developing a severance outplacement strategy - ogletree deakins

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What are your expectations when you decide to pay severance to a terminated employee? How close can you get to your expectations? Title VII, Equal Pay Act, Rehabilitation Act, ADA, Section 1981, ERISA, WARN Act - knowing and voluntary test - totality of the circumstances - Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). Daniel P. O’Gorman, A State of Disarray: The “Knowing and Voluntary” Standard for Releasing Claims Under Title VII of the Civil Rights Act of 1964, 8 U. Pa. J. Lab. & Emp. L. 73 (2005). Thesis: While an agreement to release Title VII claims might not require the application of the objective theory of contracts like a contract in a commercial transaction, it also does not require application of the “voluntary, knowing, and intelligent” constitutional waiver standard. Craig Robert Senn, Knowing and Voluntary Waivers of Federal Employment Claims: Replacing the Totality of Circumstances Test with a “Waiver Certainty” Test, 58 Fla. L. Rev. 305 (2006). Thesis: Due to the totality test’s shortcomings and problematic consequences for employers, employees, and the courts, a new and reformed analysis is needed to determine whether a waiver of non-ADEA federal employment claims is knowing and voluntary.

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  • 1. Are You Getting What You Paid For? Developing aTitle Goes Here Severance Strategy that Provides Finality Presented By: James (Jay) F. Glunt, Esq. Damon P. Hart, Esq. Ogletree Deakins September 26, 2012 Sponsored By:
  • 2. What is Your Severance Strategy? What are your expectations when you decide to pay severance to a terminated employee? How close can you get to your expectations?
  • 3. What does bullet proof mean? Importance of Finality (Release as Deterrent) Importance of Compliance (Defeating Validity Challenge) Is signing on the dotted line enough?
  • 4. A. Reducing Likelihood of a Lawsuit Be Kind but Be Truthful (Dont give false reasons for termination to soften blow) Allow employee to maintain their dignity
  • 5. A. Reducing Likelihood of a Lawsuit Do the termination privately in a discrete fashion. Is a security escort necessary? If not, avoid it; sometimes it adds unnecessary drama.
  • 6. A. Reducing Likelihood of a Lawsuit Avoid having terminated employee have to come back to facility Have final pay and paper work ready Offer to send personal effects
  • 7. B. Legal Standards for Valid Release 1. Underlying Principles offer/acceptance consideration duress, mistake, other defenses affirmative defense burden of proof
  • 8. B. Legal Standards for Valid Release 2. Title VII, Equal Pay Act, Rehabilitation Act, ADA, Section 1981, ERISA, WARN Act - knowing and voluntary test totality of the circumstances Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974).
  • 9. Knowing and Voluntary clear language education consideration business experience time to read actually read and consider? advise to consult with attorney actually consult?
  • 10. Objective or Subjective Standard? Daniel P. OGorman, A State of Disarray: The Knowing and Voluntary Standard for Releasing Claims Under Title VII of the Civil Rights Act of 1964, 8 U. Pa. J. Lab. & Emp. L. 73 (2005). Thesis: While an agreement to release Title VII claims might not require the application of the objective theory of contracts like a contract in a commercial transaction, it also does not require application of the voluntary, knowing, and intelligent constitutional waiver standard. Craig Robert Senn, Knowing and Voluntary Waivers of Federal Employment Claims: Replacing the Totality of Circumstances Test with a Waiver Certainty Test, 58 Fla. L. Rev. 305 (2006). Thesis: Due to the totality tests shortcomings and problematic consequences for employers, employees, and the courts, a new and reformed analysis is needed to determine whether a waiver of non-ADEA federal employment claims is knowing and voluntary.
  • 11. Objective or Subjective Standard? Parsons v. Pioneer Seed Hi-Bred Intl, Inc., 447 F.3d 1102, 1104 (8th Cir. 2006) (district court should not have relied upon employees subjective state of mind when determining whether release agreement was valid under ADEA/OWBPA).
