Transcript Options for Church Staff Reductions: Involuntary
Options for Church Staff Reductions: Involuntary Reductions in Force and Voluntary Employee Exit Programs
Victoria M. Garcia Partner Bracewell & Giuliani, LLP San Antonio, TX
Preliminary Actions
•
Freezes
–
Salary, hiring, promotion, post layoff hiring
•
Pay Reductions
–
Ensure applicable state wage payment laws are reviewed (advance notice may be required)
–
Reduced salaries must meet minimum $455 threshold to retain exempt status
–
Other limiting factors: employment agreements
Attrition Reductions
•
Job reduction through attrition:
–
Savings by not filling vacancies
–
Vacancies can easily be filled when conditions improve
–
Takes place over lengthy time period (but reduces immediate cost savings)
Reduced Work Schedules/Furloughs
• • • •
Placing employees on “no-work, no pay” status due to budgetary constraints, lack of work or other non-disciplinary reasons May be voluntary or mandatory Temporary – not impact on full time classification or benefits eligibility Permanent – adjust classification and benefits
Reduced Work Schedules/Furloughs
•
To realize cost savings, furloughs for salaried exempt employee must be for full FLSA work week:
–
Must ensure that employee performs no work during that week
–
No emails, phone calls, work at home, answering employee questions, etc.
•
Reduced Work Schedules/Furloughs
FLSA limitations on reducing exempt employee salaries
–
Employer can require exempt employee to use vacation during Furlough
–
If no vacation, salary must still be paid for partial week furlough
–
May not reduce salary for furloughs of less than a full “FLSA work week”
Involuntary Reductions in Force
Three Types of RIFs
•
Position elimination: position is completely eliminated
•
Position consolidation: 2 or more positions are eliminated and their duties are combined into fewer positions
•
Downsizing: the position continues, but with fewer employees performing the job duties
RIF Recommendation 1: Preparation
•
Use objective selection criteria for RIF selection between employees
–
Most objective: length/seniority of service
–
Facilities are usually more interested in retaining best performers, regardless of seniority
•
Determine if WARN or state mini-WARN applies to RIF
RIF Recommendation 2: Establish Criteria
•
Document criteria used to choose between employees for downsizing RIF
•
Rank employees separately for each facility, classification and work shift
•
Appoint a diverse committee to oversee RIF, determine selection criteria application of RIF criteria, consistency and fairness
•
After selections completed, conduct statistical disparate impact analysis
RIF Recommendation 3: Ensure Legal Compliance
• •
WARN: Facility Closing or Mass Layoff?
Is notice required?
–
30-day and 90-day analysis
•
If yes, provide timely and complete notice
–
60 days prior to facility closing or mass layoff
–
Affected employee, state dislocated worker unit, and chief elected official
•
State Law Mini-WARN Analysis
Older Worker Benefit Protection Act
• • • •
EEOC rules dictate employer notice to age protected employees under OWBPA Employee waiver must be:
–
In writing
–
Not Misleading
–
Plain language
–
Specific reference to ADEA Provide decisional unit notice information No “cure” for defective OWPBA notice
Special Requirements for Group RIFs
•
A “Group” RIF is two or more employees, at least one of whom is age 40 or older
•
Must inform employee in writing:
–
Group covered and the eligibility factors
–
Applicable time limits for execution of waiver agreement
–
Job titles and ages of individuals eligible or selected and all individuals in same job not eligible or not selected
•
Must give 45 days to consider waiver agreement and 7 days to revoke signature for a “Group” RIF
RIF Recommendation 4: Implementing the Reduction
•
Articulate “why” positions are being eliminated
•
Communicating with employees who are subject to the RIF
•
Enhancing Post-RIF Morale
•
Redefining the organization
Voluntary Exit Incentive Program
Voluntary Exit Incentive Program
•
Permitted by federal OWBPA
•
Few state law issues
•
Employer determines selection criteria to create “pool” of eligible employees
•
Factors: department, job classification, full time or part time, age, length of service
Examples of Exit Program Groups
•
Full-time Pastors who are at least 58 years old and have 10 years or more denominational service
•
All employees at schools with 20 or more years of denominational service
•
All employees who are at least 65 years old with 3 or more years of denominational service
Steps for Voluntary Exit Incentive Program
• • •
Facility may select specific department or unit, job title and age/seniority group
•
