Group terminations can be an effective tool in managing labor costs in a down economy, but they also present a host of potential issues that could lead to liability. Advance planning and foresight can lead to a well-managed group termination. There are two general legal issues to be aware of in implementing a group termination, each of which will be discussed in brief in this article.
Generally, if your company is planning to terminate more than twenty-five employees at a single time, it is advisable to plan more than 60 days in advance. The reason for this large lead time is the Worker Adjustment and Retraining Notification Act (WARN Act) and its state law equivalents (mini-WARN Acts). The WARN Act requires covered employers who trigger the law to notify government officials as well as employees who are affected by a mass layoff or plant closing at least 60 days in advance of a group termination. Failure to provide proper notice can result in fines as well as damages payable to each employee for the days they did not receive proper notice in the amount of wages and benefits.
The threshold for triggering considerations under the Older Worker Benefit Protection Act (OWBPA), an amendment to the Age Discrimination in Employment Act, is even less than 25 employees. OWBPA governs the process by which an employer may secure a valid waiver of an age discrimination claim in a reduction-in-force, voluntary early retirement or other group termination program. Generally, when just two or more employees are part of the same group termination program, special considerations arise under OWBPA.