Category: Termination

March 15, 2018

Voluntary Separation Programs

Voluntary separation programs can be mutually beneficial devices for making workforce adjustments. Employers can use them on their own or as a precursor to an involuntary program. Each program is different, but some common elements appear regularly.

What Is a Voluntary Separation Program?

Generally, I’m talking about any circumstance where an organization provides a group of employees the opportunity to resign voluntarily and obtain specified benefits that they would not otherwise be entitled to receive.

Reasons for Voluntary Separation Programs

There are many reasons why companies decide to implement voluntary separation programs. These are probably the most common:

Reduce Headcount

Whether due to lower business volume, technological advances, or other factors, sometimes companies no longer need as many workers. The result: a reduction in force. The options? Voluntary or involuntary terminations. It’s usually not enough for a company to announce that it needs 10 fewer employees only to discover that 10 people are ready to leave anyway. Instead, they may try to offer some inducement to entice employees to move on.

Reduce Payroll

Although reducing headcount can sometimes be a cost-saving measure, it doesn’t have to be. Some companies may have reason to downsize without spending less on labor costs. Space constraints, for example might make it economical to pay fewer people to do as much or more work.

But often money is a significant factor. And reducing payroll doesn’t have to mean reducing headcount. The focus could be on parting ways with more highly compensated employees. The company may even plan to replace them very soon, but with someone who demands a lower wage or salary.

Reorganize Functions

Neither money nor numbers have to be primary considerations. An organization may simply have the wrong personnel for their business going forward. Voluntary separation programs may coincide with retraining programs, for example. The idea could be to allow those who don’t want to transition to new roles to leave the company with some form of compensation for helping the business progress.

Facilitate Retirements

Companies can’t force employees out because of their age. But there may be ways they can make it easier for an employee to retire voluntarily. Many workers of traditional retirement age who would like to retire cannot afford to do so these days. In some situations it makes sense for their employers to provide an optional retirement program that would provide monetary or other (e.g., health insurance) benefits to allow employees to wrap up their careers on their own terms.

Structuring Voluntary Separation Programs

The ideal first step is to determine the company’s goals. Is it one of the four categories above? A combination of them? Something else?

With goals in mind, the employer can then consider which employees will be eligible to participate in the program. The program shouldn’t discriminate based on any protected characteristic, but not everyone needs to be offered the chance to participate. If the goals correspond to functional or headcount issues, then the company might only offer the program to specific departments or job functions. If costs are a factor, then the offer may extend only to relatively high earners.

The next step is to determine what to offer the employees. Usually, this would include some amount of cash severance pay. Health insurance or other benefit continuation may also be appropriate. Sometimes employers also offer out-placement services, like career counseling or skills training, to individuals who will remain in the workforce rather than retire altogether.

Normally, if the employer will be giving out something of value to employees who choose to leave, they should require the employee to sign a release of claims. Otherwise, despite the “voluntary” nature of the program, employees may turn around and sue the company. They may claim wrongful termination, or the allegations may relate to other aspects of their prior employment. Most employees who choose to participate in a separation program won’t object to signing a release. Those who do were probably going to cause trouble anyway. Then at least their reluctance or refusal to sign sends a valuable signal to the employer.

(Click here more on employee releases.)

Pitfalls to Avoid

Voluntary separation programs often work out well. However, as with everything, there are traps for the unwary. Here are some.

First, some employers use these programs to get younger. This raises potential age discrimination concerns. Merely offering a voluntary program that gives more senior employees the opportunity to resign/retire usually shouldn’t be unlawful. But companies must be careful about their approach. An employer who has been outspoken about getting younger to cut costs, bring on new skill sets, etc., can expect rumblings about age discrimination (if not litigation) if it later terminates the employment of older workers, even if justifiable on factors other than age.

Second, employers should obtain releases only after employment has ended. Sometimes employees accept a voluntary severance package, sign a release, and then continue to work until a later separation date. Then if something transpires between signing the release and the formal separation from employment, the release will not stop the employee from asserting a claim.

