and one-half for overtime
Discrimination Issues
• Obviously can’t select employees for layoff based on protected characteristics– Best defense is legitimate, non-discriminatory reason
for each selection
• Watch out for neutral criteria having adverse impact on employees in protected group– Review tentative lists of affected employees with
employment counsel
Unemployment Compensation
• Usually up to 26 weeks• File claim with ESC office• Employers can help coordinate and in
some situations file for employees
Other Issues
• Review layoff policies• Review employment contracts• Maintain personnel files of separated
employees• Consider labor implications• Consider security implications
Other Issues
• Consult with employee benefits counsel on:– Retirement plan considerations– Severance plan/policy considerations– Group medical plan considerations– Group life and LTD plan considerations
