In this installment of our Workplace Strategies Watercooler 2025 podcast series, David Froiland, a shareholder in Ogletree's Milwaukee office who co-chairs the RIF/WARN Practice Group, and Brandon Sher, a shareholder in the firm's Philadelphia office who co-chairs the Retail Industry Group, discuss the complex issues that may arise during the implementation of a reduction in force (RIF). Brandon and David review how the federal Worker Adjustment and Retraining Notification (WARN) Act regulations apply to remote workers and the "single site of employment" criteria. They also cover the specific triggers and requirements of state mini-WARN laws across various jurisdictions. Finally, David and Brandon address a number of other RIF/WARN issues, including statistical analysis and disparate impact theory, disclosures required by the Older Workers Benefit Protection Act (OWBPA), and multistate separation agreements.
Transcript
Announcer: Welcome to the Ogletree Deakins podcast, where we provide listeners with brief discussions about important workplace legal issues. Our podcasts are for informational purposes only and should not be construed as legal advice. You can subscribe through your favorite podcast service. Please consider rating this podcast so we can get your feedback and improve our programs. Please enjoy the podcast.
Hera Arsen: Hello, and welcome to the next edition of the Workplace Strategies Watercooler podcast series. I'm here with David Froiland, who's a shareholder in Ogletree Deakins' Milwaukee office and co-chair of the firm's RIF/WARN Practice Group. I'm also here with Brandon Sher, who is a shareholder in the Philadelphia office and who co-chairs the firm's Retail Industry Group. David and Brandon just presented a session at Workplace Strategies titled Advanced RIF Course—Navigating Complex Issues. I'm going to pass the mic over to David and Brandon.
David Froiland: Thank you so much, Hera. It's good to be here, and it's good to be in Vegas, baby.
Brandon Sher: That's right.
David Froiland: We just finished our presentation, and we're
going to talk about just a few of the more complex and nettlesome
issues that arise in the implementation of a reduction in force.
So, the first one has to do with how you treat remote workers under
the Federal WARN Act, which is difficult. We're going to
address that. The second one, we're going to talk about some of
the state law mini-WARN acts, which seem to be metastasizing.
We're going to be talking about statistical analysis and
disparate impact theory and how to use statistics in your RIF. The
fourth thing we're going to discuss really briefly is the Older
Workers Benefit Protection Act Disclosure and how to put those
together. And then the very last thing is the multi-state
separation agreements.
So Brandon, I'm glad that you're here with me, and
let's just start talking about some reduction-in-force things.
The first thing is the Federal WARN Act, and this is a notice law.
The law requires employers to provide 60 days of notice prior to a
covered action. A covered action is a plant closing or a mass
layoff. You need to have at least 50 employment losses at a single
site of employment in order to trigger the law, the federal law. A
single site of employment can include a campus. It could include a
number of buildings. If you have a manufacturing facility on one
side of town and a warehouse on the other side of town, and they
operate together as one, those together could be a single site of
employment. And the 50-employee threshold, we use that in order to
talk about plant closings or mass layoffs. And a plant closing is
when you either close down your plant or a unit of your plant. A
mass layoff, you need to have 50 employees and 33% of your
workforce in order to trigger the law.
When we're talking about these, we do have to remember that
there's a 90-day aggregation rule so that all employment losses
are counted within a 90-day aggregation period. So, you look back
90 days, you look forward 90 days, and essentially, it's a
90-day rolling period. So that on day 91, the employment losses
from day one roll off.
Now, the issue that's been coming up for all of us and has been
very nettlesome and difficult is the question of remote workers.
Where's the single site of employment for a remote worker? I
mean, this is a law that was passed in 1988, and that was long
before the dawn of pandemics and virtual work and remote work. So,
if I have a distributed workforce that is working remotely from
their kitchen table, the law is really clear that that can't be
the single site of employment that has one employee. These are
employees that have to roll up someplace, they have to be assigned
someplace, and the problem comes in the fact that the criteria are
messy and not easily applied.
