Labor: Managing a down economy--The ins and outs of group terminations

Group terminations are governed by a number of federal and state regulations

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.    

It is also important to recognize that many states have mini-WARN Acts that oftentimes have lower trigger numbers—for example, Wisconsin’s WARN Act can require notice when a trigger number of 25 employees is reached. For that reason, when your group termination reaches a level of more than 25 employees, it is advisable to pay attention to the WARN Act and any applicable mini-WARN Acts.

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. 

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Tom O'Day

Tom O’Day joined the Milwaukee office of Godfrey & Kahn, S.C. in January 2006 as a member of the Labor and Employment Practice Group. Tom’s...

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