Articles Posted in Terminations & Layoffs

By Lauren E.M. Russell

The more technological of our readers may be aware of a brouhaha involving a website named Reddit.  Reddit is best known, among the general population, for conducting structured question-and-answer sessions called Ask Me Anything (AMA), in which subjects respond to questions posted by Reddit users. The subjects of an AMA may range from the mundane (a trash man) to extremely high profile politicians, including President Obama. One Reddit employee, Victoria Taylor, was largely responsible for organizing and facilitating AMAs. She was fired in early July, and the resulting firestorm offers many lessons in what not to do when terminating a high profile employee.

What Happened? Who Knows.

For those involved in Reddit’s online community (known as Redditors) Victoria Taylor was a high profile individual. She was well known and well-liked by the community, which has many active participants. However, when Ms. Taylor was terminated, no information was given to community members.

Admittedly, this is a double-edged sword. On one hand, employment attorneys frequently counsel clients not to disclose the reasons for employee terminations: human resources decisions are confidential and will not be discussed. This can be especially true in employee-friendly states such as California, where Reddit is located. Those states may have statutes protecting employee confidentiality, which could result in employer liability if breached. On the other hand, when a high profile employee is terminated, other employees should always be prepared for the change in direction, and some explanation should be available.

In the case of Ms. Taylor, Reddit initially provided no explanation for her termination. Consequently, the public began to speculate that she was terminated as the result of a particularly hostile AMA involving Reverend Jesse Jackson. Given Ms. Taylor’s history of highly successful AMAs involving controversial figures, individuals understandably felt that termination for a single gaffe was unfair. As it turns out the Jackson AMA had nothing to do with Ms. Taylor’s termination. Instead, Reddit decided to take a change in direction, encouraging public figures to join Reddit and interact with the community directly, rather than using Ms. Taylor as a middleman.

But speculation should have been expected when no explanation was provided. Had Reddit informed key members of the public-those responsible for moderating Reddit’s forums-of the change in approach it intended, it could have avoided the controversy that resulted. Instead, these key Redditors went on strike, and effectively shut down the website. The resulting firestorm was damaging to Reddit’s public image, and profitability while the website was down.

Know Your Audience

Reddit’s second major misstep was in addressing and correcting its mistake. In an effort to get Reddit back on line, founder Alexis Ohanian issued an apology, what was posted to various boards on Reddit. Mr. Ohanian’s post was followed by a second written statement by Reddit CEO Ellen Pao. However, the tone of the statements was viewed by the protesting parties as condescending, and insufficient to fully address the issues giving rise to the protest. More specifically, the moderators who disrupted the site felt that the way in which Ms. Taylor was terminated was symptomatic of other problems at Reddit, including a lack of effective communication and a lack of respect and appreciation for the work that Redditors do, on a voluntary and uncompensated basis, to contribute to the success of the website. As a result, the statements exacerbated the conflict, rather than resolving it.

It is admittedly difficult to address conflict after it arises-ideally careful handling of a high profile termination will avoid problems in the first place. But when they arise, a business must be able to effectively communicate with its employees and/or consumer base to resolve the issue. In this case, a more effective approach may have been a joint statement from Reddit and Ms. Taylor, both apologizing for the manner of the termination, and communicating Ms. Taylor’s support for the organization. If such a statement was not possible due to an acrimonious termination, then the tone of Ms. Ohanian’s and Ms. Pao’s statements should have been more cautious.

The Results

Weeks later, Reddit still hasn’t recovered from the controversy surrounding Ms. Taylor’s termination. However, it has resulted in additional shakeups. Reddit’s CEO, Ms. Pao, was terminated and its founder, Mr. Ohanian, was reinstated as CEO in an effort to quiet the situation. Ms. Pao was, admittedly, a highly controversial figure both at Reddit, and in the tech industry generally. But her poor management of the termination of Ms. Taylor-one of the most visible faces of Reddit-is undoubtedly the cause of her termination.

