MSEC M OUNTAIN S TATES E MPLOYERS C OUNCIL Exiting Employee Issues S. Lorrie Ray, Esq.

MSEC Issues to Consider t Independent Contractor Status After Discharge t Layoff Considerations t Unemployment t Waivers and Releases t Final Pay t COBRA t Employment References

MSEC Independent Contractor Status After Discharge t Two agencies regulate Independent Contractors –IRS –State Unemployment Division t Fines and Taxes a reality if employees improperly classified. Red Flags: –Employee becomes an independent contractor –Work remains the same –Employer controls the work –Worker paid hourly –Worker only does jobs for one employer

MSEC Layoff Considerations t Strategic View t Alternatives t Planning t Selection t Legal review – WARN? t Administration t Message and Behavior t Managing Survivors

MSEC Unemployment t Only 1 test: –Was the employee at fault –Fault of employer immaterial t Considerations: –Employee’s likely success –Employee’s likely suit t Consider helping employee to file: –If short time employee, sooner is better –Providing employee with income can ease tension

MSEC Waivers and Release t Advisability t Necessary Elements –Consideration –Release –Advice of Counsel t Tax Payments: wise to deduct for income tax

MSEC Waivers and Release t Under 40 –Give 7 days to reconsider to avoid coercion t Over 40 –Give 21 days to consider –Give 7 days to reconsider t Group Release with persons in group over 40 –Give 45 days to consider –Give 7 days to reconsider

MSEC Final Pay t In Colorado: –If employee quits – next payday –If employer terminates – immediately –Cannot deduct amounts if no written employee permission, unless theft, then must prevail at criminal trial. t In Other States: laws are similar t Cannot deduct below minimum wage

MSEC COBRA t Don’t overlook ARRA through 2009, maybe 2010 –Employer pays 65% and deducts amount from payroll taxes –Congress may extend this benefit – legislation is being considered t Qualified Beneficiaries Covered t Coverage – 18, 29 or 36 months t Election – 60 days t Payment – 45 days

MSEC Employment References t Consider neutral or positive references t References must be truthful t Designate reference provider t If employee engaged in violent or unlawful behavior – do NOT provide positive reference; consider strongly providing documented job-related information to potential employers requesting it