  • 12. Knowing and Voluntary Cases 1st Hernandez v. Philip Morris USA, Inc, 486 F.3d 1 (1st. Cir. 2007) (release of Title VII claim). 3d W.B. v. Matula, 67 F.3d 484 (3d Cir. 1995) (release of Rehabilitation Act claim). 5th Chaplin v. Nations Credit Corp., 307 F.3d 368 (5th Cir. 2002) (release of ERISA claim). 6th Alonso v. Huron Valley Ambulance Inc., No. 09-1812 (6th Cir. April 26, 2010) (release of right to judicial forum). 7th Hampton v. Ford Motor Co., 561 F.3d 709 (7th Cir. 2009) (release of Title VII claim, no tender back as alternative reason for denying validity challenge). 10th Torrez v. Public Service Co., 908 F.2d 687 (10th Cir. 1990) (release of 42 U.S.C. 1981 claim).
  • 13. Can WARN Act claims be released? When it applies, the WARN Act requires employers to provide employees with 60 calendar-day advance notice before a plant closing or mass layoff. Can an employees WARN Act rights be released? Allen v. Sybase, Inc., 468 F.3d 642, 653-56 (10th Cir. 2006) (no release of Warn Act claim when claim arose after release was signed). Joe v. First Bank System, Inc., 202 F.3d 1067, 1070 (8th Cir. 2000) (WARN Act claim released by general waiver). Williams v. Phillips Petroleum Co., 23 F.3d 930, 936-37 (5th Cir. 1994) (WARN Act claims released, no tender back as alternative basis, and appeal dismissed as frivolous).
  • 14. A. Standards for Valid Release 3. - ADEA Claims knowing and voluntary test is set by the OWBPA (29 USC 626(f)) - Statutory factors supplemented by EEOC (29 CFR 1625.22) - rationale: older workers may have difficulty returning to work
  • 15. OWBPA is a Floor, Not a Ceiling 3rd Wastak v. Lehigh Valley Health Network, 342 F.3d 281, 283 (3d Cir. 2003) (OWBPA sets the minimum requirements, and pre-existing totality-of-the-circumstances test also applies). 9th Syverson v. IBM, 472 F.3d 1072, 1075-76 (9th Cir. 2007) (employer must meet statutory requirements as well as knowing and voluntary standard).
  • 16. OWBPA is a Floor, Not a Ceiling 10th Bennet v. Coors, 189 F.3d 1221, 1230 (10th Cir. 1999) (OWBPA compliance is required, coupled with an assessment of totality of the circumstances). 11th Griffin v. Kraft General Foods, Inc., 62 F.3d 368, 371-73 (11th Cir. 1995) (OWBPA sets forth minimum requirements; totality of the circumstances must still be considered).
  • 17. A. Standards for Valid Release (A) the waiver is part of an agreement . . . Written in a manner calculated to be understood by such individual, or by the average individual eligible to participate; (B) the waiver specifically refer to rights or claims arising under this chapter; (C) the individual does not waive rights or claims that may arise after the date the waiver is executed; (D) the individual waives rights or claims only in exchange for consideration in addition to anything of value to which the individual already is entitled;
  • 18. A. Standards for Valid Release (E) the individual is advised in writing to consult with an attorney prior to executing the agreement; (F) (i) the individual is given a period of at least 21 days within which to consider the agreement; or (ii) if a waiver is requested in connection with an exit incentive or [group termination program], the individual is given a period of at least 45 days within which to consider the agreement; (G) the agreement provides that for a period of at least 7 days following the execution of such agreement, the individual may revoke the agreement, and the agreement shall not become effective or enforceable until the revocation period has expired;
  • 19. A. Standards for Valid Release (I) If a waiver is requested in connection with an exit incentive or [group termination program], the employer (at the commencement of the period specified in subparagraph (F)) informs the individual in writing in a manner calculated to be understood by the average individual eligible to participate, as to (J) (i) any class, unit, or group of individuals covered by (H) (A) (K) such program, any eligibility factors for such program, and any time limits applicable to such program; and (ii) the job titles and ages of all individuals eligible or (A) (B) selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program.