So, the three criteria are for a remote worker, their single site
of employment is one, the site to which they're assigned as
their home base. Number two, the site from which their work is
assigned. Or number three, the site to which they report.
Theoretically, those could be three different sites. Or what do you
do in a case where you have an entirely remote workforce?
You're going to have to have people report up to somebody's
home office. That is a sticky and difficult and unsatisfying
exercise.
I think the reason for the loss started with field salespeople in
1988. We had field salespeople who would work out of their car, and
it makes sense that they report into someplace. That's less
clear when you have an all-remote workforce, and you may not have
brick-and-mortar sites.
The good news here is that I think that most employers can come up
with a better argument about where people report to than what the
plaintiff's bar can come up with. We know our organization
better, and so we can make better arguments about, well, this
entire sales group reports up to this VP, and even though
they're all remote, we're going to make it this VP's
home office. And that's the place. If there are
brick-and-mortar sites that are around, sometimes it can be an easy
place to say, well, we'll just tag these employees and have
them report up to the brick-and-mortar site if there's a really
logical argument for putting them there based on the three
criteria.
So, that's been a really difficult and sometimes maddening
exercise to go through with clients and applying this 1988 law to a
day in the life in 2025, where the game has changed. And the law no
longer applies very elegantly, but we're doing the best we can,
and we don't have a whole lot of law yet telling us that
we're getting it wrong. So, that is one of our challenging
issues. Brandon, why don't you tell us a little bit about some
of the state mini-WARN Acts?
Brandon Sher: Sure. So, in addition to having to do the appropriate analysis under Federal WARN, you have to also look at many jurisdictions' state mini-WARNs. Now, each state may have its unique requirements. For instance, both New Jersey and New York require 90 days' advance notice, whereas other states only require, similar to Federal WARN, 60 days' notice. Other jurisdictions actually have a lower threshold for triggering WARN. So, instead of the 50 employees, as David had mentioned, Wisconsin and Illinois only require 25 employment losses to trigger their mini-WARNs, and in the state of Maryland, perhaps 15 employee losses could trigger it. In other words, you have to do your due diligence. A new state that may or may not have a law passed is Washington. So, look out for that. In addition-
David Froiland: That one just came on in the last couple of weeks, I think, and the governor's maybe going to sign it. Is that where that stands?
Brandon Sher: Yeah, so it's been drafted, and the governor either can sign or a certain amount of days will pass, and they'll become law one way or another. We will see about that. Other thing to look into is the planning, because when you have a state mini-WARN involved, for instance, New Jersey, it requires an online form to be filled out. So, you have to make sure that you have all of the information required within the 90 days in order to satisfy those requirements. The good old city of Philadelphia, which I believe is the only city in the country, also has its own mini-WARN Act, and it is applied when there's 50 or more employees of a company that's having a shutdown of a location in the city of brotherly love. So, all good things happen in Philadelphia, David. And one of the more severe mini-WARN Acts is New Jersey's.
David Froiland: Terrifying. It is the most terrifying one of all. You don't even have single sites anymore. You don't have, just like, you'd count up all the employment losses at this site, you have to go way broader.
Brandon Sher: Exactly. This is really where you have to do your due diligence because, for instance, if you have 50 employees being terminated in a mass layoff, you obviously triggered a single site of employment. But in New Jersey, if you have 25 employees in Princeton being let go, and 25 employees in Newark, New Jersey, you will trigger New Jersey's Mini-WARN Act.
David Froiland: Oh my gosh.
Brandon Sher: Not only will you trigger it, you actually are required to pay mandatory severance to employees if they've worked at least one full year of employment. And again, they have a 90-day requirement. There is no distinction between full-time and part-time employees in New Jersey. Everybody counts. In addition to your point about remote employees, David, employees that report into New Jersey have to be counted for this.
David Froiland: So, even if you're a Utah employee, you still count as a New Jersey employee?
Brandon Sher: If you report into the establishment, yes.
