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Keeping it Legal:

Keeping it Legal:. Managing Reductions in Staff or Hours. Jeffrey E. Myers, Esquire One Logan Square 130 North 18 th Street Philadelphia, PA 19103-6998 215-569-5592. Creating a Plan For Your Reduction in Force. Identify the Goals/Needs Design New Structure to Meet Goals

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Keeping it Legal:

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  1. Keeping it Legal: Managing Reductions in Staff or Hours Jeffrey E. Myers, EsquireOne Logan Square130 North 18th Street Philadelphia, PA 19103-6998 215-569-5592

  2. Creating a Plan For Your Reduction in Force • Identify the Goals/Needs • Design New Structure to Meet Goals • Identify Areas to be Affected • Consider Different Downsizing Methods • Adopt Objective Selection Criteria • Identify Employees to be Affected • Perform Disparate Impact Analysis

  3. RIF Alternatives • Attrition • Reshaping • Early Retirement Incentives • Voluntary Layoff • Contracting In • Furloughs • ATB Pay Reduction

  4. Legitimate Incentives • Flat Dollar • Service Based • Incentives Based on a Percentage of Salary • Increases in Pension Benefits

  5. Alternatives To Reductions In Force:Wage & Hour Considerations • Potential Impact On Exempt Status of Salaried Workforce • Recent U.S. Department of Labor Opinion Letters • Permanent changes to salary and workweek permitted • Short-term changes may violate salary basis requirement • Mandatory Time Off okay if: • Week or longer and employee performs NO work • Employee receives PTO for shorter periods • Voluntary Time Off okay if: • Full day or longer • Truly voluntary

  6. Volunteers • FLSA defines employment broadly (i.e., “to suffer or permit to work”) • Individuals who volunteer or donate their services for the following are generally not considered employees: • Public service • Religious or humanitarian objectives • Volunteers typically are part-time • Volunteers generally act without contemplation of pay • Employees may not volunteer services to for-profit private sector employers

  7. EEO ConcernsDisparate Treatment • Prima facie case • Member of protected class • Qualified • Adverse action • Others outside protected class treated differently • Employer’s burden: adverse action taken for legitimate, non-discriminatory reasons

  8. EEO ConcernsDisparate Impact • Prima facie case • Neutral selection criteria, BUT • Disproportionate number of employees from protected class affected • Employer’s burden: selection criteria are job related and consistent with business necessity; no less burdensome option

  9. Questions To Ask • Is there a clear and legitimate business reason for the RIF? • Are there objective criteria for selecting employees? • Were the criteria applied consistently? • Are actions consistent with all applicable policies? • Were terminated employees soon replaced?

  10. Questions To Ask • If performance is a factor, how objective are evaluations/forced rankings? • Are early retirement incentives legitimate? • Any statistical anomalies? • Were all contract provisions complied with? • How were employees on leave treated?

  11. Determining When a RIF Triggers Application of the WARN Act • Employers: • 100 or more employees • Excluding those who worked less than 6 of the past 12 months OR less than 20 hours/week on average • Employees: • Hourly & salaried • Managerial & Supervisory • NOT business partners

  12. WARN Act • Qualifying Events • “PERMANENT” Plant Closure (Site or Facility) • 50 or more employees affected in any 30 day period • Mass Layoff • 500 or 50 &1/3 • Aggregated Layoffs • Employment Loss Defined • Termination • Layoff for more than 6 months • Reduction in Hours (6/50 rule)

  13. Consideration of State and Local Office Closing Laws • More and more state and local governments are passing plant closing legislation that varies from federal WARN Act: • New York, New Jersey • Philadelphia Ordinance • Apply to smaller employers • Different notice periods • Increased Severance Pay obligations in lieu of notice • Different definitions of triggering events • Different damage provisions and penalties

  14. California Hawaii Illinois Maryland Massachusetts New Hampshire New Jersey New York Tennessee Wisconsin Examples of States With Their Own “WARN”

  15. Designing a Separation Package • The package must include: • Earned Compensation • Vacation • Other Earned Benefits • The package may also include a separation agreement including severance pay and a release of claims • Outplacement/U.C. Assistance

  16. Designing a Separation Package OWBPA Requirements • Group terminations (more than one) • 45 day consideration period/7 day revocation period • Disclosure Statements with Separation Documents • Identify the decisional unit • Eligibility factors • Time limits • Job titles and ages of all employees in the unit • Identification of who was selected/not selected for termination

  17. Other Release Pointers • Plain language • Knowing/voluntary • Real consideration • Right to counsel • Care in integration • State affirmative obligations of employees

  18. Communications Strategy • The Displaced (Notice) • When • By Whom • Content • Public • Customers • The Survivors

  19. Safety Concerns • Take necessary security and safety measures before something happens • Warning Signs for potential workplace violence: • Inflexible-difficulty coping with change • Makes threats or intimidating comments • Displays hopelessness or paranoia • Takes criticism poorly

  20. Steps Employers Should Take to Secure Intellectual Property • Ensure that computer passwords are changed prior to termination or layoff • Ensure internal security protocols actually are being pursued • On the eve of a layoff, make sure large amounts of documents are not being copied or downloaded • Actual security • Review the legal rights in states in which the employer is taking personnel actions

  21. F O C U S Finally, F air O bjective C onsistent U nified S ympathetic

  22. ImplementationContract Review • Review Collective Bargaining Agreements • Layoff Clause • Bumping • Notice • Pension

  23. Use following slides only if required

  24. Bargaining Issues • Decisional • Required only if motivated by labor costs such as wages and benefits • Effects • Timing • Payment of Severance • Continuation of Health Coverage

  25. WARN Act Who is Entitled to Notice? • Union • Individual Employees • Chief Elected Local Government Official • State Dislocated Worker Office

  26. WARN Act: How Much Notice? • Basic -- 60 Days or • As Much as Practicable (Not Zero) • Natural Disaster • Unforeseen Business Circumstance • Faltering Company

  27. WARN Act Form and Content of Notice • Identify Site • Contact Person • Permanent/Temporary • Dates of Terminations • Affected Employees (Names, Classifications and Numbers) • Bumping Rights • Union Information

  28. WARN Act Penalties • Sixty Days of Pay (Calendar v. Working) • Sixty Days of Benefits (Includes Gratuities) • Civil Penalty -- $500 Per Day

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