Terminating the Employment Relationship

the incentive they will be terminated. It is acceptable for employers to advise employees that, based on the number of persons accepting the early retirement incentive, there may be layoffs. However, employers should refrain from telling employees that failure to accept the incentive will result in their termination.

Morgan v. A.G. Edwards & Sons, Inc . 296 A company decided to implement a reduction-in-force (RIF) plan with the first phase being a voluntary severance incentive plan (VSIP). The VSIP was offered to select non-branch employees, including plaintiff, who were age 50 or older and had at least 15 years of service. The VSIP gave employees the opportunity to resign in exchange for one year’s salary, a lump sum bonus payment, health and group life insurance for one year, and the right to continue to vest in an unvested portion of deferred compensation. Employees were given a 45-day period to accept the VSIP and an additional seven days to revoke the acceptance. A memo was sent to all employees stating, in part, that “We anticipate…initiatives, including involuntary reductions in employment. The decisions concerning involuntary reduction have not yet been made and could be affected by the number of employees who participate in the [VSIP]. Employees eligible for, but who choose not to participate in, the [VSIP] along with other employees may be considered for any involuntary reductions.” 80 employees accepted the VSIP. The plaintiff did not accept it. Thereafter, plaintiff had ongoing performance issues until he was finally terminated from employment. Plaintiff brought suit and alleged, in part, that the VSIP violated the ADEA. The court held that the memo to all employees did not make the VSIP misleading or coercive. The company was frank and upfront that the VSIP was part of a larger goal to reduce costs that may include later involuntary reductions-in-force depending on the number of persons who accept the VSIP. The memo did not mislead employees into thinking that if they did not accept the VSIP, they would be laid off. The VSIP was truly voluntary. Vega v. Kodak Caribbean, Ltd. 297 A company decided to downsize. It announced the availability of a voluntary separation program (VSP) on September 15. The company distributed descriptive documents to nearly all employees regardless of age or years of service. The materials spelled out the benefits afforded, method of calculating severance pay, and how the program would be implemented. The company encouraged workers to participate, but did not require them to do so. It informed all employees that if substantially fewer than 26 persons opted to enter the VSP, others would be reassigned or furloughed in order to reach the desired staffing level. On October 4 and October 10 the plaintiffs signed the VSP agreement and received a severance package. The plaintiffs brought suit alleging the VSP was discriminatory under the ADEA. The plaintiffs alleged that the company’s sponsorship of the VSP resulted in their constructive discharge by forcing them into an unpalatable choice between early retirement and dismissal. The court ruled in favor of the company finding that the VSP

Terminating the Employment Relationship ©2019 (s) Liebert Cassidy Whitmore 84