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Under current economic conditions, a carefully drafted and thoughtfully implemented severance and release plan for professional support staff may be an appealing option for law firms and other employers. Such plans may provide an appropriate transition from employment for individuals or groups whose employment is ended as a result of continuing responses to changing conditions. Responding to continuing work force turnover, commitments to decency, and expanding legal obligations and exposures, employers have developed a wide range of successful approaches to managing staff turnover, including the severance and release plan. Its objective is to assure a lawful, predictable and fair exchange of post-employment transition assistance to the departing employee, in return for a waiver and release of claims. Its basic elements include a formula-based payment, either in a lump sum or over time, designed to comply with the Age Discrimination in Employment Act (ADEA) and other equal employment laws, and contained in written plan documents conforming to the requirements of ERISA for welfare benefit plans and of the Older Workers Benefit Protection Act (OWBPA), respecting enforceable releases of federal age discrimination claims. The advantages of such plans are widely recognized in classic reductions in force. They can be administered efficiently and allow affected employees to make settlement decisions informed by the published terms of a severance plan that applies similarly to all departing employees. ERISA compliance confers advantages, including a private claims procedure encouraging prelitigation settlement of disputes, preclusion of many state law claims, and court (not jury) trials over many severance-related claims. Such plans may also be attractive in other circumstances. In the current economy, group or individual employment separations may signal ordinary continuing evolution in the requirements of the firm, not an economic downturn or “cause”-based discharges in the traditional sense. Indeed, the firm may continue to hire personnel in other areas or positions. In this respect, law firms participate in changes that are affecting employers throughout the economy. Anticipating these developments, law firm employers may consider adopting “standby plans” to address continuing work force adjustments that may from time to time include mutually agreed-on individual employment separations. Such plans offer several advantages in this setting. They provide a measure of security to employees who understand that their employment is at will and who desire some advance assurance that specified post-employment transition assistance will be available in return for a release of claims. Publication of the payout formula allows for advance planning and publicizes the employer’s commitment to fairness. The costs imposed by severance payments under well-drafted plans may be less than the cumulative administrative and payout costs of ad hoc arrangements. From this perspective, severance and release plans respond naturally to changes in the U.S. workplace. These changes have moved expectations from lifetime employment to a sequence of employment relationships that respond to changing interests, needs and markets over time. In this context, severance and release plans become a contractually agreed-on and predictable safety net providing transitional assistance and “no-fault separations” as employment ends. LEGAL REQUIREMENTS These straightforward and constructive intentions for severance and release plans must accommodate a lengthening list of requirements and restrictions from multiple sources. These include: � ERISA requirements, 29 U.S.C. �� 1001 et seq., made applicable because severance plans are “welfare benefit plans” under � 3(1) of that act, 29 U.S.C. � 1002(1), where they cover recurring actions over time and not merely a “one-time event,” Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987), even if maintained somewhat informally; � The ADEA, 29 U.S.C. � 621 et seq., and counterpart state laws prohibiting age discrimination in employment; � The OWBPA, 29 U.S.C. � 626(f), stating statutory conditions to the enforceability of waivers of age discrimination claims under the ADEA; � Equal employment obligations under statutes such as Title VII of the 1964 Civil Rights Act, 42 U.S.C. � 2000e et seq. and the Americans with Disabilities Act, 42 U.S.C. �� 12101-12213, both of which confer broad enforcement authority on the U.S. Equal Employment Opportunity Commission that must be accommodated in valid enforceable waivers and settlements; and � Where numerical triggers are tripped by the size of a reduction in force, the WARN Act, 29 U.S.C. �� 2101-09, and parallel state laws applicable to layoffs. Recent case law developments have also significantly affected employer severance practices and severance plan design. See, e.g., Oubre v. Entergy Operations Inc., 522 U.S. 422 (1998) (employee not required to tender back consideration before suit on ADEA claims under legally defective and unenforceable release); the EEOC’s proposed post- Oubre regulations, reported in BNA Daily Labor Report of April 23, 1999, to be codified at 29 C.F.R. � 1625.23 (purporting to confirm and expand on Oubre). David A. Cathcart is a partner in the employment and labor department of Gibson, Dunn & Crutcher LLP in Los Angeles, where he represents employers in all phases of labor and employment law.

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