Use of age as eligibility factor does not violate law for voluntary exit program Provide notice of Program to eligible employees Give a minimum of 30 days to elect participation or reject
Steps for Voluntary Exit Incentive Program
•
No rescission or withdrawal from Program after employee elects to participate
•
Provide Separation Agreement with 45 days to consider and sign, 7 days to revoke
•
If insufficient participation, next step may be involuntary RIF
Benefit Options
•
Supplemental remuneration
•
Early work release
•
Vacation payout
•
Continuation of medical coverage for 60 days and premium payments
•
Benefit Options
Extension of eligibility for NAD retirement allowance (up to 3 years) – NAD Working Policy Z
•
Criteria:
–
Enter into retirement
–
Directly from employment with the organization conducting the Program
–
Not applicable if person becomes employed with another denominational organization before entering into retirement
•
Benefit Options
Extension of retiree moving allowance (up to 3 years)
•
Criteria:
–
Enter into retirement
–
Directly from employment with the organization conducting the Program
–
Has not received retiree moving allowance from another denominational employer
–
Not applicable if person becomes employed with another denominational organization before entering into retirement
Benefits of Voluntary Exit Program Over Involuntary RIF
•
Employees elect whether to cease employment
•
Less damaging to employee morale
•
Retain lower-paid and potentially higher motivated employees
•
Fewer legal challenges
Disadvantages of Voluntary Exit Program
•
To be successful, incentives must be offered beyond NAD policy
•
Program may be more costly than RIF in short term
•
Loss of experienced employees
•
Takes more time to implement than RIF
–
30 days for election to participate
–
45 days to sign separation agreement, 7 days to revoke
Voluntary Exit Program Considerations
•
Must be employee’s free and voluntary choice to accept or reject Program
•
Do not reserve the “right to reject” volunteering employees
•
Minimum age requirements are typically permissible (even if > age 40)
•
Maximum age requirements may violate the ADEA
Voluntary Exit Program Considerations
• • •
Ensure category of employees selected for program is not so small to create impression that specific individuals are being targeted for removal Not an “early retirement” program
•
Designate knowledgeable individual as “Program Coordinator” to answer employee questions
•
Establish timeline for actions – usually 90-100 days Ensure the Program is well-documented
Voluntary Exit Program Documents
•
Introductory Letter to Eligible Employees
•
Notice of Program and Terms
•
Personalized statement of Program and benefits
•
Employee Election Form
•
Waiver and Release Agreement
Voluntary Exit Program Documents
•
Frequently Asked Questions (FAQ’s)
•
“Reminder” letters to eligible employees
•
Timeline of actions
•
Involve attorney from the beginning of Program development
Elements of the Introductory Letter to Eligible Employees
•
States that the organization needs to reduce employees, but that the choice is voluntary
•
Explains eligibility criteria
•
Use to deliver Program Notice, Personalized Statement, Election Form, Sample Waiver and Release, and FAQ Responses
•
Identify with whom the employee may discuss the program
•
States the Election Deadline
Elements of the Program Notice
•
Explains eligibility criteria
•
Explains election process and deadlines
•
Explains exit incentive benefits
•
Explains separation agreement and timing to sign agreement
•
Reiterates that the program is voluntary
•
Contains at-will employment statement
•
Provides contact information for questions
Elements of Personalized Statement
•
Specific to each individual recipient
•
Explains how the employee meets the eligibility criteria
•
Lists the benefits that the individual will receive if he or she chooses to participate
•
Explains the program election process, deadlines and requirements
Elements of the Release and Waiver Agreement
•
Important dates
–
Last date of employment
–
Date agreement provided to employee
–
Consideration period
–
Revocation period
•
Elements of the Release and Waiver Agreement
Benefits provided to the employee (examples)
–
Salary through end of employment
–
Supplemental compensation
–
Paid days off
–
Reimbursement of medical plan premiums
•
Legal claims the employee is releasing
Elements of the Release and Waiver Agreement
•
End of employment issues
–
Confidential information
–
Return of facility property
•
OWBPA decisional information required by OWBPA
–
List of job titles and ages of individuals eligible for the Program
–
List of job titles and ages of individuals with the same job classification who are not eligible for the Program