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Firms differ in handling of layoffs

By Scott Andron, McClatchy Newspapers, Source: MCT News Service

MIAMI _ When Shareef Malnik decided to close his landmark Miami Beach restaurant for renovations, he wanted to be sure service remained top-notch until the very last customer was served.

So he said nothing to most of the employees who worked an overnight party in late April. After the last dish was cleared, Malnik e-mailed the restaurant's 100 employees with the news that The Forge would be closing for six months and they would no longer have jobs.

Most received no severance.

Crispin Porter + Bogusky, the Coconut Grove, Fla., ad firm that has won Adweek's Agency of the Year award for its innovative work for clients such as Burger King and Microsoft, has an on-site gym, allows workers to bring their dogs to the office, and provides a concierge to help employees with errands.

So how did the media-savvy ad gurus handle the layoff of 50 employees recently? They called small groups into a room, told them they were fired, and sent them to clean out their desks under the watchful eye of a human resources employee. (The company says it also offered to clean out workers' desks for them and return personal items.)

They did get severance pay, however.

There's no happy way to fire workers who have done nothing to deserve it. But some ways are better than others.

While there's general agreement among employment lawyers and human resources professionals that some practices _ providing severance pay, for example _ usually are good for both employer and employee, such advice is not always followed, especially if an employer is in dire financial straits.

With the economy on the rocks, more and more companies are wrangling with how to handle layoffs. The Miami Herald has documented 4,194 jobs eliminated through mass layoffs in Broward and Miami-Dade counties so far this year _ and that figure probably represents just the tip of the iceberg because most layoffs are not made public.

Even well-managed layoffs can harm a company's reputation, hurt the productivity of remaining employees and attract lawsuits. And common practices that seem reasonable to many managers may appear heartless in the eyes of a laid-off worker.

NO WARNING

Debbie Sedaka, who lost her job at the Fort Lauderdale office of IDI, an Atlanta-based firm that builds and manages warehouses, doesn't like the way her Jan. 22 layoff came down.

"I worked for the company for 10 years," she said. 'I walked in from lunch, my boss called me into his office and said, 'I'm so sorry.'"

Sedaka, a mother of two who is in the midst of a divorce, would have appreciated some notice. Instead, she said, she was asked to clean out her desk right away.

"I was told to hurry up and leave," she said. "I was just kicked to the curb."

She did, however, receive six months of severance pay from IDI. The firm said it laid off 14 of its 225 employees, mainly because of the loss of a single major customer.

The United States is one of the few industrialized counties where advance notice and severance pay are rarely required by law.

Advance notice certainly is the kinder way to fire, said Mark Cheskin, an employment lawyer with Hogan and Hartson in Miami, but managers need to balance that against other considerations.

For example, will the laid-off workers remain productive knowing their employment comes to an end in a few weeks or months? Could they use the time to steal customers away for a new employer?

"In most instances, making the day of termination the last day of employment in the workplace is a best practice," Cheskin said.

LONGER NOTICE

Though his advice is widely accepted, some companies like to give longer notice.

"We always give at least 60 days if not longer," said Nancy Norris, a spokeswoman for J.P. Morgan Chase & Co.

The banking giant recently acquired Washington Mutual, and integrated its employees into its workforce, resulting in at least 55 local layoffs. Notice gives laid-off workers time to look for a new job, either within Chase or elsewhere, Norris said.

Experts interviewed cited several ways employers can try to minimize backlash from layoffs:

_Severance pay, they said, is definitely a good idea. First, it tells the outside world that the company is trying to do the right thing, which mitigates harm to the firm's reputation.

Secondly, it can have legal benefits. Many companies offer severance in exchange for workers signing a promise not to sue the company. Courts will rarely overturn such a contract because the worker received something of value _ cash _ in exchange for the promise.

Companies that choose to offer such deals must give workers time to consider it and, if they wish, consult an attorney, before accepting. Otherwise, the contract could be invalid.

Average severance pay in the United States was 1.39 weeks for every year of service for professional and technical workers and 1.23 weeks for nonprofessionals, according to a survey published in November by the human resources consulting firm Right Management. Managers and executives received more, according to the survey of 456 firms.

_Workers should be chosen for layoffs or job preservation based on some logical system, whether it be seniority within a department or unique skills and knowledge. The company has to use a system it can defend in court.

_Managers should be prepared to give some sort of answer when some workers inevitably ask why they were chosen to be laid off but others were not.

Legal experts, however, don't agree about how specific this answer should be.

Michael W. Casey III, an employment lawyer with the Miami office of Epstein Becker & Green, said it's often better to give a general answer citing factors such as seniority, recent performance evaluations, or disciplinary records.

'There's a saying in this business: 'The more you say, the more you pay,'" Casey said. "When you're firing someone, you want to say as little as possible."

In some cases, however, the company may want to allow workers to appeal to a company committee if they believe the criteria weren't properly applied.

Cheskin suggested a somewhat different approach. "To me, the better practice is to tell someone why they're let go," he said. 'Because if they don't, it allows the imagination to run wild. How bad does that sound to a judge or jury: 'They gave me no reason.'"

Managers should not mislead employees, either _ not even to save the feelings of a mediocre performer, Cheskin added. That's because the U.S. Supreme Court has held that juries can infer discrimination if an employer lies about the real reason for dismissal.

_On a more personal level, experts advise employers to treat laid-off workers as respectfully as possible. For example, it's rarely a good idea to make workers clean out their desks under the watchful eyes of fellow employees, a company official or a security guard.

'The No. 1 piece of advice I give clients is, 'Treat others as you would treat yourself,'" Cheskin said.

"If you treat someone who has been your employee for 15 years like a criminal, it's inviting trouble. At best, it generates bad will. At worst, it generates a lawsuit."

LOOK AT ALTERNATIVES

Before even starting layoffs, human resources experts said companies should consider alternatives. Can expenses be cut elsewhere? Would temporary furloughs solve the problem? Could workers' hours be cut instead of entire jobs?

Workers can be asked to come up with ideas for such cost-cutting, said Wayne Cascio, a business professor at the University of Colorado at Denver. "Make them part of the solution," he said. "What your employees really want to see is you made a good faith effort, you really tried."

Conversely, failing to make this effort could leave a bad taste in the mouths of former employees.

Sedaka, the office manager who got laid off from IDI, said the company wasn't interested in her offers to go part time or take a pay cut.

Then, she said, the company continued to spend money on expenses she considered questionable. "After I got laid off, the company took all the brokers on a ski trip," Sedaka said. "They spent $70,000 on a ski trip. Some of these brokers never brought a job to us and never will. There's a lot of eating and drinking."

IDI said the ski trip was a reward for the brokers, who are not company employees, and had been planned before the layoffs.

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(c) 2009, The Miami Herald.

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