Layoffs

In 2008, the word on everyone’s lips was “change.”  This year, unforunately, the word seems to be “layoffs.”   And if you’ve grown weary of the media buzzwords “bailouts” and “bonuses,” you’ve probably muttered the word “$#*@%#%$!“  

Hopefully, the worst is behind us and the economy is headed up.  However, if you’re an employer that’s looking at declining revenues or an employee that’s noticing the flow of work significantly slowing down, layoffs might be on your horizon.  For many, it’s unchartered and unpleasant waters.

Before employers start to cut their work force, they need to be aware of the laws that may apply.  All layoffs are not the same.  Some layoffs involve a large number of employees in multiple locations, while some only involve a few employees within one department.  Some layoffs provide severance benefits, some do not.  For example, if an employer provides severance benefits that involve an on-going administrative scheme, the benefits may trigger requirements under the Employee Retirement Income Security Act (ERISA).  Failing to be aware of this Act could be costly. 

And if the employer is instituting a “mass” layoff that involves at least 50 employees at a single site of employment or reduces the hours of work for 50 or more employees by 50 percent or more, the employer will likely need to comply with Worker Adjustment and Retraining Notification (WARN) Act.

Even if the layoffs only involve a small number of employees (e.g., two employees) employers need to be aware of mandatory notice and statistical disclosure requirements relating to release and settlement agreements.  The Older Workers Benefit Protection Act (OWBPA), which applies to workers 40 and over, requires that employers include certain language and follow certain steps to ensure that releases signed by subject workers are made “knowingly and voluntarily.”  If employers fail to follow the requirements, the releases can be, and often are, invalidated.  In such cases, laid-off employees are able to maintain lawsuits against their employers, even though they may have received severance benefits.

Consequently, employers need to plan carefully.  If you don’t, you might end up saying ”$#*@%#%$!” more than a few times.  And in these turbulent economic times, your business can’t afford you saying it even once.

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