TB ONE TAB TWO TAB THREE TAB FOUR TAB FIVEEmployment Issues

in a Changing Economy

The Challenges of “Right-sizing,” Remaining Profitable, and Maintaining Employee Morale

Andrea M. JohnsonPartner

March 11th, 2015Trends, Terms & Lessons Learned

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All about the price of oil?

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All about the price of oil?

• July 2008 - $145.08

• July 2014 – $103.13

• March 6, 2015 - $49.61

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All about the price of oil

• Predictions?

• Who knows?• Mattress Mack?

• Investment programs “slashed”

• The inevitable is happening – RIFs.

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Being ready -thinking it through

First question: Is a RIF required?

• Huge step

• Lots of consequences

• Expensive

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RIF implementation?

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Being ready -thinking it through

Alternatives?

– Improving efficiency/cost reduction• Cutting perks• Increasing cost burden on employees

– Reduction of overtime

– Shortened workweeks

– Salary reductions or freezes

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Being ready -thinking it through

Alternatives:

– Shortened workweeks

– Hiring freeze

– Cutting contractors

– Voluntary severance plans

– Voluntary early retirement

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Being ready -thinking it through

Business planning for the future:• Taking stock of current market and product/services sales.

• Taking stock of current compensation market.

• Planning for the future – where the company wants to be, needs to be, and what workforce is needed to get there.

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Being ready -thinking it through

Laws to consider:• Prior notice?

• WARN – Worker Adjustment and Retraining Notification Act.

• Discrimination/retaliation issues

– Title VII – Civil Rights Act of 1964

– Americans with Disabilities Act (ADA)

– Age Discrimination in Employment Act

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Being ready -thinking it through

Laws to consider:• Discrimination/retaliation issues

– NLRA – National Labor Relations Act

– Family & Medical Leave Act (FMLA)

– ERISA – Employment Retirement Income Security Act

– Family & Medical Leave Act (FMLA) –

• Leave notice?

– Pregnancy Discrimination Act

– FLSA, Fair Labor Standards Act - overtime

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Being ready -thinking it through

Laws to consider:

• Have there been

– HR complaints?

– OSHA complaints or questions?

– Other “whistleblower” issues?

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Being ready -thinking it through

Laws to consider:

• State laws

• Discrimination laws

• Workers’ compensation

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Being ready -thinking it through

Laws to consider:

• Releases?

– Older Worker Benefit Protection Act (OWBPA)

• Post-termination

– COBRA – Consolidated Omnibus Budget Reconciliation Act

– State “COBRA”

– Unemployment

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Being ready -thinking it through

Internal questions:

• Employment agreements

• Confidentiality and noncompetition clauses

• Severance plans/programs – formal or informal?

• Employee reviews and performance documentation

• Effect on morale

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Being ready -thinking it through

Prior notice: The WARN Act

• Employer with 100 or more employees

• 60-day notice if there is a “mass layoff” or “plant closing”

• Penalties

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Being ready -thinking it through

The WARN Act

• Mass layoff: – Losing 1/3 of employees at a site of at least 50 employees

• Plant closing: – Shutdown of a site at which there are at least 50 employees.

• Key question: Are 50 or more employees losing their jobs?

• If so, where?

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Being ready -thinking it through

Legal concerns related to RIF selection

• Challenges of “disparate treatment”

• Questions about “pretext”

• Disparate impact

• Statistical impact

• Pattern or practice of discrimination

• Class claims

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Being ready -thinking it through

Legal concerns related to RIF selection

• Will you be able to support the decision ultimately?

• Are there objective, non-discriminatory reasons supporting the selection?

• Employer’s burden

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Being ready -thinking it through

Legal concerns related to RIF selection

• Avoiding litigation through analysis of the RIF criteria

• Are the criteria consistent and job-related?

• What is realistic? What is objective?

