2023 Employment Law
Certificate Series
Session 3: RIFs and
OWBPA/WARN
Compliance
Cherie Blackburn and Mary Stuart King
May 10, 2023
Webinar Overview
• Reduction in Force (RIF)
• Voluntary vs. involuntary
• Older Worker Benefits Protection
Act (OWBPA) compliance
• Avoiding discrimination
• Worker Adjustment and
Retraining Notification
(WARN) Act
• Triggering events
• Notice provision compliance
• Mini-WARN Acts
/// 2
Reduction in Force
(RIF)
PART 1 ///
2023 Brings an Increase in Layoffs
• On May 1, FedEx announced that it will close 29 locations later this year and
initiate another round of furloughs at the end of May (initial furloughs occurred in
November 2022 and a second round occurred in February 2023).
• Between November 2022 and January 2023, Amazon laid off over 180,000
employees. In March the company announced that it would lay off another 9,000
employees.
• Google laid off 12,000 employees in January, receiving wide-spread criticism for
communicating the layoffs via e-mail to employees.
/// 4
Consider All Options
• Hiring freeze
• Reduced hours/schedule for existing employees
• Reduced pay for existing employees
• Furloughs
• RIFs
/// 5
Reduction in Hours and Pay – FLSA and Wage
Issues
• Be careful when furloughing exempt employees.
• Entitled to pay during any workweek in which work is performed.
• Except for certain limited exceptions, salary deductions result in loss of the exemption
• Predetermined regular salary reduction due to business or economic slowdown is permissible
provided the change is bona fide and not used as a device to evade the salary basis requirements.
• Deductions from predetermined pay based on day-to-day or week-to-week determinations of the
operating requirements of the business constitute impermissible deductions from the predetermined
salary and result in loss of the exemption.
• Pay cannot go below $684 per week ($35,568 annually).
• Non-exempt employees must be paid minimum wage and time and a half for any
hours over 40 in a work week.
• Under the South Carolina Payment of Wages Act an employer must give employee 7
days’ written notice of reduction in pay.
/// 6
Furloughs
• A mandatory temporary leave of absence.
• The employer expects to bring the employee back to work.
• Often used when a company needs to cut costs during a downturn in business.
• Can be unpaid leave for a block of days/months or a reduction in number of days
worked over a certain period of time.
• Remain on the payroll; benefits may continue.
• Employee may be entitled to partial unemployment benefits.
/// 7
Voluntary RIFs
• Includes an offer, such as an early retirement incentive, for the employee to
voluntarily separate employment.
• Generally conditioned on the employee signing a release of all claims.
• The release must be supported by valid consideration (i.e., something of value
that the employee is not already entitled to).
• Selection of those to receive request cannot be discriminatory.
• Collective Bargaining Agreement may not apply.
/// 8
Early Retirement Incentive Packages
• Must be voluntary
• Offer retirement incentive to a certain group of employees
• Open for a reasonable period of time
• Does not result in arbitrary age discrimination
/// 9
Older Workers Benefit Protection Act (OWBPA)
Older Workers Benefit Protection Act
(OWBPA)
• OWBPA is an amendment to the Age
Discrimination in Employment Act (ADEA)
made in 1990.
• Makes it unlawful for employers to:
• Target older workers when laying off workers
or undertaking staff-reductions;
• Fail to follow certain procedures when asking
older workers to waive their rights under the
Age Discrimination in Employment Act.
• Use an employee’s age as the basis for
discriminating against them in regards to
benefits
ERIs and the Older Workers Benefit
Protection Act (OWBPA)
• It shall not be unlawful for an employer,
employment agency or labor organization. . .
to observe the terms of a bona fide
employee benefit plan . . . that is a voluntary
early retirement incentive plan consistent
with the . . . purposes of [ADEA]. 29 U.S.C.
§ 623(f)(2)(B)(ii).