David Froiland: Wow.
Brandon Sher: And if an employer fails to provide the 90-days' notice, in addition to the mandatory severance, which is one week of pay for each full year of service, they'll also be on the hook for four weeks of additional pay.
David Froiland: That's incredible. And the mandatory severance is really something that's new as well. The WARN Act, I think the Federal WARN Act and the other state law WARN Acts, those are notice laws, right? You can avoid the payments if you provide the requisite notice. You're kind of out of luck in New Jersey, aren't you?
Brandon Sher: Absolutely. And not only that, if a company already has a policy where they provide severance to their employees that they let go, if that severance is not more than the mandatory severance, they have to provide additional consideration in order to have a release.
David Froiland: You're just a ray of sunshine here. It's just one set of good news from you after another.
Brandon Sher: So, why don't you tell us about the next topic, David?
David Froiland: So, let's talk about statistical analysis.
Just two days ago, President Trump issued an executive order
telling the EEOC to deprioritize disparate impact as a theory. And
of course, disparate impact theory isn't one that gets used on
reductions in force very much anyway. I think the reason for that
is that most RIFs are decentralized. You don't have one person
making all of the decisions, but the theory of a disparate impact
claim is that if 50% of your workforce is over the age of 40, then
in an age-blind RIF, then roughly 50% of your selected employees
should also be over the age of 40. If you have 90% that are over
the age of 40, that's where the statistics tell us we may have
a problem.
Now, even if we don't have a formal disparate impact theory
anymore under the EEOC's enforcement and guidances, I
wouldn't urge employers to ignore this altogether. I think in
most cases it makes sense to do statistical analysis, for one
reason, because it'll help to point out if there are pockets of
the organization that have some red flags or some problems. And
maybe if you have five different VPs and one of your VPs
disproportionately selects older workers, the statistical analysis
sometimes can help you identify that. And maybe there's a very
good reason for why the numbers look skewed and why it appears that
older employees were affected in a disproportionate way. Or maybe
we don't have a good reason. In which case, maybe we should
rethink that a little bit.
An example of a good reason would be I had a case where there were
clay modelers and the clay modelers were designing beta parts for
cars, and they're designing them out of clay, and all of this
technology was being replaced by CAD drawings, and it turns out
that all of the clay modelers were in their sixties. Well, the
company got rid of the entire clay modeler department, and when we
looked at the aggregate numbers and the statistics, it looked like
the company had really, really disproportionately affected and
selected older workers. But when you unbolt that group of clay
modelers from the rest of the group, it became really clear. The
rest of the group was really clean and had pristine statistics. And
it's just the clay modelers. Well, everybody got treated the
same, all 19 out of 19 clay modelers were selected because we got
rid of that group. That's a really good reason for why the
numbers are off.
And I think that's a great way of fighting those cases or
explaining them, whether we're talking about it in a disparate
treatment context or a disparate impact context. And I think under
some of the state laws, it's likely that disparate impact could
continue. So, it does make sense, even if the EEOC is not pushing
this disparate impact theory anymore, we can't rule out that
the state still could do that.
Brandon Sher: David, under the disparate impact analysis, statistically speaking, are there different tests that could be run depending on the size of the potential layoff?
David Froiland: Yep. Yep. And I'm not a statistician. We
have a bunch of data analysts in our firm who are graduate level
statisticians with a Master's or a Ph.D., math guys, and they
run the analysis for us. But the two different tests they perform,
one measures the standard deviations, and if that number is over
two, we start to think, well, let's examine why that number
looks skewed. The other, in smaller groups, sometimes they'll
use the Fisher's Exact process as a way of looking at the
numbers.
So, I think statistical analysis is helpful. It might inform you a
little bit about what's going on in your RIF. It is not usually
a basis for making decisions or not making decisions by itself.
What we need to do is understand the color commentary and the
landscape around those statistics just to make sure we understand
them, and we can explain them.