• Without consideration of protected categories

• Without consideration of leave, retirement age, or schedule or flex time arrangement

• Without consideration of internal complaints

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Being ready -thinking it through

Legal concerns related to RIF selection

• Documentation considerations/ training for management on the process

– Do supervisors and managers understand the process and the parameters of

selection method?

– Do they have a guide to follow?

– Are they being consistent?

• Working with counsel

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Being ready -thinking it through

Looking at the risks:• Evaluating employee ranking systems

• Objective versus subjective factors

• Seniority only?

• Weeding out the “deadwood”

• What is the independent support for the employer’s decision-making?

• Avoid the Lone Rangers

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Being ready -thinking it through

Looking at the stats

• The protected categories

• Age classes – over 40, over 50, over 60?

• Comparison to the class as a whole

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Being ready -thinking it through

Common objective factors

• Location

• Job categories

• Performance reviews – yearly merit

• Type of employment (contingent/part-time)

• Seniority

• Skills (be careful!)

• Current work in-house

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Being ready -thinking it through

Severance• Plan in existence (updating?)

• Is a release required? • Consideration

• Amount – • tax consequences?

• Benefit continuation• Outplacement

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Being ready -thinking it through

What makes a release valid?• Generally:

• Consideration• Knowing • Voluntary

• These standards apply across the board to all persons

• Totality of the circumstances

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• Those 40 and over have extra protection by statute, as to their “age claims” only.

• Older Worker Benefit Protection Act

• Key: Employee has the knowledge to make the right decision.

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Requirements of the OWBPA

• Strict enforcement

• Several factors and some courts will closely

examine to see if the release satisfies the

Act’s requirements

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Being ready -thinking it through

First – Clear and unambiguouslanguage

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Requirements of the OWBPA

• Specific, clear reference to ADEA

• Cannot waive future claims

• Consideration – something not otherwise entitled to

• Instruction to consult with an attorney

• Eligibility factors

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Being ready -thinking it through

Requirements of the OWBPA

• 21 or 45-day consideration period– For reductions of more than 1 person – 45 days– May be waived

• 7-day revocation period – cannot be waived

• No restrictions on EEOC investigations • Is there a covenant not to sue?

And….

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Being ready -thinking it through

Requirements of the OWBPA

• Data about the “decisional unit”

“[T]hat portion of the employer’s organizational structure from which the employer chose the persons who would be offered consideration for the signing of a waiver and those who would not be offered consideration for the signing of a waiver.”

• 29 CFR §16.25.22(f)(3)

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Being ready -thinking it through

Requirements of the OWBPA

• Listing those selected or not selected

for the RIF – titles and age

• Attached to the release

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Being ready -thinking it through

• Other factors for the release?

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Other logistical factors

• Communication

• Developing a plan – thinking of the details.

• Structuring the message• Reassurance and communication to the

remaining workforce

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Being ready -thinking it through

Other logistical factors• Tactful and

professional

communication

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Termination basics

• Return of property

• Security

• Confidentiality agreements

• Notification

• Paving the way for remaining workforce

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Being ready -thinking it through

Immigration concerns?

• Once employment ends, the employee with a H-1B visa must depart the U.S.

• Employer must pay his/her “reasonable costs” to return home.

• Must notify the U.S. Citizenship and Immigration Services.

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Being ready -thinking it through

Termination basics• Pay through the last day of work – due in 6 days from the

date of termination (Texas)

• Is accrued vacation pay due?

• COBRA notices

• Unemployment rights – not misconduct

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Andrea “AJ” Johnson, a partner at Burleson LLP, focuses her practice on management representation in the employment law area.  Ms. Johnson is a recognized speaker and writer on the spectrum of employment issues, focusing on both litigation and preventative analysis creating company best practices.  An “AV” rated attorney and selected for membership in the Bar Register of Preeminent Women Lawyers, Ms.  Johnson has been practicing law since 1983, and she has been a Texas SuperLawyer in employment law for six years, beginning in 2008 until the present. ajohnson@burlesonllp.com; 713-358-1733