Bottom Line

High-profile terminations must be carefully managed, and planned out before the termination is affected. The effective use of a severance agreement and a public joint statement by Reddit and Ms. Taylor could have alleviated much of the strife in this particular case. Instead, Reddit alienated much of its user base and created an avoidable firestorm. Businesses undertaking similar actions-especially for the first time-are well counseled to consult with an attorney, public relations professional, or other expert to effectively plan for a termination that will inevitably become public news. Preparation is the best way to avoid public speculation, and the resulting unrest that arises from the worst-case-scenarios dreamed up by those who are not part of the decision-making process.

I never discuss politics. Never. I don’t have the stomach for it, to be honest, and I avoid the subject like the plague. That said, I did manage to watch part of the Presidential Debate on Tuesday night. There are ample pundits who surely have more insightful (i.e., political) commentary than what I can offer. So I’ll gladly leave the politics to others and stick with what I know–employment law. Here’s one HR-related lesson that I took away from the debate.

One of the hottest topics of post- debate discussion was Mitt Romney’s comment about “binders full of women.” I’ll admit–when I heard him say that, I cringed. It just sounded so wrong.

But I’ll admit that I cringed for another reason. I assume Mr. Romney did not actually plan to say that he’d looked at “binders full of women.” Surely he meant to say that he’d reviewed binders full of resumes of female candidates. But, alas, those were not the words that he said. And now he’s stuck with the ones he did say.

And that’s the lesson for HR professionals. Be careful with your words–they’re hard to get rid of once they’ve been said and even more difficult to escape once they’ve been committed to paper.

I used to teach a seminar called, “Help Me Help You.” The theme of the seminar was effective documentation for supervisors and HR professionals. My slide deck consisted of real-life examples of documentation “done wrong.” One slide, for example, showed an excerpt of hand-written notes taken by a supervisor who later became the alleged wrongdoer in an age-discrimination case. He’d taken the notes during a pitch presentation by an outside vendor and had written, “would be good work for young project managers.”

What he meant, he explained at his deposition, was that the work offered good opportunities for junior project managers–not necessarily young ones. I have no doubt that his explanation was an honest one. But that didn’t make it any less uncomfortable when asked about it by the EEOC attorney who was deposing him.

There are more stories like this than I can possibly recount–although someday I may try if I ever getting around to writing my memoir of life as an employment lawyer. The point, though, is this: Words are cheap. Their consequences can be very, very costly. So choose wisely.

Jason Selch worked as an investment analyst for his employer for 10 years. The company went through multiple mergers and acquisitions and eventually was bought by a Bank of America subsidiary. After the BoA merger, Selch learned that his friend and co-worker had been terminated after declining to accept a pay cut.  

Presumably in protest of his friend’s exit, Selch marched into a conference room where the COO and CIO were meeting.  He asked the executives if he was subject to a non-compete agreement.  When the CIO answered that he was not, Selch promptly dropped his drawers and mooned the two executives.

The two execs, to their credit, weren’t flustered by the demonstration and simply returned to their discussion and went on with the meeting. Later, at the COO’s instruction, HR issued Selch a final written warning, which stated that any subsequent violation would result in his termination.  

When the CEO learned of Selch’s flagrant “display” of insubordination, however, he insisted that Selch be terminated.  As a result of being terminated for cause, Selch had to foreit contingency payments of approximately $2 million, which would have vested in a few months. 

Not surprisingly, Selch sued his former employer, claiming that he was entitled to the contingency payments because, in part, the written warning was a contract, which constituted a promise that he would not be fired unless he engaged in a subsequent policy violation. 

The court granted summary judgment to his employer and the decision was upheld on appeal.  In short, the court held that the warning was not a 
“promise” such that an enforceable contract was created. 

What are the employer take-aways from this case?

Well, first, kudos to the executives who, remarkably, managed not to lose their cool after such a visual assault.  Let us all be inspired by their ability to stay focused on the task at hand.

Second, today is my birthday and I find this story more than mildly entertaining. Because it is my birthday, I will take the liberty to be a bit more candid in disclosing my opinion here–what an idiot. Shame on Selch for acting like an immature middle-school kid. The good guys won this battle and I am glad for that. 

Via NY Daily News

When terminating an employee, employers need only one reason. Of course, there is rarely just a single reason for reaching the decision. But the existence of multiple reasons does not mandate that each reason be shared with the employee.  In other words, when an employer makes the decision to terminate, there should be only one reason upon which the employer relies and which is shared with the employee-the “final straw.” When an employer changes its “final straw,” it raises doubts both with the employee and with the court and changing reasons are evidence of unlawful discrimination. 