/// 10
Involuntary RIF
/// 11
•Ex: overall financial issues
•Ex: lack of work/production in a particular department
•Ex: too many of a particular position across the company
1. Consider legitimate business needs – What is the reason for
the RIF?
•Reduce overhead by a certain amount
•Reduce workers in a department consistent with available work
•Reduce positions without sufficient work
2. What is the goal of the RIF?
•Seniority (last in, first out)
•Performance
•Selection of individuals is important and cannot be discriminatory
•Selection based on reduction of department/business unit, eliminating positions,
seniority
3. What is the selection criteria used for individuals?
Consider Federal Discrimination Laws
• Title VII of the Civil Rights Act – race, sex, (gender identity, sexual orientation,
pregnancy), color, national origin, religion
• Age Discrimination in Employment Act (ADEA) – 40 and older
• Americans with Disabilities Act (ADA) – mental and physical disabilities
• Uniformed Services Employment and Reemployment Rights Act (USERRA) -
veteran status
• Genetic Information Nondiscrimination Act (GINA) – genetic information
/// 12
Broad Scope – Retaliation and Protected
Activity
• Federal laws also prohibit retaliation.
• Consider recent complaints and protected activity.
• Filing an EEOC Charge is protected activity under Title VII.
• The Fair Labor Standards Act (FLSA) prohibits discharging an
employee because the employee had instituted any proceeding
related to the FLSA (i.e., complained to the DOL).
/// 13
Consider State Discrimination Laws
• For example, SC statutory law prohibits retaliation against an
employee for instituting a workers’ compensation proceeding.
/// 14
Consider Employees on Protected Leave
• Employees on leave under the Family and Medical Leave Act (FMLA).
• Employees on leave because of a disability under the Americans
with Disabilities Act (ADA).
• Employees on protected military leave under the Uniform Services
Employment and Reemployment Rights Act (USERRA).
/// 15
Layoffs and Collective Bargaining Agreements
• Be sure to review the terms of any collective bargaining
agreements.
• CBAs typically include requirements related to layoffs or RIFS.
• Govern selection criteria – ex: RIF must be based on seniority or seniority plus
• Bumping rights – ex: CBA may allow you to “bump” a worker with less
seniority to fill an open or remaining job.
• Superseniority – protects union representatives or shop stewards.
• Recall rights designated to certain employees.
/// 16
Tips for Conducting a RIF
• Identify the need for the RIF well in
advance
• Determine whether the WARN Act
applies (including any mini (State)
WARN Acts
• Consult with legal counsel
• Document the legitimate business
reasons for the RIF
• Document the business unit,
department and positions to be
effected
• Document the selection criteria and
selection process
• Use objective criteria whenever
possible
• Review the current demographics of
your workforce (to include all protected
classes – age, race, gender, pregnancy,
gender identify, sexual orientation.
nationality, disability, religion, veteran
status.
• Compare the demographics of your
workforce as it will look once the RIF is
completed.
• Consider disparate impact and adjust
selection as needed
/// 17
Severance Agreement
• A contract, or legal agreement,
between an employer and an
employee that specifies the terms of
an employment termination, such as a
layoff.
• Also referred to as a “separation” or
“termination” agreement or
“separation agreement general
release and covenant not to sue.”
Requirements for Release of Age
Claim (OWBPA)
• Good Resource: EEOC’s “Q&A –
Understanding Waivers of
Discrimination Claims in Employee
Severance Agreements”
/// 18
Severance Agreement
General Requirements for Waivers of
Discrimination Claims
• Must be supported by consideration.
• Waiver must be “knowing and voluntary.”
• Cannot require employee to waive future rights.
• Cannot
• waive an employee’s right to file a Charge with
the EEOC;
• limit an employee’s right to testify, assist
participate in an investigation, hearing or
proceeding conducted by the EEOC.
Consideration for Severance Agreement
• Something of value to which the employee is
not already entitled.