I think the next two topics that we're going to talk about, the
next one is the OWBPA disclosure, and then the last one we're
going to talk about is the multi-state separation agreements. Why
don't you tell us, Brandon, about why we have to do these Older
Workers Benefit Protection Act disclosures, and what they do?
Brandon Sher: Sure. So, we have to do it because the law tells
us we have to do so. And we use the acronym OWBPA, which stands for
Older Workers Benefit Protection Act. And this disclosure provides
the employee the information required in order for them to validly
waive their claims under the Age Discrimination and Employment Act.
And in order to do so, the employer has to provide certain
information. What type of information is that? Well, first they
need to provide what is the decisional unit? What group of
employees or class of employees did the employer consider when
deciding who to select and who not to select for their employment
termination? They also have to provide a chart of these folks of
who was selected and who was not selected that provides their job
title, their age, and whether they were selected or not selected
for employment.
When counseling clients on issues like this, one thing that we want
them to do is their due diligence. Make sure that the job titles
are accurate. Depending on when the disclosure is being provided to
the employee, ensure that their age is accurately reflected. For
instance, did somebody have a birthday the week before when you
drafted the disclosure before you provided it to them? It's
more of an art than a science, the form, a lot of the times, David,
but when the client gives you enough information, we're able to
provide the decisional unit and make sure that's accurate. We
talk about selection criteria, and we really want to get it right
because we want to make sure that the release is valid. And what
are your thoughts about it?
David Froiland: It's a frustrating rule, and a lot of the
case law out there is unfavorable to employers, even when little
mistakes are made on the disclosure, which makes it sort of
frustrating, and it's even more frustrating given that the
regulations provide pretty mushy guidance about how to handle this.
For example, if you have a plant, and a plant has 130 people in it,
and you're going to close down the plant, and let's say
we've got six different departments in the plant, do we have
six different decisional units and six different disclosures, or do
we just treat these all on the same disclosure? And the regs
don't answer that question. I think that employment lawyers
generally can agree that either case could be defensible under the
state, the current, law, but we always want to just, given that
this is always an uphill slog for employers that are trying to
defend their disclosures. I think it makes sense to think about
what kind of challenges could we face?
And if a plaintiff said, well, look, I'm in this department,
but I think you should have given me information from the other
departments, and I think you're concealing that information
from me, maybe we decide we can just take that issue off the table
by providing one disclosure that has all of them. Now, we can't
just alphabetize this by job titles. There's a case, actually,
that says you can't, you need to put these employees in an
order and in a sequence that makes sense. So, if you're going
to combine departments, and you have the assistant general counsel,
and then in another department you have the assistant welder, and
in another department, you have the assistant janitor, you
wouldn't want to just alphabetize those and lump them all
together. You'd want to have another column that has
departments, and you'd want to divide people up by departments
because that's how the decisions are actually getting made. The
whole point of this disclosure is to show what the decision-making
looked like so that the disclosure follows the decision-making
process.
So, Brandon's right, and it's a little bit art and a little
bit science. We do think that the more cut-up disclosures can often
be defensible. We also think that in a lot of cases, especially if
it's a smaller group, it can make sense to just do one global
disclosure with an extra column that has department or other
decision-making unit as a way of taking the issue off the table
that somehow we concealed information from plaintiffs in one side
of the plant floor versus to the other side of the plant floor.
Just take the issue off the table and provide all of that
information so we can go into court, and we can say, "Your
Honor, we were transparent. We said exactly what happened. We
wanted the employees to know this, and we thought that's what
the regs require us to do."
Brandon Sher: And when drafting these disclosures, we like to make sure there's time to do quality control because we might make selections, but then the day before these employees are notified, maybe someone had to retain their job, or maybe a new slot opened up. So, we want to make sure the information is on the disclosure indicated as of a certain date because it's really a snapshot in time. And one thing I like to do with the clients that I advise is kind of question them. When they tell me the decisional unit is an entire department, I'll ask, well, did the supervisor of that department, was he considered, or she considered? If they were not, then they're not part of the decisional unit. So, you really just want to take something at face value. You kind of really have to dig into this stuff and make sure that you're really providing accurate information.