In Smizer v. Community Mennonite Early Learning Center, the employer told the employee that he was being fired due to a Facebook posting he’d made. But the employee didn’t buy it.  He claimed that he really was fired because of his “tardiness and lack of cleanliness in his classroom.”  He claimed that similarly situated female employees, who also were tardy and who kept equally messy classrooms, had not been fired.

If this claim were true, and there were late and messy female employees who had not been fired and the plaintiff was really fired for these reasons, it would support the plaintiff’s Title VII claim.  So the plaintiff sought the court to compel his former employer to produce documents he claimed would show these failings of his female counterparts.

The employer responded that evidence relating to tardiness and messiness were not relevant to the suit because, as you may recall, it fired the plaintiff due to a “troubling” comment he’d made about coworkers on his Facebook page. Thus, the employer contended, the evidence that the plaintiff sought was irrelevant to his claim.

The court disagreed.  In its opinion, it stated that the plaintiff had provided “ample documentation” tending to show that the Facebook posting may not have been the real reason for his termination.  Instead, the documentation apparently showed that the employer had claimed at various other times that there were other reasons for terminating Smizer-including his tardiness and lack of cleanliness.  In employment-discrimination claims, “a shifting justification for an employment action can itself be circumstantial evidence of an unlawful motive.”  Because evidence of “shifting justifications” may be admissible at trial, the requested documents were discoverable and ordered the employer to produce them. 

So what’s the big lesson employers can learn from this story?  In short, pick a reason and stick to it.  One reason to terminate an employee is all you need-and all you should have.  Certainly, there may be (and usually is) a long history of performance issues with the employee.  And all of these would be relevant to the employer’s decision to proceed to termination. But the “final straw” is not a “bail of hay.”  Pick a reason, stick with it, and don’t muck it up by giving multiple reasons for the decision at the termination meeting or in a termination letter.  If you’ve done what you’re supposed to do, you’ve addressed the other issues as they came up with the employee and he’s aware of those issues. 

Smizer v. Community Mennonite Early Learning Ctr., No. 10 C 4304, 2011 U.S. Dist. LEXIS 102212 (N.D. Ill. Sept. 7, 2011).

See also:

Bad Reason #29 to Fire an Employee

Don’t Hate Me Because I’m Brilliant: One Employee’s Tale

3d Cir.: No Protection for an Employee Who Lies

It happens everyday. Employees are let go for poor performance or lack of work. After the decision to terminate has been made, employers must consider whether to offer the employee additional pay or benefits in exchange for a release by the employee of all claims he or she may have against the employer.

A separation and release agreement is simply the contract used to document the understandings reached by the parties. In addition to the severance payment and release, the employer might agree to provide a neutral reference or outplacement services for the employee. The agreement might also contain an agreement by the employee avoid working for a competitor for a period of time.image

When should an employer consider a separation and release agreement? The following situations are typical:

· A termination in which the employee has already asserted a claim against the employer;

· A termination in which the employer is concerned that the employer will likely assert a claim;

· A termination in which the employer is willing to provide extra pay or benefits above what the employer would normally be entitled in exchange for a waiver of claims.

Although a waiver of claims is very desirable, employers should consider the possible consequences of asking for such a waiver, particularly if the severance payment is going to be small. By asking for the waiver, the employer may suggest to the employee – for the first time — that he or she actually has a claim.

See also:

Top 10 Layoff Tips
Best Practices When Considering a Severance Agreement

Our annual employment law seminar, held last month, was a tremendous success.  As promised,  3d man providing informaitonwe posted the first of the presentation slides (COBRA and the Economic Stimulus Package), last     week.  Today, we are happy to deliver the slides from Scott Holt and Maribeth Minella’s “Layoffs and  Reduction in Force” presentation.  

Mark your calendars–our next seminar will be held on June 5, 2009, as part of our Breakfast Briefing series.  Look for more information this week on the topic and registration.  In the meantime, don’t hesitate to let us know if there are topics in particular that are on your radar these days.

For more information on terminations and layoffs,  please see our prior posts, Top Ten Layoff Tips, and Bad Reason #29 to Fire an Employee.

