By: Elaina Smiley, Esquire es@muslaw.com
In these tough economic times, many employers are looking for methods to cut costs to keep their businesses viable. Unfortunately, cost cutting often involves terminating or laying off workers. A business that is considering reducing its workforce needs to take preventative measures to reduce liability. Employers should avoid the following pitfalls when performing layoffs:
1. Not Analyzing the Demographics of Employees Selected.
During layoffs, employers must consider the impact that the reduction will have on employees in protected classifications such as age (40 and over), gender, race, color, religion, national origin, disability or other protected classification. For example, an employer selects a female age 55 with 15 years of service for termination but retains a white male age 25 with two years of service in the same position. Without good documentation of performance issues for the female selected, she may have a claim against the company for age and gender discrimination.
2. Not Being Truthful With Employees About the Reasons for Selection.
Employers must be honest with employees regarding the reasons for termination. If an employee is selected because he/she has performance issues, the company should tell the employee about the issues. Often those making the termination decisions want to spare the employee any hard feelings and do not address the performance problems as the reason for termination. This approach can harm the company if the employee files a claim. A good defense to a discrimination claim is that the decision to terminate the employee was not based on a protected classification, but rather was based on the employee’s poor performance. If the company does not tell the employee about the performance issues then the company may be viewed as not being truthful and this undercuts the company’s defense.
3. Offering Severance Payments Without Getting a Release of Claims.
Another mistake that companies often make is to offer severance payments without getting a release of claims. If a company is terminating an employee and pays money for which the employee is not otherwise entitled, it is wise to get a proper release of claims when the employee is in a protected classification or may have claim against the company. Securing a release in exchange for a monetary payment will reduce the potential for future claims.
4. Failing to Give the Statutorily Required Time Periods for Consideration and Revocation of Releases.
Employers who offer severance to employees in exchange for a release of claims must adhere to all employment laws in order to properly secure a release of claims. For example, under the Age Discrimination in Employment Act, in order to properly release an age discrimination claim, the release must give the employee 21 days to review the agreement and 7 days to revoke the agreement after the employee signs. In other situations where there are multiple layoffs with a severance payment, the release must provide the employee 45 days to review the agreement with 7 days to revoke after signing. Furthermore, when an company has multiple layoffs involving a release agreement, the employer must provide employees a list of the job titles and ages of all individuals selected for termination and the ages of all individuals in the same job classification or organizational unit who are not selected.
5. Not Properly Paying Out Wages Upon Termination
Finally, when employees are terminated, the employer must pay out all wages, vacation pay and commissions that are considered earned. Failure to properly pay earned wages can result in a claim under Pennsylvania Wage Payment and Collection Law and other employment laws.
Please contact Elaina A. Smiley at (412) 456-2821 or es@muslaw.com for additional information.
1. Not Analyzing the Demographics of Employees Selected.
During layoffs, employers must consider the impact that the reduction will have on employees in protected classifications such as age (40 and over), gender, race, color, religion, national origin, disability or other protected classification. For example, an employer selects a female age 55 with 15 years of service for termination but retains a white male age 25 with two years of service in the same position. Without good documentation of performance issues for the female selected, she may have a claim against the company for age and gender discrimination.
2. Not Being Truthful With Employees About the Reasons for Selection.
Employers must be honest with employees regarding the reasons for termination. If an employee is selected because he/she has performance issues, the company should tell the employee about the issues. Often those making the termination decisions want to spare the employee any hard feelings and do not address the performance problems as the reason for termination. This approach can harm the company if the employee files a claim. A good defense to a discrimination claim is that the decision to terminate the employee was not based on a protected classification, but rather was based on the employee’s poor performance. If the company does not tell the employee about the performance issues then the company may be viewed as not being truthful and this undercuts the company’s defense.
3. Offering Severance Payments Without Getting a Release of Claims.
Another mistake that companies often make is to offer severance payments without getting a release of claims. If a company is terminating an employee and pays money for which the employee is not otherwise entitled, it is wise to get a proper release of claims when the employee is in a protected classification or may have claim against the company. Securing a release in exchange for a monetary payment will reduce the potential for future claims.
4. Failing to Give the Statutorily Required Time Periods for Consideration and Revocation of Releases.
Employers who offer severance to employees in exchange for a release of claims must adhere to all employment laws in order to properly secure a release of claims. For example, under the Age Discrimination in Employment Act, in order to properly release an age discrimination claim, the release must give the employee 21 days to review the agreement and 7 days to revoke the agreement after the employee signs. In other situations where there are multiple layoffs with a severance payment, the release must provide the employee 45 days to review the agreement with 7 days to revoke after signing. Furthermore, when an company has multiple layoffs involving a release agreement, the employer must provide employees a list of the job titles and ages of all individuals selected for termination and the ages of all individuals in the same job classification or organizational unit who are not selected.
5. Not Properly Paying Out Wages Upon Termination
Finally, when employees are terminated, the employer must pay out all wages, vacation pay and commissions that are considered earned. Failure to properly pay earned wages can result in a claim under Pennsylvania Wage Payment and Collection Law and other employment laws.
Please contact Elaina A. Smiley at (412) 456-2821 or es@muslaw.com for additional information.
This Meyer, Unkovic & Scott update is intended to provide information of general interest to the public and is not intended to offer legal advice. Meyer, Unkovic & Scott does not intend to create an attorney-client relationship by providing this information. Readers should consult with counsel before acting upon this information.
No comments:
Post a Comment