If You Have to Make Layoffs, Furloughs or Close a Unit

Webinar Summary
Panelists discussed the legal implication of layoffs, furloughs, and closures from both legal and communications standpoints. Bruce Millman of Littler Mendelson discuss the differences between layoffs and furloughs, and the business effects due to the discontinuation of the employment relationship. The panelists discussed issues arising due to WARN Act considerations for businesses, as well as the internal and external communications strategies and processes for dealing with employment uncertainty, and laying off employees.

Below are key bullet points from the webinar –

• Both the federal and state WARN Acts trigger certain conditions and obligations for notice when discontinuing the employment relationship
• Bear in mind other termination considerations, including unused PTO, severance, continuation of benefits, all of which may vary by jurisdiction
• Be mindful of salary and wage changes for exempt vs. non-exempt employees
• Identify the appropriate methods for communication to your stakeholders, whether you are a franchisor, franchisee, or supplier
• Stay ahead in your message preparation to respond to changes in business operations and employment

Full Bullets –

• Furloughs & Layoffs à define your terms
• Layoff – generally permanent
• Temporary layoff/furlough – indicates a continuing relationship with the employer
  • Paid/unpaid
  • With/without benefits
  • Definite/indefinite
• Furlough often involves weekly strategies
  • Reduced workweeks, alternate workweeks, other schedule changes
• Federal WARN Act – certain conditions trigger WARN obligation for notice
  • 60 days notice for mass layoff or plant closing
  • 50+ employees in operating unit
  • 50+ employees who are 33% or more of employee complement at jobsite
    • Site based
  • Temporary layoff under 6 months is not a WARN trigger
  • Layoff beyond 6 months will trigger WARN
  • WARN notice has specific requirements
  • Unforeseeable Business Circumstance exception in WARN Act
    • Requires notice as soon as possible before the layoff. Important to provide notice to avoid class action later
  • Natural Disaster exception to WARN – requires written advance notice and compliance as soon as possible before the layoff
  • You must give notice
• State WARN Acts
  • Longer notice – New York
  • Lower thresholds – Illinois as few as 25 people
  • Shorter layoffs – Maine: if the layoff lasts more than 2 months you must give notice
  • Some without UBC exceptions
    • CA, NY, NJ, IL, Others
• Other Termination/Furlough issues
  • Final pay
  • Unused PTO?
  • Unemployment notices to employees
  • Unemployment notices to state agencies – sometimes contemporaneously with the layoff
  • COBRA
  • Severance/Releases (up to date? #MeToo)
• Salary or Wage reductions without schedule changes
  • Executive Contracts
    • Try to impose cuts across the board, but some contracts could be breached by these reductions, and kick in severance that could be much higher than the cuts you’re trying to impose in the first place
  • Minimum wage and minimum salary requirements
    • Don’t go below minimum wage or salary requirements to maintain exemptions
  • Advance notice requirements
    • Cannot reduce someone’s pay without notice – longest is Missouri (30 days notice)
  • Frequency of changes (exempt employees)
    • Possibly defeat exemption on salaried workers. If you frequently change this salary, you can endanger the concept that the employee is exempt
  • Constructive discharge?
• Salary or wage reduction for non-exempt employees
  • Notice
  • Minimum wage
  • Off-clock
    • Make sure you’re not incurring liability for significant off-clock work
  • Predictive Scheduling laws
  • Constructive discharge
  • Benefit issues
    • COBRA & eligibility
    • Insured
    • Self-insured – Stop Loss coverage
    • Plan amendment
• Salary or wage reductions for exempt employees
  • Full salary for workweek when any work is performed, regardless of quantity or quality
  • Salary reduction tied to schedule reductions risks exemption
  • Exempt employees need not be paid for any week in which no work is performed
  • Constructive Discharge
  • Benefits
• Partial Week furlough
  • Advance, lengthy reduction (months, not weeks)
  • Infrequent changes
  • Minimum salary maintained (not prorated)
  • Notice, etc.
• UI Options
  • Workshare programs
  • Reduced unemployment benefits for reduced hours that avoid layoffs
  • Advance application by employers for reduced UI benefits
  • Program participation means employees may be able to collect some unemployment
• Proper Stakeholder Communication amid Layoffs, Furloughs, and Unit Closures
  • Franchisor
    • Employees
    • Franchisees
    • Zee leads (in development)
    • Customers
    • Ownership/PE
    • Investor relations (public companies)
    • Suppliers/vendors
  • Franchisee
    • Employees
    • Customers
    • Investors/partners
    • Franchisor
    • Suppliers/vendors – look to these folks for best practices, as well
  • Supplier
    • Employees
    • Clients
    • Partners
• Map out Communications Channels
  • Franchisor à
    • Employees – email, phone, text, in person, social media; bear in mind person-to-person contact and private communication
    • Franchisees – email, phone, text, in person, webinars, intranet
    • Franchisee leads – email, phone, text, CRM
    • Customers – email, phone, text, inperson, onsite
• Frequency
  • Franchisor – daily town halls for franchisees – this information is passed from franchisor to franchisee to customers
  • Franchisor emails with guidance on relief and stimulus
  • Franchisee – daily social media, live streaming, email, PR with clients
    • Keep in contact and top of mind with collateral, mailers
  • Suppliers – weekly/twice weekly emails, phone, text
• Holding Statements
  • Hold off on making definitive statements before you’re informed as it risks greater damage
  • Be vocal and present, let your audiences know that you’re on top of it, then assess, evaluate and communicate again
  • Avoid rumors
• Staying ahead
  • Message preparation
    • Temporary closures
    • Modified operations
      • Business alterations: pick-up delivery; going virtual; extra precautions; exposure to virus
  • Franchisee support communications
    • Fee reductions
    • Government compliance
    • Financial management
    • Landlord communications – rent relief
    • State of the Union
• Layoffs and Furloughs
  • Communicate widely and often
    • Discuss and acknowledge your company’s position; commit to solving problems
  • Fill in information gaps
    • Share market data and competitive information, helps keep employees’ trust
    • Offer external resources
  • Deliver layoff/furlough message personally and respectfully in private
    • Internal communications first, external to customers follow, press is last to know
    • Do not broadcast this. Be personal, keep it internal
  • Support your team still employed
    • Insecurities will surface; communicate company status with concerned respectfully and privately
• Tone
  • Be real, authentic, sincere
    • Lean into company values, consider the viewpoint
    • Provide context for difficult decisions that are being made
  • Be informed
    • Accuracy during uncertainty is reassuring
    • Be in lock step with HR
    • Share government-regulated/mandated guidelines
  • Be collaborative
    • Include franchisees, customers, vendors – let other voices be heard
    • Respond to inquiries quickly and consistently
  • Be purposeful
    • What is the outcome you want from your communication; provide something of inherent value to your stakeholders
• Vibe
  • People before profits
    • Protect human connection
    • Empathy and compassion
  • Delivery is key
    • Clear, to the point
  • Strategic
    • Innovation, creativity, revenue focused
    • Use the disruptive lessons of the present to build for the future
  • Look ahead
    • Time is now to start the welcome back party