• Cannot be accrued and unused vacation owed
to the employee.
• Cannot be bonus owed to employee.
• Can be lump sum (certain number of weeks’
pay) not otherwise owed.
• May include the right to resign, depending on
circumstances.
• May include agreement not to contest
unemployment – but employer needs to be
truthful in responding to information from state
unemployment agency.
/// 19
Definition of “Knowing and Voluntary” for
Release of ADEA Claims
• Written in a manner that can be clearly understood – use plain language geared to the
education and comprehension level of average individual/employee.
• Must not be misleading.
• Must specifically refer to rights or claims arising under the ADEA by name.
• Must advise employee in writing to consult with an attorney before accepting the
agreement.
• Provides the employee at least 21 days to consider the offer.
• Gives the employee 7 days to revoke his or her signature.
• Cannot include release of claims that arise after the date on which the waiver is
executed.
• Supported by consideration.
/// 20
Invalidity of Release of ADEA Claims
• Where agreement fails to meet the seven criteria of “knowing and
voluntary.”
• Where induced by fraud, undue influence or other improper conduct
to coerce the employee to sign it.
/// 21
Group Layoffs Under OWBPA
• Group = two or more employees
• Exit incentive programs
• Voluntary program
• Other employment termination programs
• Involuntary termination
• Program exists if employer offers additional consideration (incentive) to leave in
exchange for signing release to more than one employee
/// 22
Additional Requirements for Group Layoffs
• Group = 2 or more employees
• Up to 45 days (instead of 21 to consider the waiver)
• Inform employees in writing:
• The decisional unit = class, unit or group of employees from which the
employer chose the employees who were/were not selected
• Eligibility factors for the program
• Applicable time limits
• Job titles and ages of all employees who were eligible/selected
• Ages of all individuals in the same job classification who were not selected
/// 23
Example of Information Provided for a Group
Layoff
/// 24
Job Title Age # Selected # Not Selected
Bookkeepers
25
28
45
2
1
6
4
7
2
Accountants
63
24
1
3
0
5
Retail Sales
Clerks
29
40
1
2
7
1
Wholesale
Clerks
33
51
0
2
3
1
Best Practices – Severance Agreements
• Include a cover letter reiterating that employee 40 or older has up to 21 days to
accept the agreement.
• Be aware that material changes restart the 21-day period.
• For employees under 40 establish a reasonable deadline to return the agreement.
• Specifically reference federal employment laws.
• Make sure severance agreement is not signed before last day of employment – will not
cover remaining time period during employment.
• If continuing as employee, consider Severance Agreement with Release attached as Exhibit
to be signed on last day of employment
• Make the deadline for paying severance pay after the 7-day revocation period for
employee 40 or older (and pay employee after the revocation period).
• Make sure terms of Agreement reflect that it is “knowing and voluntary.”
/// 25
Worker Adjustment
and Retraining
Notification (WARN)
Act
PART 2 ///
Worker Adjustment and Retraining Notification
(WARN) Act
• Background
• Enacted on August 4, 1988, and became effective on February 4, 1989.
• Born out of the closings of large steel mills in the 1970s and 1980s.
• General Provisions
• Requires covered employers to provide notice 60 days in advance of covered plant closing and
covered mass layoffs.
• Notice must be provided to either affected workers or their representatives (e.g., labor union); to
the state dislocated worker unit; and to the appropriate unit of local government.
/// 27
Who’s Covered Under the WARN Act?
• Employer Coverage
• Private, for-profit; private non-profit; and public and quasi-public entities operating in the
commercial context.
• Employers with 100 or more employees, not counting employees who have worked less than 6
months in the last 12 months and not counting employees who work an average of less than 20
hours per week.
• Employee Coverage
• Hourly and salaried workers, including managerial
and supervisory employees.
/// 28
What Triggers Notice Under the WARN Act?
