1. DIFFICULT TIMES, TOUGH DECISIONS:
DOWNSIZING AND RELATED
EMPLOYMENT LAW ISSUES
David Dubberly
Certified Specialist in Employment and
Labor Law
February 5, 2009

2. Alternatives to Involuntary Terminations
• Pay freezes or reductions
• Shorter work weeks or work days
• Reductions in authorized overtime
• Voluntary LOAs
• Temporary shutdowns
• Reduce temporary personnel
• Hiring freezes
• Voluntary separation programs

3. WARN Act Coverage
• 100 full-time (20 hours or more) employees (add all facilities) (count
employees on lay-off or leave if they have reasonable expectation of
recall)
OR
• 100 full-time plus part-time employees if the part-time employees work
at least 4,000 hours per week
AND
• private sector (even if non-profit)

4. Employees Counted/Entitled to WARN Act Notice
Category Counted in Applying WARN Act? Entitled to Notice?
Part-time Employees No Yes
Temporary Employees Yes No
Seasonal Employees Depends whether they are “part- Depends whether they
time” or “temporary” are “part-time” or
“temporary”
Employees on Layoff or Leave Yes, if the employees have a Yes
reasonable expectation of recall
U.S. Employees Employed Outside the U.S. Yes No
Foreign Employees Employed Outside the U.S. No No

5. When Does WARN Act Apply?
• Plant closing
• permanent or temporary “shutdown” of “single
site of employment” or one or more “facilities
or operating units” within single site of
employment
• results in “employment loss” for 50 or more
employees, during either a 30-day or 90-day
period

6. When Does WARN Act Apply?
• Mass layoff
– layoff that does not involve plant closing
– results in employment loss at single site of
employment, during either 30-day or 90-day
period, for:
• 50 or more employees if they constitute 33% or
more of active employees
• 500 employees regardless of whether they
constitute 33% of the workforce

7. “Employment Loss” Defined
• An employment loss occurs if an
employee
– is terminated other than for cause
– is laid off for six months or more
– has his hours reduced by more than 50%
during each month of a six-month period

8. What is Required When WARN Act Applies?
• 60 days notice to:
– full-time and part-time
employees
– Dislocated Worker Unit of the
state government
– certain local government
officials

9. What is Required When WARN Act Applies?
• Notices to non-unionized employees must contain:
– statement of whether action is permanent or temporary
– expected date when closing or mass layoff will occur
– date when each individual employee will be separated
– statement of whether or not bumping rights exist
– name and telephone number of company official
• Notices to state and local government officials must
contain:
– same information provided to employees
– list of job classifications of separated employees and number of
employees in each classification

10. WARN Act Exceptions
• 60-day notice requirement may be wholly or
partially waived if:
– closing temporary facility
– “faltering company”
– “unforeseeable business circumstances“
– natural disasters
– sale of business
• Employer bears burden of proof

11. Remedies and Penalties
• Violations can lead to:
– civil penalties, including back pay and lost benefits for up to
60 days
– attorney’s fees
• If required notice not provided to appropriate
government officials:
– fine of up to $500 per day for each day of violation for up to
60 days
• Offsets may be allowed for voluntary severance pay

12. State Notice Requirement (S.C. Code § 41-1-40)
• Employers requiring notice prior to quitting must give
employees notice of intent to stop work
– Notice must be at least two weeks in advance or equal to
time of notice employer requires
– Notice is given through posting
• Exceptions: unforeseen accident to machinery or act
of God or of a “public enemy.”
• Penalties: fine of up to $5,000 plus damages to each
employee

13. Waivers and Releases
• Older Workers Benefit Protection Act
– “knowing and voluntary” waivers of ADEA claims
– strict requirements:
• plain language
• refer to ADEA
• no waiver of claims after signing
• consideration in addition to current entitlement
• advised to consult with attorney
• single individual 21/7 days to review/revoke; group 45/7
days
• special rules for exit incentive programs

14. Federal Wage Issues
• Exempt employees must still be paid on
“salary basis”
– Full week shutdowns
– Reduce pay in connection with adopting
formal reduced workweek schedule
• Non-exempt employees must still be paid
minimum wage and time and one-half for
overtime

15. Discrimination Issues
• Obviously can’t select employees for layoff
based on protected characteristics
– Best defense is legitimate, non-discriminatory reason
for each selection
• Watch out for neutral criteria having adverse
impact on employees in protected group
– Review tentative lists of affected employees with
employment counsel

16. Unemployment Compensation
• Usually up to 26 weeks
• File claim with ESC office
• Employers can help coordinate and in
some situations file for employees

17. Other Issues
• Review layoff policies
• Review employment contracts
• Maintain personnel files of separated
employees
• Consider labor implications
• Consider security implications

18. Other Issues
• Consult with employee benefits counsel
on:
– Retirement plan considerations
– Severance plan/policy considerations
– Group medical plan considerations
– Group life and LTD plan considerations

19. QUESTIONS?
David Dubberly
(803) 253-8281
ddubberly@nexsenpruet.com