What if your employer announced cut-backs but, instead of announcing who would be subject to layoffs, you were giving the task of making the choice.  How easily could you select which of your coworkers you would “vote off of the island”?   Talk about peer pressure. Talk about cubicle wars!

Would you vote for the employee who never carries his weight?  Or would you invoke the Survivor strategy of voting off the strongest competitors–even though it means you’d run the risk that you’d have to do more or that the business would suffer in the absence of its key performers?  image

Thanks to a  new reality show, viewers can live this decision process vicariously.  In each episode of “Someone’s Gotta Go’,” workers at a struggling business will choose who should get a salary cut or raise and who should be fired based on information about pay and past performance.

Maybe you’d better smile at the coworker in the neighboring cubicle a little more often these days.

Delaware employers can learn more about other, more humane, alternatives to layoffs at our annual Employment Law Seminar on April 29.  (Learn more about the employment-law seminar here and register for the seminar here).

Delaware’s largest industrial employer is asking its salaried workers to take at least two weeks’ unpaid leave.  75 of the company’s senior leaders announced that they will take three weeks off without pay in response to the current market conditions.  There are a number of reasons to consider initiating this type of voluntary program instead of involuntary layoffs.  According to the article reported by the Wilmington News Journal:Dupont

Employers appear to be favoring voluntary programs, according to a February survey by Watson Wyatt consulting firm. Eleven percent of the 245 U.S.-based companies surveyed have instituted mandatory furloughs, while another 6 percent expect to launch a program in the next 12 months.  By comparison, 10 percent already have had voluntary furloughs and another 9 percent are expected to ask for voluntary furloughs within the next 12 months, the survey said.

A DuPont representative cited the current preference for flexible work schedules as one reason for its decision to initiate the voluntary program.  Another reason was that it made compliance with foreign laws easier than if an involuntary layoff program had been utilized. 

For those of us on the East Coast, where summer is king, now may be an ideal time to consider offering a flexible-downsizing initiative.  If your organization is trying to cut labor costs without having to layoff its valued employees, you may want to think about unpaid leave, voluntary furloughs, and reduced-schedule work week.  If your employees traditionally flock to the beach on Friday afternoons, they may jump at the chance to work a four-day week for 4/5 of their normal pay.  Even a temporary program for the summer months may be enough to enable your organization to stave off unwanted involuntary reductions.

I’ll be conducting an audio conference on layoff alternatives in June for M. Lee Smith Publishers.  Be sure to check out the HR Hero website for lots of resources on employment-law and human-resource topics, including information about voluntary and mandatory furloughs.  Delaware employers can learn more about the legal considerations involved in layoffs at our annual Employment Law Seminar on April 29.  (Learn more about the employment-law seminar here and register for the seminar here).

Layoffs and reductions in force were the topics of a seminar we presented yesterday, during which we reviewed how to plan and implement workforce reductions, requirements for severance agreements and releases, and alternatives to layoffs.shutterstock_21093820

In following up to yesterday’s discussion, here is a list of the “Top 10 Layoff Tips”: 

1. Plan your business first.

Your business plan should always be at the forefront of any decision. Don’t let a reduction in force later hamper your ability to compete. Even if they don’t result in costly litigation, short-sighted layoffs can be expensive because when your business picks back up you will eventually need to replace your laid-off employees.

2. Plan your reduction in force second.

Any reduction in force, whether a traditional lay off or an alternative, should complement your business plan. The short-term goal is to cut costs, but a reduction in force should not cut corners.

3. Consider alternatives.

There are many alternatives to traditional layoffs, and their beauty is that you can tailor them to fit your company’s needs. Alternatives include job sharing, reducing employee hours, voluntary sabbatical programs, and cutting benefits. The list is long and varied, so be creative.

4. Document, document, document.

HR professionals who are worth their salt know that good documentation is the first line of defense to an employee’s discrimination claim. Likewise, impeccable documentation of your reduction in force planning and implementation is your first line of defense to discrimination claims that may arise from a reduction in force.

5. Control the process.

Translation: Don’t wait until the last minute. If you think your business is on shaky ground, start thinking about how to reduce your labor costs. Ultimately, you want a reduction that cuts costs, keeps your best employees, and can get your business through the economic downturn. If you wait and make labor cuts your last resort, you will likely sacrifice one of those goals.

