Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.bonus,americast.usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Fri, Oct 30 1992 Date: Fri, 30 Oct 92 04:42:14 EST Message-ID: 10-29 0000 BONUS: Some offers aren't so voluntary USA TODAY Update Oct. 29, 1992 Source: USA TODAY:Gannett National Information Network After 28 years at IBM, maintenance technician Andrew Chervak left his job in July without so much as a handshake from his boss. Instead, he took part in a ritual known as sign-or-starve: He got in line at the IBM country club and signed a paper saying it was his choice to give up his job. But it doesn't feel that way to him. Chervak, 56, of Endwell, N.Y., had good performance appraisals until his last year. Without signing the waiver promising not to file suit, he would have lost his severance - a year's salary. WHY IS THIS TREND HAPPENING? As more corporations turn to voluntary buyouts and early retirement programs to cut jobs, many workers are coming to the same agonizing conclusion Chervak did. In the past, early retirement often meant a fat bonus check and the chance to double-dip - resign, take the money and run to the competition. But today jobs are scarce. Severance packages aren't nearly as generous. And based on mounting evidence from employment attorneys, you're as likely to be pushed out the door in a voluntary program as you are to jump - especially if you're a highly paid, older worker. ARE THESE PROGRAMS VOLUNTARY? No, says Steve Platt, co-chairman for the age discrimination committee of the National Employment Lawyers Association. Platt gets 20 to 30 calls a day from people being pressed to accept so-called voluntary offers. "I've never seen so many employers acting in such a mean-spirited way toward their employees," he says. WHY IS THIS ACTION SPREADING? Indeed, the use of voluntary programs has risen dramatically the past three years. Early retirement plans are available for those nearing retirement; they usually add years to an employee's age and length of service to allow the employee to collect benefits. Voluntary severance programs can be offered to any employee, regardless of age. Typical benefit: 2 weeks' pay for every year of service, up to a year's salary. HOW MANY COMPANIES ARE OFFERING SUCH AN OPTION? Wyatt, a benefits consulting firm, says 19 of the USA's 50 largest companies offered early retirement to employees in 1990 or 1991. The American Management Association surveyed 836 members: 34% offered early retirement the past year vs. 19% in 1989; 29% offered voluntary buyouts vs. 19.5% in 1989. Meanwhile, the use of share-the-pain strategies such as hiring freezes, salary cuts and short work weeks dropped. HOW ARE EMPLOYEES REACTING? Not only are more programs being offered, but also more employees are signing up. This year at IBM, 40,000 - twice the number expected - signed up for a voluntary buyout. General Motors got 6,300 salaried workers - 2,300 more than expected - to take early retirement. Kodak had 8,354 people - almost triple the number expected - take early retirement. WHY IS THIS OCCURRING? Employers believe workers are more loyal to the corporation than they really are, and they underestimate their entrepreneurial spirit. In the mid-'80s, many companies lost their most valuable people to early retirement programs. To remedy the problem, they've switched to targeted buyouts, offered in certain locations or to specific skill groups. They reserve the right to deny the plan to an employee with an essential skill. HOW HAVE EMPLOYERS RESPONDED? Employers are generally pleased with low-ball estimates. "It costs them initially, but next year the bottom line is really enhanced," says William Morin, chairman of Drake Beam Morin, which helps companies design voluntary programs. As the number of buyouts offered has risen, so has the use of waivers. Sixty percent of employers - 10% more than five years ago - require workers accepting voluntary programs to sign documents waiving their right to sue, says Drake Beam Morin. Many employment lawyers say wide usage of waivers allows companies to push people out in droves. WHAT IS THE REASON? Passage of the Older Workers Benefit Protection Act, originally designed to ensure workers 40 and older get benefits they're entitled to. Before the act took effect in October 1990, employers risked being sued for age discrimination even when departing employees signed waivers. But the act spelled out how a waiver could be constructed to hold up in court. As long as companies give employees 45 days to consider a voluntary program, notify them of their right to consult a lawyer and allow them seven days to change their minds, it's difficult for workers to prove they were coerced. WHY DON'T COMPANIES JUST FIRE EMPLOYEES? Some companies genuinely want to treat their workers well. Others just hope to avoid discrimination lawsuits. Many large companies have overfunded pension plans that can pay for early retirement offers without hurting the bottom line. And it's been proven that workers who survive layoffs suffer low morale and productivity - so the more generous the offer to departing employees, the less productivity will suffer. WHAT DO COMPANIES HAVE TO BEWARE OF? The few corporations remaining that boast full-employment or no-layoff policies also have their images to consider. Despite cutting 40,000 jobs this year and 63,000 from 1986 to 1991, IBM continues to cling to its full employment tradition. Offering a voluntary plan that isn't truly voluntary isn't against the law, either. It's when members of a protected class - older workers, women, minorities - are targeted that discrimination is possible. HOW IS COERCION AVOIDED? "It's a very delicate thing," says Morin, whose firm coaches managers at IBM, GM, General Electric, AT&T, Monsanto and Dow Chemical on how to "chat people out of companies." A manager can't threaten to fire you if you don't accept a buyout, or even let you know co-workers are taking one. But managers can say the next time around, the company might have to look at layoffs. WHAT IS THE FALLOUT? Attorney Steve Platt sees a common pattern: a "reign of terror" that lasts six months to a year, during which workers are reprimanded, rotated on different shifts and demoted. Then they're warned they'll be fired, and given the option of resigning with a severance package. Don Girouard, 60, a former sales manager in GE's Chicago office, says he signed a waiver under duress two years ago after being demoted and told his job had been eliminated. A 32-year employee, he had been promoted five times and was making $70,000 a year, plus commissions. He now earns $20,000 a year selling specialty advertising items. He has sued GE. HOW DID IBM MAKE THE CHANGE? At IBM, performance appraisals got tougher about a year ago. Many long-term employees who'd been judged average or above-average found their rankings had dropped. IBM spokeswoman Kathleen Ryan does not dispute that performance evaluations might have encouraged some to take IBM's latest offer. But she insists the program was voluntary, and that most employees who took it were happy. Bonus Editor: Kate Coughlin. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM