This month, I am highlighting the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act). If your company staffs fewer than 100 employees, this law does not apply to you, but just the same it is better to treat your employees well when you sell your company, or when you furlough or lay off employees. The WARN Act is a U.S. labor law that requires employers with 100 or more employees to provide 60 calendar day advance notification of plant closings and mass layoffs. This law pertains to all your employees, either salaried or hourly. If there is a union, they must receive notice. The local official (mayor) must receive a notification, and the state dislocated worker unit. The purpose of the law is simple: give your employees time to get used to the loss, find other jobs, and hopefully have the opportunity to train or retrain to better compete in the job market.
It is important to note that the WARN Act does not include your part-time employees who work less than an average of 20 hours per week or those that have worked less than six months in the last 12 months when counting your full-time equivalents (FTE). Any contract employees are not protected, but as I have said before, contract employees are only contracted employees until you no longer need them. To review, if you give them an email, computer, and business cards, they are probably not contracted employees.
Exclusions also include: closing a facility because of a strike or worker lock-out; layoffs at sites with fewer than 50 employees; situations in which 50-499 workers lose their jobs, and that number is less than 33 percent of your total employees at a single worksite; situations in which the layoffs last less than six months or in which hours are not reduced 50 percent in each month of any six months. If you are confused, contact your local employment attorney before laying anyone off.
There are also exclusions to the full 60-day notice requirement. However, it must be as soon as practicable and explanation must be given as to why the notice is late. If you are not bored yet, give me a few more minutes because there are a few essential points.
Exclusions apply to the following circumstances: If your company is faltering by actively seeking capital or if the business believes advance notice would prevent its ability to obtain the money it needs to avoid a shutdown; if there are unforeseeable business circumstances (Ex: COVID 19); or there is a natural disaster.
COVID 19 may not have directly caused all the mergers and acquisitions in the Permian, but it has severely impacted an energy recovery. We all know capital infusions were slipping at the end of 2019, but COVID 19 and the subsequent shutdowns have clobbered almost every business and industry.
I started tallying the bankruptcies, mergers, and acquisitions in April but lost track. The last article I read was about Exxon laying off 723 employees in Houston. I used to love the old Humble/Exxon building and the Petroleum Club on the top. They made the best filet mignon chili on Fridays, or was that Tony’s? However, I am pleased that I have Chevron, Apple, and Chewy stocks. Oh, to have had a crystal ball a year ago.
Then, how can Southwest Airlines furlough employees for the first time? This month, 573 employees at Dallas Love Field received WARN notifications. Additionally, Southwest plans on cutting 530 jobs in Houston, 77 in Austin, and 142 in San Antonio. Southwest also asked its employees to take a 10 percent pay cut. Remember, from a previous article, if you cut an employee’s wages by more than 20 percent, they can file unemployment.
If I could keep my job and take a pay cut of 10 percent, I would jump at the chance. So why are many of the employees not wanting to take the pay cuts? Southwest is having a little problem with their unions, and now I might understand why. The Wall Street Journal had an article early in December entitled “Companies Stockpile Record Stack of Cash,” and the report said Southwest is one of the many companies sitting on substantial cash. My doctoral dissertation was on school finance, and this kind of finance is far from my expertise. I would refer you to a local finance expert, Dr. Steve Beach, at UTPB. There may have been many cuts in spending and dividends, but when it comes to the financial layperson looking in, such as myself and many of Southwest’s employees, things can be hard to fully understand. Also noted in the article was the fact that, with low-interest rates, there is no need for companies to pay down debt. If I were a Southwest employee and I heard that the company had a stockpile of cash, true or not, I would be reluctant to take a pay cut. Remember, if it is in print, it must be true.
Dr. Phil says, “No matter how flat you make a pancake, it’s still got two sides.” It is difficult with all the fake news to know what is real and what is false.
If you are going to lay off employees, you need to comply with federal and state laws and control the messaging. Your brand is essential both inside and outside of your organization. I look to Chevron concerning messaging. Their acquisition of Noble Midstream may have been difficult for some employees, but it happened like a lamb and not a lion in the public’s eye.
There is some good news for Texas: Hewlett Packard is moving to Houston. Who would not get out of California?
Remember, layoffs are hard. Can you imagine losing your job with a pink slip? From Connect First, you might want to read the short chapter on remembering to stand in someone else’s shoes.
This month’s advice is to keep calm and have a great employment attorney and a knowledgeable HR Manager you trust.
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“Your employees are the heart of your organization.” Dr. Michele Harmon is a Human Resource professional, supporting clients in Texas and New Mexico that range in size from five to more than 3,000 employees. Email: micheleharmon1@gmail.com