Counsel to Counsel - September 2008 - (Page 27) good example of why companies need to take a look back before looking forward to a reduction in force. If the employer doesn’t pay any outstanding meal compensation at the time of termination, it is on the hook for up to 30 days of compensation plus attorneys’ fees. That’s large exposure for a relatively small issue. The manager was conditioning the employees to a new reality, and explaining that the situation was beyond the company’s control. “That way, it doesn’t come as a shock when you say, ‘We have to close our doors immediately, and you’re out of a job today.’” There are statutory requirements for early notice as well. In some states and situations you have to give employees 60 days’ notice of a layoff; otherwise, the company is liable for 60 days’ wages. Be Clear This recession is different from previous downturns in that courts are taking a closer look at whether disclosures comply with the Older Workers Benefit Protection Act. That law provides, among other things, that the terms of any waiver must be written in a manner calculated to be understood by “such individual, or the average individual eligible to participate.” If employees are given a waiver stuffed with esoteric language, a court will have a basis to invalidate the release as to age discrimination. “It immediately gives a judge who is inclined to invalidate the agreement a good solid reason to do so: It was written in such heavy legalese that a reasonable person could not understand it,” Loftis explains. The moral to the story is simple: The straighter you deal with people, the better. “Tell them everything,” Loftis says. “Give them a full disclosure. Make it meaningful. The more meaningful you make it, the better it is for everyone.” “I recently overheard a manager talking to his waitstaff at a shift meeting. He was telling them that the restaurant industry was suffering, and that tips and tables would be down.” the manager was conditioning the employees to a new reality, and explaining that the situation was beyond the company’s control. “Everybody thinks it’s a minor issue, but it can blow up into a large lawsuit,” Lavenant says. “Any severance package should fully compensate employees for whatever they are legally due, and maybe even a little bit more, so that the release is amicable and that the claims they may have had are released.” Choose Carefully How you choose the people you lay off is perhaps the most significant aspect of a work force reduction. “The process you use is more important than the people you select,” Loftis cautions. “If your process is flawed, you will have a very difficult time justifying the termination. Do not use a reduction in force to deal with performance issues you have not dealt with. That does not work.” Loftis says the worst situation he ever saw was a company that told its managers to eliminate 10 percent of its work force using a single, dubious criterion: “Pick the least effective people, period,” Loftis relates. “That was the extent of the analysis. There was a huge rash of EEOC cases, and nobody remembered how they had made the selections. “It’s extremely important to structure the process on the front end. Are you going to rely on performance evaluations? If so, how far back do you look? Do you select people based on disciplinary actions? If so, what type? Courts and juries will give you a big boost if you have a process and you follow it.” Loftis once worked on a matter where more than 1,000 jobs were involuntarily eliminated across all 50 states and Puerto Rico. The cuts resulted in not a single EEOC case. He credits that success to careful structuring of the process early, and a generous severance package. “Whenever you do a severance package, it has to be enough to make the employee really think twice before turning it down. Two weeks’ pay is hardly worth putting out there. It has to be something meaningful.” W. Randolph Loftis Jr. is a managing member at Constangy, Brooks & Smith, LLC and is Peer Review Rated. He may be reached at rloftis@constangy.com. Michael S. Lavenant is a partner at Landegger, Baron & Lavenant. He may be reached at michael@landeggeresq.com. Early Warning If you know your company will have to let people go, send the message early so employees have some warning. Some employees may move on voluntarily, and others will have time to plan for the change. A sudden job loss can leave people hurt and angry, and more likely to sue. “I recently overheard a manager talking to his waitstaff at a shift meeting,” Lavenant recalls. “He was telling them that the restaurant industry was suffering, and that tips and tables would be down.” Constangy, Brooks & Smith, LLC has counseled employers on labor and employment law matters, exclusively, since 1946. With 14 offices nationwide, the firm represents Fortune 500 corporations and small companies across the country. More than 100 lawyers partner with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. www.martindale.com/c2c SEptEmbEr 2008 27 http://www.martindale.com/c2c
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