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Victoria M. Garcia Partner Bracewell & Giuliani, LLP San Antonio, TX PowerPoint Presentation
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Victoria M. Garcia Partner Bracewell & Giuliani, LLP San Antonio, TX

Victoria M. Garcia Partner Bracewell & Giuliani, LLP San Antonio, TX

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Victoria M. Garcia Partner Bracewell & Giuliani, LLP San Antonio, TX

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  1. Options for Church Staff Reductions: Involuntary Reductions in Force and Voluntary Employee Exit Programs Victoria M. Garcia Partner Bracewell & Giuliani, LLP San Antonio, TX

  2. Preliminary Actions

  3. 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

  4. 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)

  5. 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

  6. 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.

  7. 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”

  8. Involuntary Reductions in Force

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. Voluntary Exit Incentive Program

  17. 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

  18. 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

  19. 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

  20. 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

  21. Benefit Options • Supplemental remuneration • Early work release • Vacation payout • Continuation of medical coverage for 60 days and premium payments

  22. 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

  23. 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

  24. 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

  25. 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

  26. 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

  27. 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

  28. 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

  29. 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

  30. 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

  31. 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

  32. 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

  33. Elements of the Release and Waiver Agreement • Important dates • Last date of employment • Date agreement provided to employee • Consideration period • Revocation period

  34. 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

  35. 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

  36. Questions and Answers