MBA News - Layoffs

Note these legal age issues when planning to layoff employees.

MBAHRO — Wed, 14 Apr 2010 17:11:00 GMT

Note these legal age issues when planning to layoff employees.

The Older Workers Benefit Protection Act (OWBPA) provides additional protection to employees covered by the Age Discrimination in Employment Act (ADEA). The OWBPA affects downsizing employers in two ways.

First, the OWBPA places strict requirements on an employee's release of an ADEA claim. Requirements include:

It requires such a release to be in writing as part of the information given to the employee during the layoff.
Employees must be able to easily understand the release. (the "knowing and voluntary requirement").
The employee must be advised to consult with an attorney after the day of the layoff.
Employees must be given a 21-day consideration period to evaluate the release
The employee must be given a seven-day revocation period after signature.

Second, the OWBPA includes potentially dangerous conditions for group layoffs. If an employer offers severance and an associated release to two or more employees, and any of the employees are 40 years old or older, the release must include:

A 45-day consideration period.
Information about those eligible to participate, eligibility factors used, and job titles and ages of any employees in the same job classification or unit not eligible to participate.

Modern Business Associates frequently deals with HR issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including designing processes for terminations and council when planning to layoff employees.

Layoff Damage Control Focus: Employee Morale

MBAHRO — Thu, 08 Apr 2010 17:15:00 GMT

Layoff Damage Control Focus: Employee Morale

Lowered employee morale is an unwanted (and often unavoidable) consequence of a mass layoff. Retained employees can feel various emotions, including:

Loss or guilt over colleagues who were laid off
Insecurity about their future with the company
Increased stress due to a heavier workload

To maintain employee moral and loyalty, you must reaffirm the remaining employees' value to the company, and refocus them on company objectives and goals (using incentives if possible).

Immediately after a layoff, you should facilitate a company-or department-wide meeting to discuss the layoffs and provide a forum for employees to ask questions and air concerns.

Thereafter, you should hold periodic meetings to maintain this dialogue with employees and follow up on the company's direction and achievement. Being honest and inspiring confidence in the company's future will help preserve employees' allegiance.

What should be in your employee’s severance payment?

MBAHRO — Tue, 30 Mar 2010 18:25:00 GMT

What should be in your employee’s severance payment?

You are probably aware that State laws governing employees' final pay upon termination vary widely. As your company grows, needing to terminate an employee may come up more often. To avoid legal hassles, you should make sure your HR people know how to legally cut the employee’s severance payment check.

For example, a laid-off employee's severance payment may be due immediately upon termination (e.g., in California), or not until an employee's next regularly scheduled payday (e.g., in Florida).

Likewise, an employee's entitlement to payment for accrued vacation and/or sick time, commissions, and bonuses varies by state.

There are different rules in each state for whether the employee is entitled to:

Accrued vacation
Accrued sick time
Commissions
Bonuses

Failing to pay an employee as required by law can subject you to costly unpaid wage claims and additional civil penalties. You should encourage your HR resources to take a look at applicable laws to determine amounts owed to employees.

Modern Business Associates frequently deals with HR issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including designing legal processes for terminations and council when calculating a legally abiding severance payment.

Federal HIRE Act offers a tax credit on social security, how much can my company earn?

MBAHRO — Thu, 25 Mar 2010 22:42:00 GMT

Federal HIRE Act offers a tax credit on social security, how much can my company earn?

President Obama signed into law the Hiring Incentives to Restore Employment Act ( HIRE Act ) in March of 2010. The federal HIRE Act carries a tax credit on Social Security. It starts immediately for employers hiring qualified employees through the remainder of 2010.

The best way to generate the maximum tax credit on Social Security is to hire qualified employees early in the year, since the exemption stops on wages paid after January 1, 2011.

If an employee earning $40,000 annually is hired on April 1, 2010, the Social Security tax credit to the employer would be approximately $1,900.
If the same employee was not hired until Aug. 15, 2010, the savings would be lowered to $950.

The tax credit on Social Security can be used to offset scheduled tax deposit liabilities beginning April 1, 2010 and accrue with each payroll processed.

Employers will receive a 6.2% Employer Social Security Tax Exemption on wages paid to “qualified employees” after March 18, 2010 and before January 1, 2011, up to the Social Security maximum of $106,800.

