UBP blog


Recession and layoffs lead to a greater risk of retaliation against employers

Filed under: Uncategorized — ubpblogger @ 9:11 am
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It’s no secret that our economy is in a recession and companies have either laid off or are continuing to lay off workers. A recent Fox TV Rasmussen Report showed that 77 percent of Americans know at least one person who has been laid off from their job and 12 percent of Americans know at least 10 people personally who have been laid off. Given all these layoffs, one thing that employers should keep in mind is the heightened risk of violent retaliations associated with a layoff and with involuntary terminations in general.

While there is no guarantee that a worker will retaliate violently against an employer after being terminated, there is always still a risk. There are several steps that employers and HR professionals can put in place at their companies to help mitigate these risks and help protect all other employees.

1. Give as much warning as possible of upcoming layoffs (that way they will be less of a shock if your employees know they are coming).

2. When your company has selected a particular employee for lay off, explain to them exactly why they are being selected and frame your explanation in as positive a manner as possible (i.e. You are an incredibly hard worker and a wonderful asset to this company, but we have discontinued the product that you work on and we need to let you go.)

3. Most importantly, have a plan for all the logistical aspects of a layoff, starting with deciding whether they will be done individually or as a group. Will terminated employees be allowed to go back to their desks and clean them out themselves or will someone gather their belongings and bring them to the termination site? Either way, make sure to have strong bags or boxes ready. How will you protect confidential information, contact lists and computer files?

4. Treat laid-off employees with dignity. If possible, help them to avoid the layoff “walk of shame”. For example, layoffs could be scheduled during the lunch hour so fewer employees see former co-workers leaving the building with their belongings.

5. While you are laying an employee off, verbally explain issues such as severance packages, unemployment benefits and continuation of insurance coverage under COBRA. You should also send them a letter about these issues. Most employees have a difficult time processing what they hear when they are very upset.

6. Last but not least, in anticipation of a worst-case scenario, have heightened security measures in place, especially during a big week of layoffs or when you are laying off someone you know has a short temper. When you are concerned about safety issues, plan to do the layoff in a room close to an exit door where the terminated employees do not have to walk through an area filled with co-workers on their way out. Finally, never let the employees being terminated sit between the HR Director and other “messengers” and the door, blocking your escape route!

When is resignation “involuntary termination”?

Filed under: ARRA Act COBRA Subsidy,COBRA — ubpblogger @ 8:58 am
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For the purposes of the new ARRA Act COBRA subsidy, determining who qualifies as an Assistance Eligible Individual (AEI) due to an “involuntary termination” is a lot more complicated than many HR professionals think. That’s why the IRS released Notice 2009-27 on April 1, 2009 and included in it both a definition and further clarification of “involuntary termination” when dealing with the COBRA subsidy. With just two weeks left to notify all AEIs of the new COBRA subsidy, HR professionals must know what exactly “involuntary termination”means, what it includes and what it excludes. That way they can ensure compliance by notifying everyone about the subsidy and not inadvertently leaving anyone out.

The Notice defines an “involuntary termination” as:

“a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee’s implicit or explicit request, where the employee was willing and able to continue performing services”

based on all the facts and circumstances.

For COBRA Premium Assistance purposes, the facts and circumstances are what determine whether a termination is involuntary.

This means that under the IRS Notice 2009-27, a termination otherwise deemed “voluntary” (or a resignation) will be considered involuntary if the facts and circumstances indicate that the employer would have terminated the employee anyway and that the employee knew that his or her employment would be terminated.

In Notice 2009-27, the IRS gives examples of situations where the terminated employee would be eligible for COBRA due to the fact that his or her termination was deemed “involuntary” given the facts and circumstances. These circumstances include, among other things:

  • Failure of an employer to renew an employee’s contract at the time it expires (provided that the employee in question is willing and able to continue work under the contract)
  • Constructive discharge
  • Involuntary reduction in an employees work hours to zero resulting in loss of health coverage
  • Early retirement of employees who would have been laid off otherwise
  • Voluntary termination of employment due to an employer-initiated material reduction in the employee’s work hours or material change in the geographic location
  • Voluntary termination in return for a severance package (i.e. a buy-out) offered to the employee by his or her employer.

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