• Plant Closing
• Where an employment site will be
shut down and the shutdown will
result in an “employment loss” for 50
or more employees during any 30-day
period.
• Mass Layoff
• Where there is an “employment loss”
at a single employment site during
any 30-day period for 500 or more
employees; or
• Where there is an “employment loss”
at a single employment site during
any 30-day period for 50 to 499
employees if they make up at least 33
percent of the employer’s active
workforce.
/// 29
Mass Layoffs and Remote Workers
• Mass layoffs apply to a single site of employment.
• Although “single site of employment” is not defined by the Act, the regulations
provide that a single site of employment is “either a single location or a group of
contiguous locations.”
• The regulations further provide that for mobile workers, workers whose primary
duties require travel from point to point, such as sales persons, the single site of
employment will be their “home base, from which their work is assigned, or to
which they report.”
• Case Study: Piron et al. v. General Dynamic Information Technology, Inc., No.
3:19-cv-00709-REP (E.D. Va. Sept. 27, 2019)
/// 30
Exemptions: The WARN Act is NOT Triggered
When…
• A plant closing affects only a temporary facility;
• A plant closing or mass layoff constitutes a strike or lockout not meant to evade
the WARN Act; or
• A plant closing or mass layoff occurs because
particular facility, project, or undertaking is
completed and affected employees were hired
understanding that their employment was
limited to that facility, project, or undertaking.
/// 31
What’s an “Employment
Loss” Under the Act?
Three Scenarios:
1.Termination, other than a
discharge for cause, voluntary
departure, or retirement;
2.Layoff exceeding 6 months; or
3.Reduction in an employee’s
hours of work of more than 50
percent in each month of any
6-month period.
/// 32
Business Relocation
Transfer Exception:
1. Refusal to transfer to a
different site within
reasonable commuting
distance is not an
employment loss.
2. Acceptance of a transfer
outside this distance within
30 days after it is offered
or within 30 days after the
plant closing or mass layoff,
whichever is later, is not an
employment loss.
The Problem
A covered employer expecting a 2-3
month long temporary layoff at a single
site lays off 500 full-time employees. Is
the WARN Act triggered?
No – The scenario does not qualify as an
“employment loss.” First, the layoff is
temporary and the employees expect to
be recalled, so it is not considered
permanent termination. Second, the
layoff is not expected to exceed 6
months, and there is no reduction in
hours of work to exceed 6 months.
The Solution
/// 33
90-Day Aggregation Rule for Plant Closings
and Mass Layoffs
• Employers must look ahead 90 days and look back 90 days from each employment loss to
take into account both planned and completed employment losses.
• Separate employment losses occurring within any 90-day period triggers the WARN Act
requirements if the losses when added together involve the requisite number of
employees.
• If the aggregated employment losses trigger the WARN Act, notice requirements apply
as of the date of the first individual termination.
• Prevents employers from using repeated small layoffs to escape the notice requirements.
• Notice is not required under the WARN Act if the employer demonstrates that the
employment losses are the result of separate and distinct actions and are not an attempt
to evade the WARN Act’s requirements.
/// 34
What is the Requisite Notification Period?
• Notice must be timed to reach the required parties at least 60 days before a
closing or layoff.
• When the individual separations for a closing or layoff occur on more
than one day, the notices are due to the employees’ representatives,
state dislocated worker unit, and local government at least 60 days
before each separation.
• If the workers are not represented, each worker’s notice is
due at least 60 days before that worker’s separation.
/// 35
What are the Exceptions to the 60-Day
Notice?
/// 36
• Narrowly construed exception
• Where a company has sought new capital or business to stay
open and giving notice would ruin the opportunity
• Applies only to plant closings
1. Faltering Company
• Where business circumstances are not reasonably foreseeable
at the time notice was required
• Applies to plant closings and mass layoffs
2. Unforeseeable Business Circumstances
• Where the plant closing or mass layoff is the direct result of a
natural disaster, such as a flood, earthquake, drought, or storm
3. Natural Disaster
The Problem
The same covered employer expecting a
2-3 month long temporary layoff at a
single site lays off 500 full-time
employees. At 3 months in, unforeseen
business circumstances arise and the
employer is required to extend the layoff
beyond 6 months. When was the WARN
Act triggered?