The maximum credit per qualified employee is $6,621.

Pay close attention to the HIRE Act requirements the employee must meet to activate the tax credits.

Modern Business Associates is available to assist as you navigate through the federal HIRE Act and work toward maximizing your tax credit on Social Security. While we focus on these areas, you can concentrate on your core business needs and goals. Should you have any questions, please do not hesitate to contact us.

Why national unemployment levels mean legal hassles for you.

MBAHRO — Sat, 13 Mar 2010 22:56:00 GMT

Why national unemployment levels mean legal hassles for you.

As a business owner, you should understand that a significant level of unemployment is the largest predictor of an increase in employee lawsuits relative.

Understandably, employers face difficult questions and concerns during a weakened economy

What is the process for an employee’s layoff?
Which employment laws are relevant?
How can I avoid an employee lawsuit?
How do I combat lowered employee morale?

A downsizing employer is expected to navigate a complex legal and human resources minefield, and must get its answers right the first time. Employers will increasingly seek legal guidance to minimize risk when answering these critical questions and dealing with laws.

You may need compliance assistance (or a shoulder to cry on) during an isolated layoff,
You should develop a strategic reduction-in-force plan while consulting your legal resources. In this way, you can avoid looming legal hassles that are characteristics of high levels of unemployment.

Modern Business Associates frequently deals with layoff issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including designing layoff plans and educating clients about lowering the chance of an employee claim.

Having an employee sign a separation agreement doesn’t cover you completely.

MBAHRO — Thu, 11 Mar 2010 23:02:00 GMT

Having an employee sign a separation agreement doesn’t cover you completely.

If you offer a severance, a separation agreement and general release is essential to secure the release of employment-related claims.

Keep in mind that not all claims can be released by an employee, Including:

Wage and hour claims
Certain workers' compensation-related claims
Family and Medical Leave Act (FMLA) claims (courts are split over this issue).

Additionally, an employer cannot bar an employee from filing a charge of discrimination (although it can prevent an employee from obtaining related monetary relief thereunder). Because of varying local/state employment laws, employers should be encouraged to seek outside counsel for separation agreement drafting and review.

A separation agreement should be clearly written and must comply with local, state, and federal law. Important factors must be considered when negotiating severance and drafting a separation agreement.

Modern Business Associates frequently deals with legal HR issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including designing legal processes for terminations and designing a separation agreement.

Employee discipline documentation is your friend when preparing for a lay off.

MBAHRO — Mon, 08 Mar 2010 23:04:00 GMT

Employee discipline documentation is your friend when preparing for a layoff.

Documentation of employee discipline is critical when building a list of potential candidates for a lay off. Employee discipline documentation is one of the most important aspect to adding credibility to recommending an “inflexible” or “weak link” employee for a layoff list.

However, it is too often the case that management cannot support its rationale with documented employee discipline. In those instances, the employer's decision about who to include in the lay off can be used by former employees to bolster discrimination allegations. Document your poor performers before considering a layoff.

Fighting costly legal battles can quickly offset savings achieved during a layoff. A June 2008 Supreme Court decision has made lay offs even riskier for employers. In Meacham et al. v. Knolls Atomic Power Laboratory, the court determined that an employer must bear the burden of proving the "reasonableness" of factors other than age when a RIF has an adverse impact on workers age 40 and older. Employers who are unversed in the legal pitfalls of a lay off often seek to eliminate their "weakest links," citing non-specific, undocumented and legally weak issues, like "performance" or "lack of flexibility" (two criteria used by the employer in Meacham) as the reasons employees were selected for a layoff.

Modern Business Associates frequently deals with lay off issues. As a HR outsource company, our clients rely on us to help them effectively deal with these kinds of topics including designing plans for lay offs and documenting employee discipline.

Benefits of Performance Appraisals include Compliance Protection

MBAHRO — Fri, 05 Mar 2010 23:06:00 GMT

Benefits of Performance Appraisals include Compliance Protection

A performance appraisal system, when properly managed, provides you with a means of measuring, maintaining, and improving your employee’s job performances. Through the job performance appraisal program, your company can:

Validate hiring decisions
Recognize employees' job performance strengths and weaknesses
Identify employees who are ready for promotion or greater responsibilities
Assess training needs

From a compliance perspective, you should be able to rely on performance appraisals to justify the full range of personnel decisions, including discipline and termination actions.

