The headline of the article reads, “BuzzFeed Lays Off Nearly 70% of Furloughed Staff.” I scratched my nearly bald head. What was, what is, the status of that portion of the BuzzFeed staff?
Over the course of the last half-century, I have had some very good labor and employment law mentors on both the management and labor sides of the table. They taught me to use employment law terms carefully and intentionally because those terms have different meanings. This is especially important when it comes to ending employment using terms such as “just cause for termination,” “layoff,” “furlough,” “bumping,” and “recall.” Everyone needs to know what action is being talked about.
And then came the “feel good” generation of kids – and that includes my own children – who were raised with the “We don’t want to hurt anyone’s feelings” philosophy. Now, those children are grown up and responsible for communicating hard employment decisions. Some are apparently taking the childhood lessons of we-don’t-want-to-hurt-feelings to work. So I am seeing the use of euphemisms – or maybe game playing – to soften the blow of the termination of employment. This ends up causing confusion.
Decades of well-established law under the National Labor Relations Act teaches us when an individual who is not presently actively employed is nevertheless considered an “employee” and thus eligible to vote in a union election. As an example, in Windsor Woodworking, Inc. v. N.L.R.B., 647 F.2d 859, 861 (8th Cir. 1981) the outcome of a union election was a 25-25 tie (which the union loses), with 7 challenged ballots. The seven were individuals who, prior to the date of the election, had been told by Windsor that they were being “let go.” The NLRB determined, after a post-election hearing, that the seven individuals had a “reasonable expectation of returning to work.” As such, they were “employees” on the requisite dates for the election. Their votes tipped the results to the union.
The word “individuals” is emphasized above to reinforce that what counts is what the individual thinks: Did the individual reasonably expect that he or she was still employed and would be recalled to work in the future or not? That has been, and as nearly as I can determine still is, the standard applied by the NLRB on whether a person is still an “employee” under that law. The intent of the employer is not considered. The employer needs to use the right words that communicate what it means. The individual is not presumed to be a mind reader. In the words of the Eighth Circuit in Windsor, “The failure of Windsor to state to the seven employees that they were terminated rather than laid off is some indication that Windsor, at the very least, wanted to retain its options.”
The lesson that employers must be crystal clear in communicating an individual employee’s status carries over into other areas of employment law. Take, for example, the June 2, 2020, decision of the First Circuit Court of Appeals in Russomano v. Novo Nordisk Inc., regarding restrictive covenants in employment.
Russomano signed a covenant not to compete when he was employed by Novo Nordisk in 2016. The covenant not to compete ran during employment and for a period of 12 months following termination of employment. Then, Russomano was told his position was being eliminated and the employment relationship would be terminated effective Friday, August 3, 2018. He was encouraged to apply for vacancies at the company had. Some of the conditions for receiving severance pay included his continuing to be employed through the separation date and “not accept[ing] an alternate position with Novo Nordisk prior to the Separation Date.” Russomano was offered and accepted a different position within the company. The offer letter stated his start date in the new role was “[e]ffective [Monday,] August 6, 2018.” The First Circuit noted that August 6 was three days after the termination date specified in Russomano’s termination letter. When Russomano started the new job, he was not asked to enter into a new covenant not to compete.
In January 2020, Russomano resigned his employment with Novo Nordisk, and took a job with another company in the same general business as Novo Nordisk. Russomano asked Novo Nordisk for written assurances that it would not use his 2016 non-compete agreement to object to his employment with the new employer, BioMarin. Novo Nordisk declined to provide that to him. So Russomano sued Novo Nordisk, seeking a declaratory judgment that his new employment did not violate the non-compete agreement. Novo Nordisk filed counterclaims against Russomano, made third-party claims against BioMarin, and sought a temporary restraining order and preliminary injunction to restrict Russomano’s work for BioMarin.
The district court concluded that Russomano’s employment with Novo Nordisk was in fact terminated on August 3, 2018. The termination started the clock on the twelve-month period under which Russomano agreed he would not compete. That period ended on August 3, 2019. Thus, in January 2020, Russomano was under no obligation not to compete with Novo Nordisk.
The First Circuit agreed. In what I regard as sloppy language, the First Circuit set up the case by saying:
The [district] court found that Russomano was likely no longer bound by the non-compete portion of the agreement because, by its terms, those provisions expired twelve months after the termination of Russomano’s employment, and Novo Nordisk briefly laid him off in 2018 before rehiring him without having him sign a new non-compete agreement. Novo Nordisk argues that Russomano was not laid off in 2018 but instead transferred positions within the company, such that his employment was not terminated until Russomano resigned in early 2020.
The First Circuit used derivatives of the terms “laid off” and “terminated” here, to describe what Novo Nordisk did to Russomano, but these terms are not interchangeable. The court’s opinion later makes clear, and indeed, focuses on, the fact that Novo Nordisk did not use “laid off” terminology. Rather, Russomano was unambiguously told the employment relationship would be terminated. Novo Nordisk most likely wished it had told Russomano he was being laid off. Then the company might have been able to apply NLRA logic, like that from Windsor Woodworking, to argue there is a factual question as to whether Russomano remained an employee.
Employers, the words you use make a difference. Drop the “feel good” euphemisms. State clearly what you mean. And clearly state the consequences of the action.
Termination – means involuntarily ending the employment relationship, with no intention that the person will be “recalled” (recall is an instruction from the employer to return to active status, later, when business circumstances change, and with the expectation that circumstances will change). This is a permanent end to employment. Benefits and pay end. The ability to vote in a union election ends. Post-employment restrictions are triggered.
Layoff – means temporarily removing an employee from active status without severing the employment relationship, such that the individual reasonably expects he or she will be “recalled.” Pay ends. Benefits may or may not end (be clear — after checking with your benefits providers — about whether benefits end or not, and if not, for how long they may continue). The ability to vote in a union election continues. Post-employment restrictions may or may not be triggered, depending on how the agreement and the layoff notice are worded. Experience teaches that employers are well advised to put some limit on the period of layoff. For example, “if you have not been recalled within YYY calendar days from layoff, the employment relationship will be terminated.” Also, don’t forget to exercise recalls before hiring new people for the same positions as those on layoff. If you don’t, you might hear from a number of agencies who may receive complaints from the people who were told they were laid off and expected to be recalled.
The word “furlough” does not appear to have a uniformly accepted definition in traditional labor law. It may be used to describe unpaid disciplinary suspensions, reductions in the normal work week, or even the use of paid or unpaid time off on a temporary basis. Furloughs are typically a mere partial reduction in work where gross weekly pay is commensurately reduced, although the pay rate is not reduced. Benefits presumably continue during furloughs. Because one is still an “employee” under any of these usages of the word “furlough,” the ability to vote in a union election would continue. Post-employment restrictions would not be triggered.
Learn a critical lesson from Windsor Woodworking: If, as an employer, you are going to use a word or phrase, take the time to provide a detailed explanation as to exactly what you intend the employee understand the term to mean. In my mind, being clear about whether the employee’s interruption of employment is partial, temporary, or permanent is being compassionate and supportive. In addition, these messages can be delivered in a compassionate and supportive manner, even when using the correct, defined term.
Side Note: Under a layoff, and some furloughs that reduce the normal weekly work hours, the impacted individuals can file for unemployment compensation benefits, even though they are still employed. As is true for a traditional “termination,” whether the individual will receive those benefits will depend on the facts and circumstances of the change. But more likely than not, a person who has been “laid off” or “furloughed” will be approved to receive unemployment benefits. An employee furloughed due to a suspension for disciplinary reasons, however, may not.