Third, organizations must plan for multiple possible outcomes. Sometimes the voluntary program produces the desired workforce changes on its own. Other times, too many, too few, or the wrong employees elect to participate. It may be possible to structure the program to avoid some of these bad outcomes (e.g., by limiting participation to a particular number of employees). But, whatever the approach, the voluntary nature leaves the results largely in the employees’ hands. Thus, employers should plan ahead for the next steps based on different contingencies.

Fourth, business needs can change quickly. And it takes time to design and implement a voluntary separation program. It is often best to keep a tight timeline for the program, so it wraps up before business conditions change significantly.

Final Thoughts

Implementing a voluntary separation program requires considerable planning. For most companies this planning should involve a team who can both provide the necessary background information/skills and keep the program confidential until launch. Team members ideally should include upper management, supervisors, human resources, and legal counsel experienced with group termination programs.

October 12, 2017

Disciplining Public Employees in New York Under Civil Service Law Section 75

Section 75 of the New York Civil Service Law establishes procedures for disciplining many governmental employees in the state. Public employers must know which employees these rules apply to and what the rules are.

This post will address:

Which employees Section 75 protects
Alternatives to Section 75
Section 75 charges
Section 75 hearings
Post-hearing procedures

Who is in Civil Service?

All governmental employees in New York are in either the “Classified” or “Unclassified” Civil Service. The Unclassified Civil Service consists primarily of:

Elected officials
Officers and employees of the State Legislature
Certain Governor-appointed positions
Members, officers, and employees of boards of elections
Certified teachers and supervisors of school districts and BOCES
Certain professional positions in the State University and Community College systems

(For information about disciplining teachers in New York, read my post on New York Teacher Tenure Rights.)

All other positions are in the Classified Civil Service.

The Classified Civil Service is further divided into exempt, competitive, non-competitive, and labor classes. Classified Civil Service positions are competitive by default, unless the applicable civil service commission establishes otherwise. The competitive class includes all positions for which it is practical to assess the merit and fitness of employees by competitive examination.

Exempt positions within the Classified Civil Service are usually policy-making positions. Non-competitive positions are ones for which it is not practicable to conduct competitive examinations.

Among other things, these classifications help determine whether Section 75 applies in disciplining a particular employee.

Which Civil Service Employees Does Section 75 Cover?

Section 75 applies, by default, when a public employer seeks to discipline the following members of the Classified Civil Service (with limited exceptions):

All competitive class permanent appointees.
Any permanent appointee who was honorably discharged from the U.S. armed forces after serving in time of war.
Any permanent appointee who is an exempt volunteer firefighter.
An employee who has served at least 5 years of continuous service in a non-competitive position not designated as confidential or influencing policy.
A non-competitive employee of New York City in the position of Homemaker or Home Aide who has at least 3 years of continuous service in the position.
A police department employee holding the position of detective for three continuous years or more.

Employees can waive the protections of Section 75, including through their unions. Often, collective bargaining agreements will provide that grievance and arbitration procedures will apply instead of Section 75’s procedures.

Section 75 Disciplinary Charges

When an employer wants to discipline an employee subject to Section 75, it must serve the employee with written charges of misconduct and/or incompetency. The notice must identify the proposed disciplinary action and the reasons for it. Usually, an employer can only seek discipline for alleged incompetency or misconduct within the past 18 months.

The employee must have at least 8 days to answer the charges in writing.

Interim Suspension

Once an employer serves the charges, it may also suspend the employee without pay for up to 30 days. If the charges are not resolved in that time, the employer must restore the employee to the payroll.

Employees acquitted of the charges must be restored to their position with full backpay, less any unemployment benefits received.

Hearing Process

Under Section 75, the employer designates the hearing officer. This can be an officer or employee of the disciplining employer or an outside person. Sometimes, however, collective bargaining agreements modify the employer’s right to select the hearing officer unilaterally.

The hearing officer will oversee a hearing on the disciplinary charges. The hearing typically proceeds much like labor arbitration hearings, without formal rules of evidence or procedure.

The charged employee may have representation by an attorney or a union representative during the hearing. The employee and employer may both call witnesses and present evidence. The employer bears the ultimate burden of proving incompetency or misconduct.