For example, if a performance appraisal reflects poor job performance by the employee and this employee is later terminated, the you can point to the performance appraisal to show the employee was not performing to standards. If, however, an employee with overall weak performance is given a good or even average appraisal, and the employee is later terminated without interim discipline, the performance appraisal will have the opposite result — the employee may use it to show the termination decision was not justified and instead, was based on a discriminatory or other unlawful factor.

A well designed and administered performance appraisal program can go far to protect employers from certain legal challenges to employment decisions.

Modern Business Associates frequently deals with performance appraisals. As a HR outsource organ, our clients rely on us to help them effectively deal with these kinds of topics including compliance protection.

How to avoid age discrimination issues during layoffs.

MBAHRO — Thu, 04 Mar 2010 23:07:00 GMT

How to avoid age discrimination issues during layoffs.

There are a variety of reasons for an employer to offer severance to an employee who is separating from employment (e.g., to settle threatened or actual litigation, as a goodwill gesture in the event of a layoff), but in virtually all situations, the employer is going to insist that the employee sign a release as a condition to receiving the settlement payment.

This article outlines some of the most important issues, specific to age discrimination, employers should consider when drafting such waivers. In all circumstances, it is advisable that outside counsel review all agreements.

The Age Discrimination in Employment Act (ADEA) has a list of requirements that must be incorporated into your release. They focus on making sure the departing employee does not waive any right or claim under ADEA unless the waiver is “knowing and voluntary”. This means the release must:

Be "written in a manner calculated to be understood" by the employee; and
Specifically refer to the employee's rights or claims under the Age Discrimination in Employment Act; and
Only waive rights or claims that arose prior to the date the waiver was signed; and
Provide consideration; and
Advise the employee to consult an attorney prior to executing the release; and
Allow the employee at least 21 days to consider whether she will sign the agreement; and
Allow the employee at least seven days to revoke the agreement.

Keep in mind, a release under the Age Discrimination in Employment Act may not preclude an employee from filing a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) or participating in an EEOC investigation.

A release agreement can serve useful business purposes, including, but not only, litigation prevention and avoidance. To achieve its objective, however, the waiver must be carefully drafted to ensure that if challenged, it will be enforced.

Modern Business Associates deals with these kinds of issues on a frequent basis. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including issues around age discrimination.

WARN act can ruin your layoff plan, are you at risk?

MBAHRO — Mon, 01 Mar 2010 23:11:00 GMT

WARN act can ruin your layoff plan, are you at risk?

Here at Modern Business Associates, we frequently deal with federal labor and employment laws and how they affect our clients. Laws relating to layoffs have been a hot topic lately. The Worker Adjustment and Retraining Notification Act (WARN act) is one such hot legal issue.

The WARN act sets forth specific notification requirements for covered employers undergoing certain layoffs. (States including California, Illinois, Maine, and New Jersey have enacted similar legislation expanding an employer's notification obligations.)

In part, the WARN act requires employers with 100 or more employees to provide workers with 60 days written notice of:

Plant Closings
Mass Layoffs

Under the WARN act, a "plant closing" is a permanent or temporary shutdown of a single site of employment resulting in an employment loss of 50 or more employees during a 30-day period.

Under the WARN act, a "mass layoff" is either a reduction in workforce resulting in a single-site employment loss of at least 33 percent of the site's employees (a minimum of 50 employees must be affected), or an employer's overall loss of 500 or more total employees.

With certain exceptions, employers who fail to comply with the WARN act, face substantial monetary liability. An affected employer must identify and adhere to its obligations under the WARN act and its state counterparts.

Modern Business Associates frequently deals with complex HR issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including designing plans for layoffs and HR communication plans appropriate to federal labor laws.

Layoffs and other times when job reinstatement according to FMLA regulations may not be necessary.

MBAHRO — Wed, 17 Feb 2010 16:58:00 GMT

Layoffs and other times when job reinstatement according to FMLA regulations may not be necessary.

