Whether you call it “rightsizing” or a reduction in force (RIF), it’s legally dangerous. Yesterday’s Advisor gave the first five of attorney Michael Rosen’s nine tips for avoiding lawsuits during RIFs. Today, we have more of his tips, and we introduce a unique resource for small HR departments.
6. Determine Severance and Check ERISA Compliance
Rosen, a labor and employment partner with the law firm Foley Hoag LLP in Boston, says that employers will typically provide some amount of severance—often based on a formula such as years of service—to employees who are laid off. Severance may or may not be conditioned upon the employees signing of a release of claims against the employer.
Employers should clarify whether severance will be subject to ERISA. It may be beneficial for an employer to create an ERISA plan that spells out the eligibility requirements for severance and the process by which the plan will be administered.
7. Ask for a Release
Many employers are generally familiar with releases in the context of individual terminations, says Rosen. But many employers are unaware of the specific, heightened requirements for obtaining a valid release from employees 40 years of age or older in the context of a layoff.
These heightened requirements are the result of the Older Workers Benefit Protection Act (OWBPA). Among other requirements, in a group termination program such as a layoff, employees 40 or older must be provided with information about (1) eligibility factors to participate and time limits of the termination program, (2) job titles and ages of all employees eligible or selected for the program, and (3) ages of all employees in the same job classification or organizational unit not eligible or selected for termination.
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8. Don’t Forget Immigration Implications
For companies that employ foreign nationals, a layoff will raise a host of immigration issues.
Nonimmigrant workers on the various categories of temporary work visas (H-1B, L, E, and TN) are legally authorized to remain in the U.S. only as long as they are employed with the particular employer noted in their visa application.
An employer that terminates an H-1B employee before the end of the validity period on the approved H-1B petition must pay the employee “the reasonable costs of return transportation” of the foreign national to return abroad.
Additionally, an employer must notify the U.S. Citizenship and Immigration Services of the H-1B foreign national’s termination. Only when that notification is filed is the employee’s employment considered “terminated” according to U.S. Department of Labor (DOL) regulations.
These are a few of the requirements employers must consider in the event that a layoff affects foreign workers.
9. Don’t Lose Sight of Termination Basics
A layoff can be an administratively complicated event, causing some employers to lose sight of basic requirements that come into play in any termination situation.
These include ensuring that affected employees are paid all accrued salary and unused vacation time in the final paycheck (which in many states must be provided on the last day of employment); administering COBRA notices; reminding employees of the continued applicability of nondisclosure obligations and other restrictive covenants; ensuring that employees return all company property on a timely basis; and providing state unemployment rights notices to employees, as many states require. Ensuring that all of these matters are addressed appropriately requires significant planning and organization.
Terminations—they’re tough to manage, and even tougher in a smaller HR department. And, by the way, the termination is just one of what, a dozen challenges that will hit your desk today? Harassment accusations, intermittent leave headaches, accommodation requests? Let’s face it, in HR, if it’s not one thing it’s another. And in a small department, it’s just that much more challenging.
We asked our editors if there was any special help directed right at the smaller—or even one-person—HR office. They say Managing an HR Department of One is unique in addressing the special pressures small HR departments face. Here are some of the features included:
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—Overview of compliance responsibilities, through a really useful 2-page chart of 21 separate laws with which HR needs to comply. These range from the well-known Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA) to lesser known, but equally critical rules such as Executive Order 11246. Also included are federal and state posting requirements. (Proper postings are among the first things a visiting inspector looks for … especially now that the minimum wage has been changing repeatedly.)
—Training guidelines. No matter what your company size, expect to do training. Some of it is required by law. Some of it is just good business sense. Managing an HR Department of One walks you through how to train efficiently and effectively, for the least time and money.
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