6. Involve stakeholders.

Who? The people who can be trusted with the company’s actual financial condition, who have a good reputation with employees, who can think creatively, and who represent affected employees. These are the people who have demonstrated a commitment to your company’s success. Don’t just involve the same managers who make all of the decisions. Think creatively about who to involve in the process.

7. Seek the advice of legal counsel early.

This accomplishes two important things. First, layoffs can lead to angry employees, who are more likely to sue you. Involving legal counsel early can help you reduce your exposure to lawsuits by making sure your reduction in force does not run afoul of any employment or labor laws.  Second, your communications with counsel are likely protected by the attorney-client privilege, which is important in litigation. This does not mean that the process should be kept secret, because it shouldn’t. The purpose of the privilege is to give clients the opportunity to speak freely and without the concern that what they say to their attorney will be used against them later. That, in turn, means you can float your creative ideas by your attorney and not have your brainstorming held against you.

8. Thoughtful risk analysis.

Whether you involve legal counsel or not, any reduction in force has to be planned and implemented with an eye on potential legal missteps. If you control the process, you also have an opportunity to think about the potential hazards in a meaningful way. Consider the risks your reduction in force poses and if they are too great, change the plan.

9. Identify WARN notice issues.

We’ve posted about the Worker Adjustment and Retraining Notification (WARN) Act before. Basically, it’s a federal law that requires certain employers to give employees 60 days advance notice of a layoff. If you employ at least 100 full-time employees or 100 full-time and part-time employees who, in the aggregate, work at least 4,000 hours per week, any reduction in force discussion should include consideration for the WARN Act.

10. Special considerations for older workers.

There are laws that pertain only to employees who are forty or older, and those laws have particular requirements for things like releases and severance packages. This is one more reason to involve your legal counsel early so that you can readily address any issues presented by workers who are covered by the Older Workers Benefit Protection Act (OWBPA) and the Age Discrimination in Employment Act (ADEA).

The four-day work week is very popular among public employers these days.  Employers who have implemented a compressed work week program successfully say they’ve enjoyed benefits such as saved energy costs, decreased absenteeism, and improved employee morale resulting from the change. 

I don’t believe that a four-day work week is the solution of all solutions, as some have claimed.  But I do believe that there are certain organizations that, because of their structure and purpose, can be good models for the program.  The ideal candidates, though, are almost always government employers.  A mandatory four-day work week, generally, is not realistic in the private sector. image

But does that general proposition lose its vigor in a bad economy?  Can the four-day work week be implemented in the private sector more effectively because of the downturn?  It turns out that flexible schedules can have important benefits in an economic downtime, just as they can in times of fiscal health.  The trick, though, is to get employers to be aware of the opportunities.  

Fast Company blogger, Cali Yost, has an ongoing series of posts about the benefits of “flexible downsizing” and why employers are better suited to consider this option as opposed to layoffs.  In a recent post, she explains:

There are creative, cost-effective ways to use strategic work+life flexibility to reduce labor costs while remaining connected to valuable talent. These options include reduced schedules, job sharing, sabbaticals, and contract workers.

In a recent interview with Penn professor and author, Dr. Peter Capelli, Yost questioned why more employers aren’t taking advantage of the benefits that can be derived from a flexible-downsizing initiative.  Most employers, said Capelli, are too short-sighted, focusing only on short-term cuts instead of the longer term savings to be had.  Capelli asserts that it is cheaper to retain an employee at  5% reduction in pay than to layoff 5% of the workforce because “there are no severance packages; the legal liability and associated costs are much less; and the savings come instantly without the agonizing administrative process of figuring out who has to go…”.

Flexible downsizing is also a valuable option when employers are trying desperately to avoid layoffs–at the cost of the fiscal health of the organization.  These companies are so pained by the thought of laying off personnel that they avoid doing so to the extent that it actually results in more layoffs in the long-term.  Alternatives such as voluntary, across-the-board pay cuts, reduced-hour schedules, and furloughs of even a few weeks can mean the difference between voluntary, and relatively minor, cut-backs now and involuntary and severe cut-backs later. 

Contact Information