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You don’t need a weather vane to know which way the wind is blowing, and you don’t need a Wall Street Journal subscription to know we’re in a recession. Yes, there is some dispute about that, but disaster — when you’re in its midst — is hard to detect. So what’s the smart general counsel to do? Plan for a recession now, not later. This recession planning will translate into one thing: more work done by fewer employees, which means firing people (not, as one executive insisted on testifying, “right-sizing the company,” although I was able to talk him out of that). Here is the big idea: Whiteboard the organization and the positions you want, without talking names. Decide why the organization must look like this (in specific terms, not barroom generalities). Because jobs will be eliminated, you’ll be identifying new positions, old positions with different duties, and/or modified positions. Prepare new job descriptions accordingly, and use them in deciding who goes and who stays. If this sounds like a cookbook recipe for reductions in force, it is. It’s a time-tested way to keep the best employees. I have tried numerous RIF cases to juries. They understand the idea of holding on to the best talent but will reject — and be angered by — an employer’s argument that “the company was losing money, so employees had to go.” COURTS SPEAK One added twist: The U.S. Supreme Court will hear oral argument on April 23 in Meacham v. Knolls Atomic Power Laboratory, a key RIF case involving the Age Discrimination in Employment Act. According to the August 2006 opinion by the U.S. Court of Appeals for the 2nd Circuit, the employer conducted a RIF by rating employees on “flexibility” and “criticality” of skills (and other factors). Thirty-one employees were fired, 30 of whom were older than 40. The employees sued and won a large jury verdict. That verdict was set aside on appeal because, the 2nd Circuit said, it was the employees’ burden to prove the employer’s reasons for terminating them were unreasonable, not the employer’s burden to prove that its actions were based on reasonable factors other than age. The high court will now decide whose burden it is, but corporate America will be building cheerleader pyramids for the 2nd Circuit’s view in Meacham: “Any system that makes employment decisions in part on such subjective grounds as flexibility and criticality may result in outcomes that disproportionately impact older workers; but at least to the extent that the decisions are made by managers who are in day-to-day supervisory relationships with their employees, such a system advances business objectives that will usually be reasonable.” Translation: When it’s discrimination versus efficiency, efficiency wins. However Meacham is finally decided, never forget one important thing when firing people: Lives are affected by these decisions, not just the company’s return on investment. So be transparent on the whys and hows of the overall RIF; pay attention to the emotional needs of the remaining employees (survivor guilt is real and debilitating); and demonstrate concern for the toll on those making and communicating the decisions (I have sat with more than one crying manager). PLEASE RELEASE ME What of the departed? Severance or no severance? Release or no release? Here’s the drill: If offering two-weeks severance only, forget the release and just give them the money. A release offered and refused is admissible as evidence of consciousness of guilt. Releases must follow the intricate details of the federal Older Workers Benefit Protection Act. Like landing a jumbo jet, this law leaves no margin for error. If the severance-for-release deal involves more than two employees, the employer must tell employees who was considered for termination (by name and job title), who was then spared, and who was not. Why? The law acts as a consumer statute, requiring employers to provide information so that employees can make a considered choice on whether to take the money and sign or reject the money and sue. Biggest employer error under the Older Workers Benefit Protection Act? Failing to correctly identify the “decisional unit” — that is, those who were in the termination-considered group. The key consequence if the employer does not follow the law? Any signed release does not a bar to suit make. A more fundamental problem here is that too many lawyers assume one size fits all, think a release used 10 years ago is good to go today, and try to sound smart by drafting densely written, 20-page forms. It’s as if there was one release drafted in the misty past, handed down from generation to generation, and used again and again without question. Here’s the smarter way to go: Boil the release down to a few pages. Keep it simple with bullet points and check marks. The goal is to get the employee to sign it, not to show legal virtuosity. Write in active voice, not passive. A release stating that the employee has been advised to consult an attorney is invalid; the release must say that the company advises the employee to consult a lawyer. And think ahead. Extinguish any outstanding issues on reimbursements owed and commissions due, but don’t let a merger clause extinguish all obligations, such as an existing covenant not to compete. THE BIG GOODBYE Recessions leading to major RIFs also trigger issues under the federal Worker Adjustment and Retraining Notification Act. In general, a “mass layoff” of at least 50 employees at a single site, which adds up to at least 33 percent of the employees at that site, requires employers to give those workers 60 days’ notice. The biggest mistake employers make? Failure to understand the aggregation rule, whereby smaller job losses over a 90-day period may be “aggregated” to constitute a mass layoff. The key consequence for violating WARN? If an employer fails to give 60 days’ notice, it’s on the hook for 60 days of compensation to unnotified employees. Any loopholes? The Labor Department says an employer may pay in lieu of notice — that is, just give workers their full salary and benefits for the 60-day period instead of providing them notice and waiting around for two months. Capitalism depends on “creative destruction,” or so the theory goes. But the theory does zero to lessen the sting of being fired. Years ago (or what now seems years ago) I closed a law firm. Kaput. One of the things I learned is that decision-makers’ intentions count — to employees, to vendors, to clients, and, perhaps most importantly, to yourself. Keep that in mind, legally and humanely, in recession planning. You’ll be glad you did.
Michael P. Maslanka is the managing partner of Ford & Harrison in Dallas. Maslanka is board-certified in labor and employment law by the Texas Board of Legal Specialization and writes the Texas Employment Law Letter .

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