Question

A large company is planning to downsize.A consultant suggests the following:

1 It makes sense to focus on one of your unionized plants.We suggest that you reduce the 300 employees at that plant to 100. Some of the components that you produce at that plant can be made at your non-union South Carolina plant.

2 Since you will be terminating 200 employees, I suggest that you terminate 50 employees per week. This way, you won’t have to worry about any legal requirements for providing notice.

3 If you want to be safe, you can send a letter to employees the week before you begin the first wave of terminations telling them that the long-term prospects for the plant are not good.

4 Let the supervisors use their best judgment about who should be retained.They know best.

5 Consider offering an early retirement plan to generate some voluntary turnover, but don’t get people’s hopes up by announcing it before all the details are in place.

6 If you offer an early retirement plan, require that all employees who accept it waive their ADEA rights.

7 Taking early retirement is an important decision, so give employees two weeks to think over the offer.

What are the legal problems with the consultant’s advice? What would be better advice?

Answer 1

After going through the given information and analysing it deeply I have identified several legal issues concerned with the consultant’s advice. The advice given completely overlooked the impact of federal and state laws on the overall process. These legal problems are highlighted as follows:

• Reducing 300 employees to 100 will require the employer to understand and follow legal implications in such situation.
  • Legally it is mandatory for employer to prepare and deliver the employee’s final pay check,
  • Paying accrued but unused vacation time,
  • Providing COBRA paperwork
  • Provide benefit information
  • Provide legally required notice to employees
• In case employer fails to handle layoff smoothly, it will expose the employer to potential legal liability.
• Legally it is mandatory for employer to provide documented business reasons for such actions.
• It is important to conduct a legal review for unfairly discriminatory impact on protected classes of employees.
• Employer must obtain signed releases of liability from employees.
• As per Worker Adjustment and Retraining Notification (WARN) Act, employer is liable to give 60 days’ written notice before lying off one third of workforce.
• Employer will be liable to provide severance package to 200 employees and this package should exceed the benefits the employee was hired as per contract laws.
• Employer must follow guidelines of federal legislature in order to releases employees under the Age Discrimination in Employment (ADEA) and Older Workers Benefit Protection (OWBPA) Acts.
• Early retirement plan does not wave off ADEA right entirely.

My advice to employer is to employ transparency in process. It is important to for organization to downsize than employees have the right to information. Employees trust must be gained and employer must try at retain as many employees as possible.