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Layoffs and Recalls Policy

March 09, 2008

The Layoffs and Recalls policy covers the procedures for: aiding employees whose jobs have been eliminated; alternative action before layoff; maintaining benefits and who is eligible; part-time or temporary employees’ rights during a layoff; “bumping” sequence; and recall notice.

Subject: Layoffs and Recalls

Organization: Anonymous

Example of: Standard Policy

It is the company’s policy to notify an employee in advance of any necessary layoff that is no fault of the employee. If advance notice is not possible, the employee will receive pay in lieu of notice on the basis of the greater of service time or applicable law.

Provisions

1. When a layoff is necessary, the following points will be considered in determining which position(s) will be necessary to temporarily dissolve.

• The employee’s job responsibilities in relation to the continued efficient operations of the company.

• The employee’s skill level and cross-training.

• The efficiency of the employee.

• The employee’s length of service.

2. Any employee on leave of absence during a layoff period will be subject to layoff on return to work, in accordance with the above considerations.

3. The company will give an employee being laid off a 7-day advance notice (or such greater time as may be required by applicable law), except in the case of an emergency layoff, where the situation would not have been predictable.

4. The company will give an employee terminated by layoff pay in lieu of notice, based on the employee’s length of service to the company.

5. Vacation pay for vacation time earned but not taken will be paid to the laid-off employee.

6. An opportunity to continue coverage under the company’s employee benefit plan will be given in accordance with COBRA.

7. The reinstatement of laid-off employees requires the approval of the general manager and the vice president for human resources.

8. Under normal conditions, the order of recall for employees being reinstated will be in reverse order of the layoff. Employees recalled will be required to report to work within a 2-week period.

9. An employee reinstated after a layoff lasting 6 months or longer will be treated as a new employee for all purposes.

10. Employees reinstated after a layoff lasting less than 6 months will maintain continuation of service if they report to work within 2 weeks of notification of recall. The employees must complete a Medical Group Enrollment Card, unless waived pursuant to applicable law.

• Hourly Employees:

—If a plan member at the time of the layoff, coverage begins on the first day the employee returns to work.

—If not a plan member, the employee must complete an Enrollment Card and coverage will begin on the first day of the month following 3 months of employment.

• Salaried Employees (exempt and nonexempt) will be eligible for coverage on the first day they return to work:

—For benefit purposes, an employee’s length of service will be reduced by the length of time the employee was laid off.

—If an employee was paid for earned vacation time when he or she was laid off, the employee will not be eligible for additional vacation time until January of the next calendar year.

Procedures

The supervisor will complete a termination record form, indicating that the employee was laid off. The termination date and termination code must be completed in case the employee is not recalled.

Alternative/Additional Provisions

Loss of recall status. Employees who violate applicable company policies, e.g., confidentiality, while on layoff status may not be recalled.

Determination of which individuals to lay off. The chief financial officer along with department heads will determine the number of positions that can be eliminated. On the basis of the number of positions to be eliminated, the department heads will ask immediate supervisors to identify those individuals whose positions can be eliminated. No one whose position may be eliminated is to take part in any of this process.

The decision of which employee to terminate will be based on prior performance reviews based on the company’s forced-ranking system. In other words, if there are 10 employees in a department, the employee ranked number 10 will be the individual to be laid off.

Department heads will review the application of this criteria by the supervisors.

Once the individuals have been identified, the group will be reviewed for adverse impact on individuals who are members of protected groups.

The group that will review this information will include the chief financial officer, the department heads, and the human resources department.

Procedures

The company will follow the procedures listed below in aiding employees whose jobs are eliminated:

• As much notice as possible will be provided to employees who will be laid off.

• Care will be taken to comply with all applicable laws.

• A range of continuation of compensation and salary from a minimum of 2 weeks to a maximum of 6 months will be provided. The actual amount of the assistance will be based on the economic condition of the company at the time. In extreme circumstances, it may not be possible to provide any benefits or compensation continuation.

• Counseling and training in outplacement assistance will be provided to laid-off employees.

• Assistance will be given to laid-off employees to qualify for unemployment.

Alternatives

Prior to laying off or reducing the number of employees, the company will consider all realistic alternatives to such actions. Such alternatives include but are not limited to:

• Obtaining price concessions from suppliers.

• Refinancing debt.

• Obtaining additional credit.

• Attracting new capital.

• Seeking to increase income by offering a new product or service line.

• Reducing the cost of current products or services.

• Selling off unneeded assets.

• Seeking government assistance through such plans as the Federal Trade Adjustment Act for jobs lost because of foreign competition.

• Reducing payroll cost voluntarily by such actions as voluntary retirement, unpaid leave for childrearing, job-sharing, voluntary reduction of hours, and the like. This alternative may need to be coordinated with actual notice of a reduction in force.

Maintaining Benefits

In the absence of applicable state laws, employees on layoff shall be permitted to maintain their health benefits for their total length of service or 12 months, whichever is the lesser amount of time. The employee shall be responsible for submitting the entire premium on a “due date” specified by the employee relations manager.

• Probationary and part-time employees have no recall rights, having been terminated. They may be rehired at the discretion of the company, after all regular full-time employees available for recall from layoff are placed.

• The “bumping” sequence to be utilized by the affected person(s) is as follows:

—A person affected is eligible to “bump” the least-senior person in his or her job grade, providing that person possesses less plant seniority.

—If there is no person with less plant seniority within the job grade of the affected person, the affected person is eligible to examine the least-senior person in each successive lower job grade, until a person is found whose plant seniority is less than the affected person.

—Each person who is bumped from a job classification may likewise examine each lower grade for the least-senior person in that grade with less plant seniority and replace that person. This process may be repeated until the person with the least plant seniority shall be forced out of the plant on layoff.

—Where several persons may become displaced in each successively lower job grade, the choice of job selections available within each lower job grade shall be made in descending order of seniority.

—Where a displaced person is not qualified to perform the job that is available in the bumping sequence, he or she may examine the least-senior incumbent in each successively lower job grade until he or she finds someone with less plant seniority whose job he or she can perform satisfactorily.

—Where a person is unqualified or unwilling to accept the terms of layoff to a lower job grade, that person has the option of either accepting a layoff without reassignment or resigning.

—A person shall not be permitted to skip an available job in the layoff procedure to obtain a job he or she prefers unless he or she is unqualified to perform the available job.

All of the foregoing is based on ability to do the job.

• Periods of reduced business activity demand reduction of staffing levels to maintain a financially acceptable position. Implementation of staff-reduction activities is to be based on a uniform and logical procedural system. This system shall provide the utmost equity and job protection for senior employees in descending order.

• Employees with more than 90 days but less than 7 years of continuous service at the time of layoff will have recall privileges for 1 year from the date of their layoff.

• Employees with more than 7 years of continuous service at the time of layoff will have recall privileges for 2 years from the date of their layoff.

• Where demonstrated skill and efficiency in performing the particular work available are relatively equal between two or more employees, seniority shall be the determining factor.

Temporary Layoffs

For temporary layoffs (those scheduled to last 30 days or less), seniority shall be the factor in determining which employees shall be retained, providing the employees have clearly demonstrated their ability to perform all phases of the job.

In any decrease of the workforce, probationary and temporary employees are the first to be dismissed.


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