The hearing office must make a record of the hearing and issue recommendations on the charges. The employer, through its board or officer with the power to remove an employee, must review the recommendations and decide the outcome of the charges. In other words, the hearing officer does not actually decide the case under Section 75. The employer does.

If the employee disagrees with the final decision on the charges, they can appeal to the applicable civil service commission or through state court.

When To Pursue Section 75 Discipline

Employers seldom rush to discipline an employee protected by Section 75. Often this is a nearly last resort. Most public employers try to first counsel employees before getting to this point. But some forms of misconduct demand immediate disciplinary action. As does repeated bad behavior or poor performance.

Disciplining a public employee, especially one covered by Section 75, often involves many legal issues. Most employees in this situation have due process rights and other constitutional protections. Many–especially in New York–are in a union. This adds layers of complexity to the discipline process. Or at least it adds incentive to make sure the discipline is done right. Accordingly, most public employers should get legal advice before initiating disciplinary procedures. They should also have legal representation during the hearing process.

September 13, 2017

Employee Releases Under the Older Workers Benefit Protection Act

The federal Age Discrimination in Employment Act of 1967 (ADEA) prohibits discrimination against employees 40 years or older because of their age. In 1990, Congress amended the ADEA through the Older Workers Benefit Protection Act (OWBPA). The OWBPA includes specific requirements that employers must meet if they want to obtain enforceable employee releases of ADEA claims.

Employers most often seek releases from employees at the end of employment. They typically offer severance pay or other benefits in exchange for a waiver of claims. But if the release doesn’t meet the OWBPA requirements, then the employee may still be able to claim age discrimination.

OWBPA Requirements for Employee Releases

The waiver of claims must be part of a written agreement between the employee and the employer. The agreement must be written in a manner “calculated to be understood by such individual, or the average individual eligible to participate.”
The release must specifically refer to rights or claims arising under the ADEA.
The employee cannot waive rights or claims that may arise after the release is signed.
The employee must receive something of value in exchange for the waiver of rights. It must be something that the employee did not already have the right to receive.
The employer must advise the employee in writing to consult with an attorney before signing the release agreement.
The employer must give the employee at least 21 days to consider the release agreement.
The release agreement must give the employee at least 7 days after signing to revoke the agreement. The agreement does not become enforceable before the end of the revocation period.

Additional Requirements for Group Programs

The OWBPA contains additional requirements for waivers connected to an “exit incentive or other employment termination programs offered to a group or class of employees.” This includes both voluntary and involuntary programs. Thus, it applies both to voluntary resignation programs and involuntary reductions in force. Most likely, it applies to any situation where you ask more than one employee to sign a release related to the same decisionmaking process. It does not, however, necessarily apply when an employer fires two employees around the same time, but for unrelated reasons

For group programs, the employer must allow employees least 45 days to consider the release agreement, rather than 21.

In addition, the employer must give the following information to employees at the beginning of the 45-day consideration period:

A description of any class, unit or group of employees covered by the program, any eligibility factors, and any applicable time limits.
A list of job titles and ages of all employees eligible or selected for the program, and the ages of all employees in the same job classification or organizational unit who are not eligible or selected for the program.

Many employers especially hesitate to provide the age lists required in group programs. However, failing to do so would render the waiver of ADEA claims unenforceable.

Use of OWBPA as a Guideline

The OWBPA only applies to waiver of ADEA claims. Accordingly, many employers choose not to follow all of its requirements for releases by employees under the age of 40. However, an employee could challenge any waiver as unenforceable on basic legal principles. Essentially, an employee could claim that they did not understand what they were signing. Using the OWBPA requirements for all employment releases promotes greater enforceability. If it is good enough for Congress and its federal age discrimination law, shouldn’t it be good enough for all employee waivers?

To reiterate, many employee releases should still be enforceable even if they don’t satisfy some aspects of the OWBPA. But it’s usually not worth taking that risk.

Of course, employers should not try to obtain a waiver of legal claims without the assistance of an experienced lawyer. Each situation may be different and necessitate different approaches.