David Froiland: The one other point I'd make about these
disclosures, I think for about 800 years in Anglo-American law, if
two parties wanted to effectuate a release, all you have to do is
you have to say, I release you, and then you have offer, and you
have acceptance, and you have consideration, and that's all you
needed under just regular old contract law. Congress said, well, in
1991, Congress said, you know something, we think there are too
many employees who are being pressured into taking retirements that
are affecting their pensions and having a lifelong effect on their
family finances. And so, we want to have extra, extra, extra
disclosures before employees are permitted to waive and release
their age claims.
So, this disclosure is required for every RIF or for every release
to the extent it's a group termination program, and the
definition of group is more than one. So, even if you're
letting two people go, if you want the release to be valid against
federal age claims, the disclosure needs to be provided along with
the release. Now, it's not illegal if you don't provide the
disclosure. It just means that the release is not going to be
effective as to the federal age claims. So, you pay them the money,
and then they can sue you anyway.
Brandon Sher: So, David, if a client's letting go of three folks, two of them are under 40, one's over 40, who gets the disclosure?
David Froiland: So, we actually get this question pretty often.
All three employees go on the disclosure, if they were all
considered. If only one of them is over 40, that's the only
employee who actually gets the disclosure. We don't need to get
a release under the Age Discrimination Employment Act from the
employees who aren't 40 anyway. For the ones who are under 40,
we don't need it from them. So, they don't get a
disclosure, yet their job titles still and their ages still appear
on the disclosure for the person who does get it.
All right. Let's switch to multi-state separation agreements.
And I have to brag about Brandon here a little bit. This is, I
think, becoming one of the biggest nightmares for a lot of
employers. And it used to be so easy, we would just do two
agreements, two templates. One was for California, the People's
Republic of California, and the other was for the other 49 states.
Easy-peasy. And that's just really simple. But the state's
increasingly implementing new rules that require a whole bunch of
magic language to effectuate a release in their state, and it's
rules about language that must be there, and it's rules about
language that may not be there in the release.
And so Brandon, faced with this conundrum, has fashioned, I think,
a pretty brilliant and thoughtful way of doing a fifty-state
release with the least number of templates. And so, he buckets
certain states together. Why don't you tell us about your
bucketing approach, Brandon?
Brandon Sher: Buckets, everybody's favorite word here. So, I
have clients often ask, well, Brandon, as David mentioned,
we've always done California and 49 other states in one general
release agreement. What's changed? The answer is the
proliferation of the #MeToo movement. Many states now prohibit
non-disparagement, confidentiality, et cetera, and if we're
doing a reduction in force, chances are there's not an asserted
claim. So, a lot of these things are not triggered, but we
don't know, for instance, if they are. So, my approach is to
keep it as simple as possible. If we have a reduction in force,
really, I think most employers only care about keeping the amount
of the severance confidential, and if they do so, we can avoid a
lot of the requirements of a lot of these #MeToo movements.
Now, one way of looking at it also is which states have
requirements besides #MeToo. Certain states have prohibitions on
non-compete agreements. Some states have different revocation
periods. Good old Minnesota, regardless if you're over the age
of 40, has a 15-day, they call it a, rescission period. So, I think
that would be confusing to some employees who are, for instance, in
Pennsylvania. Well, if you live in Minnesota, you get 15 days. So,
I make Minnesota its own bucket because that makes it very clear
that no matter how old you are, you get this 15-day rescission
period in order to make sure there's a validly released claim
under the Minnesota Human Rights Act. What I like to do is keep the
states that are trickier, California, New Jersey, Minnesota, and
there's many others that can list, and make those separate
templates. This keeps it simple. This way, if those states
aren't at issue for your reduction-in-force, you don't have
to worry about it.
