It’s no secret that the next year is shaping up as a grim time for employees, with many layoffs on the horizon, says attorney Bennett Pine. And layoffs mean lawsuits and liability unless you carefully plan and execute.
Your first step to avoid liability? Familiarize yourself now with the requirements of the Worker Adjustment and Retraining Notification Act (WARN Act), the Older Workers Benefit Protection Act (OWBPA), and age discrimination laws, Pine says.
Pine is a shareholder in the New York/Newark office of law firm Anderson Kill & Olick, P.C. His comments were found in his blog on the website mondaq.
Worker Adjustment and Retraining Notification Act (WARN Act)
Briefly, according to HR.BLR.com, employers must comply with the WARN Act if they have 100 or more full-time employees or 100 or more employees, including part-time employees, who regularly work a total of 4,000 hours per week, exclusive of overtime. The Act defines part-time employees as those who work 20 or fewer hours per week, and temporary employees as those hired with the understanding that their jobs will end when a specific project ends.
The law requires covered employers to give their affected employees 60 days’ notice of a “mass layoff” or a “plant closing” that is expected to last 6 months or longer. Employers must also notify local government officials and their state’s dislocated-worker unit.
Don’t be fooled by the term “plant closings,” says Pine. Some employers interpret “plant closings” too literally, but WARN’s requirements also relate to offices and virtually any site of employment.
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Age Discrimination
One of the biggest dangers for employers in layoff situations is age discrimination charges. Because employers typically lay off employees to reduce expenses, layoffs may disproportionately affect employees age 40 and older, since they are often the highest paid workers.
Since the 2005 Smith v. City of Jackson ruling, employees suing for age discrimination may recover under the “disparate impact” theory. Under this theory, employees may recover even if there is no discriminatory intent and the selection criteria are face-neutral with respect to age.
There is a defense, however, if the company can show that the selection was based on a “reasonable factor other than age,” for example, performance ratings.
The bottom line, says Pine, is that it is critical to document the “legitimate business reasons” for your actions.
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OWBPA Benefits
The Older Workers Benefit Protection Act (OWBPA) provides additional safeguards for employees over age 40. In particular, with regard to release agreements, the law requires that the release be “knowing and voluntary.” That means clear language that spells out exactly what employees are getting and what they are giving up. It must also tell employees that they have the right to consult an attorney.
Furthermore, employees over age 40 have a minimum of 21 days to consider the agreement. And then, after they sign, there is a 7-day revocation period.
If the action is a group layoff—that is, if more then one person is to be laid off as a result of the same decision—then employees have 45 days to consider. Moreover, says Pine, the employer must give employees information about other employees in similar positions, both those who are being laid off and those who are not. That information includes job title and age category.
In the next issue of the Advisor: How to prepare bulletproof release agreements, and an introduction to a collection of checklists that helps you through the broad spectrum of HR challenges.