Voluntary Separation Programs: Key Regulatory Considerations; Employer Pros and Cons; Design and Implementation

This CLE webinar will examine how to design legally compliant voluntary separation programs (VSPs). The panel will discuss when employer clients should consider VSPs as an alternative to or in conjunction with involuntary separations. The panel will address key considerations for designing and implementing compliant VSPs, including complex regulatory, benefits, and tax issues. The panel will also offer best practices for mitigating the risk of enforcement action and litigation.

In a volatile economy, employers are faced with workforce reorganization and downsizing to cut costs. Many are considering VSPs as part of a reorganization strategy because they can reduce the workforce while mitigating certain litigation risks that may come along with involuntary terminations. However, VSPs come with their own risks of which counsel should be aware.

VSPs generally offer enhanced benefits to employees in exchange for their agreement to voluntarily separate from their employment within a defined period and execute a release of claims against the employer. Yet, designing and implementing VSPs requires counsel and their employer clients to understand complex benefits, tax, and employment regulatory issues to avoid the risk of noncompliance.

Key considerations for designing and implementing a VSP include: (1) ensuring that employee participation is completely voluntary without employer coercion (e.g., "first come, first served"); (2) clearly defining legitimate business reasons for the program, an objective selection process, and eligibility requirements not linked to any protected characteristics such as age; (3) complying with ADEA and OWBPA requirements for employees who are age 40 and above including providing certain written disclosures, identifying the decisional unit from which the employee is chosen to be offered VSP participation, and allowing the requisite time periods for offer consideration and revocation; and (4) ERISA and tax considerations when structuring the severance plan.

Listen as our expert panel examines the use of VSPs in workforce reorganization strategies. The panel will discuss key considerations for determining whether to use a VSP and offer best practices for VSP design and implementation.