And of course, a lot of people in HR, they want to simplify things
as far as number of templates because it creates less confusion and
less chances of human error, et cetera. So, a lot of times, we
could have a general template where instead of listing each
state's individual state laws that are being released, we just
do the federal laws, and any other state laws that may apply. I
like to include a savings clause that says, just because we do not
list every state, doesn't mean that we're releasing or
waiving our right to get release from other states. In other words,
the specific identification of laws, rules, or otherwise does not
mean that we're including everything.
David Froiland: So, Florida and Georgia, you would put in the same release because there's nothing special about those states?
Brandon Sher: Precisely.
David Froiland: What about does this break down red and blue based on ideology? States like West Virginia, are those easy on grounds that those are pro-employer states?
Brandon Sher: It's interesting you bring up West Virginia because it's actually a very pro-employee state when it comes to their releases. In fact, you have to identify the telephone number of the West Virginia Bar Association in case one of their employees wants some advice about signing the release. If there's a group termination in West Virginia, you have to provide them a similar disclosure as like the OWBPA in order for those claims to be released.
David Froiland: Even for younger employees?
Brandon Sher: Even for younger employees.
David Froiland: It's just mind-blowing sometimes, you just wouldn't think of that with West Virginia. Increasingly, there are state laws kind of require you to have separate carve-out language for that state. And so, I think the stakes are becoming higher and higher and the need to really individually tailor for the different states is becoming more urgent and more compelling all the time.
Brandon Sher: There are exceptions to this though. There's certain language that you can include in the agreements that this release is not based on a claim of discrimination, retaliation, harassment, it's based on a reduction in force, and some of these laws are not triggered, but you need to make sure these provisions are explicitly mentioned in the release, so we don't have these fines that you had mentioned.
David Froiland: And it is interesting when you think about if you want to do a non-disparagement clause, but you have to load it up with so many disclaimers about all the ways that you can disparage us before you get to the part about you can't disparage us. Query whether that defeats the purpose of the non-disparagement clause in the first place.
Brandon Sher: Absolutely. In my experience with a reduction in force, what our clients really want is for the employee to sign the release. So, I like to make it not intimidating by having too many of those disclosures and provisions like that, kind of make it very straightforward. This way, it's more likely that the employees sign the agreement.
David Froiland: I completely agree with that, and I think that
there's a lot of folks in the business world that want to see a
more, they want to see non-competes, and they want to see
non-disparagements, and they want to see all the confidentiality,
and you can understand why they would want that at the moment these
employees sign in order to get their severance. I think that the
state laws are making this more and more difficult, and I think
that the trend is going to be towards simpler and simpler
separation agreements so that fewer carve-outs are needed, fewer
disclaimers are needed. You can't disparage us at all, except
here's all the ways you can.
I think the move is going to be toward getting more simple on
these. And I think administratively, those are going to be easier
to have to distribute to employees. And I think that from an
employee standpoint, they don't want to see a twelve-page
addendum with all of the legal gobbledygook. They want to see that
they're getting a straightforward agreement from their company
that they've worked for, and this is what they have to sign in
order to get their severance.
Brandon Sher: I also like to advise clients that these templates are great for efficiency, that they're off the shelf, but they're only as good as the last time that they were updated. So, it's good to make sure that they're refreshed, make sure there's any new state laws that are out there, and I like to have checklists for these types of things. For instance, in order to get a release under the Older Workers Benefit Protection Act, you have to make sure that you give the appropriate consideration period, the revocation period, make sure it's knowing and understanding. The same type of checklists can be made for these different state provisions that are required.
David Froiland: Yeah, so I think those cover kind of the most sticky issues that we discussed during our presentation today. Brandon, it's good to present with you.
Brandon Sher: Likewise, David.
David Froiland: Thanks very much.
Hera Arsen: Thank you, Brandon and David, for giving us the highlights of your advanced RIF session. Thank you to the audience for listening today. We hope you will stay tuned for the next podcast in our Workplace Strategies Watercooler podcast series.
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