Legal Necessity or Act of Kindness? - Designing and Administering Severance/Transition ...

53 Pages·2017·0.59 MB·English

Legal Necessity or Act of Kindness? -
Designing and Administering
Severance/Transition Arrangements
Suzanne Walker
Counsel
Kilpatrick Townsend & Stockton LLP
Joel Gulick
Vice President and Associate General Counsel
ARES Management LLC
April 20, 2017
© 2017 Kilpatrick Townsend
Overview
WHEN DOES IT MAKE SENSE TO OFFER SEVERANCE?
• Reduction in Force
• Management Restructuring
• Mergers and Acquisitions
WHY SHOULD A COMPANY OFFER SEVERANCE?
• Practice or policy (culture)
• Employee relations philosophy
• Potential exposure/likelihood of litigation
• Reason for separation
WHAT SEVERANCE BENEFITS (IF ANY) SHOULD BE OFFERED?
• Salary continuation
• COBRA
• Outplacement services
• Acceleration of Equity Award Vesting (if applicable)
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Reduction in Force – Why?
• Macy’s closing 68 stores likely cutting over 10,000
workers – Tribune Media Wire, January 4, 2017
• 79 to lose jobs in closure of Baltimore plastic
container plan – Daily Record Digital Editor, March 1,
2016
• Wells Fargo is closing over 400 branches – CNN
Money, January 13, 2017
3
Reduction in Force – Establish a Game Plan
• Timetable
• RIF Team (decision makers)
• Selection Process
• Adverse Impact Analysis
• OWBPA Termination Requirements
• Federal/State WARN Impact
4
Reduction in Force – Timetable
• Consult with Counsel
• Document Business Decision
• Design a selection process
• Establish Data Collection Procedures
• Identify employees impacted by selection process
• Develop a Communication Plan
5
Reduction in Force – RIF Team
• Outside Counsel – Attorney Client Privilege
• Human Resources – Statistical analysis, training, and
communication
• Supervisors – Selection process and communication
6
Reduction in Force – Selection Process
Must be consistent with business reasons for the RIF
and uniformly applied. Criteria may be based on:
• Seniority
• Performance
• Job elimination
• Loss of project or client
• Attendance
• Leadership Potential
• Skills requirements (education)
7
Reduction in Force – Selection Process
Review
In order to manage risk, selection process must have
multiple levels of review:
• Supervisors make preliminary decisions
• Department heads review and make adjustments as
necessary
• Supporting documentation reviewed
• Management and HR Review
8
Reduction in Force – Adverse Impact Analysis
Courts are likely to scrutinize all the facts and
circumstances surrounding a RIF to determine whether
an inference of discrimination is raised and whether an
employer's business decision to terminate an
employee(s) is valid (nondiscriminatory).
Prior to implementing a RIF, employers should review
the employee documentation (RIF list) and conduct a
disparate impact analysis. A pre-RIF statistical analysis
can reduce the risks of discrimination allegations.
9
Reduction in Force – Adverse Impact Analysis
Attorney client privilege can be used to analyze
protected categories that an employer may want to
shield from discovery in any potential litigation.
In addition to a disparate impact analysis, employers
should review the RIF list in light of potential disparate
treatment or a pattern or practice of discrimination.
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