Layoffs Are on the Rise Again – Are Your Documents Updated?

By: Karen Elliott. This was posted Tuesday, June 11th, 2013

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This past week Richmond-headquartered Fortune 500 company Genworth Financial announced that it would lay off about 400 positions in a cost-cutting move.

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, “Deju Vu All Over Again – Layoffs and Furloughs Return.”

If you need additional guidance, please contact one of our employment attorneys.

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