The Impact of Layoffs on Employees Who Remain : Q

Q Recently my company underwent a major downsizing. After a lot of anticipation and dread, I found out I was one of the lucky ones: I didn’t lose my job.

Immediately after the layoff announcements, two groups seemed to form at work--the “haves” and the “have-nots.” It created a lot of difficulty and animosity between the two groups.

What bothers me now is I feel guilty and apologetic to those being laid off. Are these feelings typical?

--P.S., Irvine

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A The reactions of people in your organization are indeed typical and represent some of the unforeseen negative side effects associated with downsizing.

While layoffs have a profound effect on the people being let go, they also can have a negative impact on the workers who remain, including a fear that they might be next. This is particularly problematic when a company doesn’t adequately inform employees about the reasons for the layoffs or downsizing.

It is important that companies take into account how layoffs and downsizing programs may affect the organizational climate for years to come. If organizations provide employees with appropriate justification for personnel cutbacks and show a good-faith effort to help laid-off employees find other jobs, they can minimize some of the effects on the remaining employees.

As for the animosity between workers who are “pink-slipped” and those who are not, it is important to realize the stress the laid-off workers are under and to try to minimize conflicts.

As for feelings of guilt, remember that you are not to blame for your colleagues losing their jobs. If your company had provided justification for the layoff decisions, you might not be feeling as guilty as you are now.

--Ron Riggio

Director, Kravis Leadership Institute

Claremont McKenna College

Low-Level Workers’ Access to 401(k)

Q My employer, a Fortune 500 company, will not allow me to participate in the company’s 401(k) program because I am below the “manager” level. (I am also represented by a union, but both union and nonunion lower-level employees are prevented from 401(k) participation.)

401(k) plans provide a significant tax shelter for retirement savings. Is it legal for the company to exclude certain classes of employees from participating? Shouldn’t all employees by eligible for the same government-regulated tax benefits?

--T.L., Burbank

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A Pension plans provide an incentive to accumulate compensation with great tax benefits. Even though the government is giving up immediate taxes, it is easing the burden on its welfare system in the future by encouraging people to fund their retirement years themselves. A 401(k) plan is especially valuable for executives at the upper end of the salary range.

As a condition of such favorable tax treatment, the government imposes certain rules. Theoretically, for instance, the plan cannot discriminate against lower-paid workers. It should include all of a company’s employees.

An employer can temporarily exclude certain employees from participation in the plan by imposing qualifications such as age or years of service with the company. But if your employer unlawfully discriminates against lower-level employees, the penalties could be very severe, including disqualification of the entire plan for favorable tax treatment.

I question whether the plan they have is really a 401(k). If it is a different type of an executive compensation plan or a bonus arrangement, it may be subject to other rules.

Whatever the nature of your plan, the plan document itself should be fully evaluated for its exact specifications. Don’t rely upon the oral representations of your management.

Also, it is possible the union may have negotiated different treatment under the plan to gain other benefits or because it has its own plan. Check with your union representative regarding this.

--Don D. Sessions

employee rights attorney

Universal City

Getting Paid for Out-of-Town Work

Q When employees who are paid by the hour are sent to work out of town, are employers required by state law to pay for the time the employees stay overnight and work the following days? Is there a difference if these assignments occur frequently?

--J.D., Long Beach

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A Unless your company is governed by a labor union contract, it is regulated by state laws that cover travel-time pay obligations. If travel is assigned by the employer, it is considered work time and must be paid for.

Employers can--and often do--establish a different rate of pay for actual travel time than the wage paid for a normal workday. That’s OK, as long as they don’t pay below the minimum wage of $4.25 an hour. If the total paid travel time exceeds eight hours in one day, the employer must pay an overtime rate of time-and-a-half.

The employee is not entitled to receive travel pay for meal periods or time taken for sleeping and relaxation. The employee’s normal commute time also isn’t eligible for travel pay.

The frequency of assignments should not affect the travel payments.

--Elizabeth Winfree-Lydon

senior staff consultant

The Employers Group

The Shop Talk column is designed to answer questions of general interest. It should not be construed as legal advice.