At 3 months – Under the “unforeseen
business circumstances” exception, the
WARN Act was triggered at the time it
becomes reasonably foreseeable that the
extension is required and notice must be
given at this time.
The Solution
/// 37
What Language Must the Notice Include?
• Form
• Written Notice
• Reasonable method of delivery to ensure timely receipt
• Contents
• Specific and plain language:
• Temporary or permanent nature of layoff or plant closing
• Entire or part closing of plant
• Commencement date
• Expected employment loss date
• Bumping rights
• Employer contact
/// 38
What are the Penalties for Violating the Act?
• Employees:
• Back pay and benefits for the period of violation, up to 60 days.
• Liability may be reduced by wages paid during the violation period, and voluntary and
unconditional payments made to the employee.
• Unit of Local Government:
• Civil penalty up to $500 per day.
• Penalty may be avoided if the employer satisfies the liability to each aggrieved
employee within 3 weeks after the plant closing or mass layoff is ordered.
/// 39
Violations Subject Employers to Individual and
Class Action Suits
Houston, We Have a Problem
- Allegations of failure to provide approximately 675 workers with advance
written notice.
- The April 4, 2023 lawsuit calls the layoffs foreseeable and alleges Virgin Orbit
owes proposed class members wages, bonuses, health and life insurance
premiums, accrued holiday pay, accrued paid time off for 60 days post-
termination, and health insurance benefits.
Losing More Than Weight
- Allegations of failure to provide over 1,000 workers with advance written
notice.
- Employees part of the May 4, 2023 action are seeking pay for the full 60
days since the original notice was sent, as well as the monetary value of the
benefits they would have enjoyed during that time.
/// 40
The Rise of Mini-
WARN Acts
PART 3 ///
/// 42
State Mini-WARN Acts: State Laws Creating
WARN-Like Obligations
• California
• Applicable to a “covered establishment” that employs or has employed 75 or more
full and part-time employees in the preceding 12 months.
• 60-day notice period .
• Plant closure affecting any amount of employees.
• Layoff of 50 or more employees within a 30-day period regardless of percent of
workforce.
• Other relocation provisions.
/// 43
State Mini-WARN Acts: State Laws Creating
WARN-Like Obligations
• New York
• Covers private employers with as few as 50 employees.
• 90-day notice period.
• Plant closing occurs when an employment loss affects 25 or more full-time
employees during a 30-day period due to permanent or temporary shutdown.
• Mass layoff occurs when, over a 30-day period, a reduction-in-force results in an
employment loss lasting more than six months for: (a) at least 25 full-time
employees who represent at least 33 percent of all employees at the site; or (b) at
least 250 full-time employees.
• Other relocation and reduction in hours provisions.
/// 44
State Mini-WARN Acts: State Laws Creating
WARN-Like Obligations
• New Jersey (Effective April 10, 2023)
• Covers private employers with 100 or more part-time and/or full-time employees.
• Single place of employment is calculated at the “establishment level.”
• In other words, terminations at different locations throughout the state may need to be aggregated
(e.g., terminations of 10 employees at each of five separate locations)
• 90-day notice period.
• Mass layoff includes reductions-in-force affecting at least 50 employees in the state
within a 30-day or 90-day period, regardless of what percentage of the overall
workforce this number constitutes.
• Mandatory severance payments regardless of compliance.
/// 45
Thank
You
CONTACT
Cherie Blackburn
(843) 720-1728 |
cblackburn@maynardnexsen.com
/// 46
Mary Stuart King
(843) 720-1754 |
mking@maynardnexsen.com
maynardnexsen.com
