Layoffs Are On The Rise Again – Are Your Documents Updated?


Around the country, it appears companies are again planning large layoffs in cost-cutting moves.  Although For the calculation (Layoff)Research Triangle Park seems to be weathering the storm better than many areas, Net App and Quintiles are reducing forces overall.  In Richmond, Genworth Financial just announced 400 positions would be cut.  

Shortly after that announcement, in discussions with other employment counsel around the country, it became clear that Genworth is not alone in making such a mid-year adjustment.  Many colleagues noted they have just this past week dusted off their group “Severance Agreements and Releases.”

If your company, too, is making such mid-year adjustments, be sure to check your agreements for legal compliance.    Many agreements do not properly comply with the Age Discrimination in Employment Act.

Common errors include:

  • Non-compliance with the Older Worker’s Benefit Protection Act (“OWBPA”). This means that if your layoff includes two or more individuals, then you must provide a 45 day notice period as well as a listing of ages and job titles of employees who were and were not selected for the layoff (termination).
  • Inclusion within the release of the OWBPA acknowledgment. Many severance forms include the OWBPA acknowledgement within the release. The employee may not sign the release, so best practice is to include the acknowledgement separately.
  • Including only employees “older” than 40 in the OWBPA documents.  The federal Age Discrimination in Employment law applies to individuals 40 and older.
  • Forgetting that the severance payment should not be made until 7 days after the employee signs the agreement if the OWBPA applies.
  • Not including in the agreement a statement that if changes are made to the agreement, whether material or not, that the notice period does not renew.

If you are like many companies making this mid-year adjustment, also remember to review your employee selections for layoff for disparate impact. We discussed some basic considerations in our blog back in June 2011.

(Photo credit: Wikipedia).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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