Does your HR department know the limited situations under which an employer can refuse to reinstate an employee who has taken FMLA leave according to FMLA regulations?

The Act's primary purpose is to ensure that employees are reinstated to the same or equivalent positions held at the commencement of the leave. Moreover, when there is a dispute, it is probably fair to say that the U.S. Department of Labor and most courts lean strongly in favor of the reinstatement of employees. Laws in this area do offer some limited circumstances in which an employer may deny job restoration to otherwise protected employees:

Key employees-According to FMLA laws, an employer may deny reinstatement, but not leave, to "key employees." A key employee is a salaried employee who is compensated within the top 10 percent of the employees working within a 75-mile radius of the employee's worksite. 29 CFR §825.217.1 To deny job restoration to a "key employee," the employer must be able to show that the employee's restoration, not leave, would cause "substantial and grievous economic injury" to the employer's operations. In addition, the employer must have informed the employee, in writing, of his status as a "key employee" prior to the commencement of the FMLA leave. 29 CFR §825.216(c).
Layoffs-An employer may deny reinstatement to an employee whose job was eliminated due to a reduction in force, but only when the employer can demonstrate that the employee's job would have been eliminated even if the employee had not been on FMLA-protected leave. 29 CFR §825.216(a)(1).
Specific term or project-Some employees are hired for a specific term or to perform a specific function. If the term expires or the function ends while the employee is on FMLA leave, the right to job restoration ends as well. 29 CFR §825.216(b).
Employee notice-In rare circumstances, an employee taking leave according to FMLA laws will tell the employer that he will not be returning to work. Pursuant to the Act's regulations, an employer's obligation to restore an employee to work ceases if the employee provides the employer with "unequivocal notice" that he will not return to work. However, the regulations also make it clear that an employee does not forfeit his right to reinstatement when the employee states that he may not be able to return to work, but would like to do so. 29 CFR §825.309(b)
Fitness for duty-Sometimes an employer has concerns about an employee's ability to resume all previous job duties and wants to delay or eventually deny an employee's release until a "fitness for duty" certification is obtained. This is permissible only if the employer notified the employee in writing prior to the leave that a fitness for duty certificate will be required to return to work and the employee fails to present such documentation. 29 CFR §825.216(c).
Other considerations-In determining whether an employee who is on leave due to an illness or injury is entitled to job reinstatement, an employer should not ignore state and local family and medical leave laws and the Americans with Disabilities Act (ADA). If the employee was injured at work, state workers' compensation laws may govern.

No decision to deny job restoration can be taken lightly and you should consult with your HR professional prior to any decision involving the job status of someone who has been on leave provided by FMLA laws.

1. The court in Harbert v. Healthcare Service Group, Inc., 391 F.3d 1140 (10th Cir. 2004), cert. denied, 126 S.Ct.
356 (2006), concluded that in "joint employer" situations in which the employee has a fixed job site, the term "worksite" is the site to which the employee is assigned.

2. The Department of Labor (DOL), in a December 1, 2006, Federal Register notice, published a request for information soliciting comments on the FMLA. The comments were due on February 16, 2007, and will be used by the DOL in a possible overhaul of the FMLA regulations.

Modern Business Associates frequently deals with issues relating to FMLA laws and employees. Laws like FMLA are the kinds of topics MBA deals with regularly as a Professional Employee Organization. Our clients rely on us to help them effectively deal with these kinds of topics including FMLA regulations.

Benefits of Performance Appraisals include Compliance Protection

MBAHRO — Wed, 13 Jan 2010 16:18:00 GMT

Benefits of Performance Appraisals include Compliance Protection

Validate hiring decisions
Recognize employees' job performance strengths and weaknesses
Identify employees who are ready for promotion or greater responsibilities
Assess training needs

From a compliance perspective, you should be able to rely on performance appraisals to justify the full range of personnel decisions, including discipline and termination actions.

A well designed and administered performance appraisal program can go far to protect employers from certain legal challenges to employment decisions.

Alternatives to Layoffs

MBAHRO — Sat, 09 Jan 2010 16:20:00 GMT

Modern Business Associates frequently deals with layoff and other HR issues. As a HR outsourcing organization, our clients rely on us to help them effectively deal with these kinds of topics including designing plans for layoffs and appropriate HR communication plans.