Articles

The Big Breakup: Handling Workers’ Departures with Grace

Employees today aren’t like those of yesteryear – they don’t take jobs and remain in place until it’s time to collect a pension and a gold watch. Companies have changed too, making the promise of a pension and a fancy timepiece rare.

According to the Bureau of Labor Statistics, the average tenure of the American worker is 4.6 years. For a Millennial worker born between 1977 and 1992, the wanderlust comes even sooner. Millennials move on an average of every 3.2 years, which means that over the course of a 45-year career each could hold a staggering 14 jobs.1

Companies that are wise to the new job-hopping norm take these new employment patterns into consideration when developing and communicating about their benefits plans. The number of companies that offer pensions is declining, but even employers that do so are finding that fewer employees hang around to become vested.

What’s the problem? According to the 2013 Aflac WorkForces Report,2 today’s employees are as much about the benefits as they are about the Benjamins. In fact, when asked what their employers could do to keep them in their jobs, 49 percent of workers surveyed said, “Improve my benefits package.”

As the economy improves, savvy human resources representatives are gearing up to meet the heavy demands of on- and off-boarding workers. That’s because a recent Society of Human Resource Management survey of HR professionals and managers predicts significant upswings in turnover as the job market continues to improve.3 What’s more, PwC Sarasota research and analysis shows that it’s not just rank and file employees who are heading for the exits: High performers are increasingly leaving their organizations. In 2010, 4.4 percent of high performers left their jobs, an increase of nearly 19 percent over 2009.4

The Aflac WorkForces Report found that stress plays a major role in employees’ decisions to leave their jobs. The report found that workers who are stressed are more likely to leave their jobs than workers who are not stressed (40 percent vs. 30 percent). And 28 percent of the employees who are likely to leave their jobs within the next year say their decisions will be driven by the fact that they don’t have peace of mind.

No matter how good a company’s benefits package or how persuasive its HR team, some workers will decide it’s time to break up and move on to perceived greener pastures. When that happens, it’s best to make the departure as easy and painless as possible. Employees who leave on good terms often become ambassadors for their former organizations, and some even serve as valued sources for referrals.

When a departure is involuntary, graciousness and professionalism are just as key: The proliferation of social networks means that disgruntled exes can make their voices heard far and wide, potentially damaging a company’s brand and reputation. What’s more, allowing workers to leave with dignity can minimize the odds of a claim or a lawsuit.

Here are a few conversations employers should have with departing workers to make their exits seamless and confusion-free:

  • Exit interviews
    When employees leave of their own volition, companies should encourage them to participate in exit interviews. These interviews provide employers with the opportunity to uncover the real reasons for worker attrition, because departing workers are generally more candid about organizational problems than those who remain on the job. After all, they have less to lose by their candor. Companies can use exit interviews to gather important information about whether salaries and benefits are up to par with competitors’, as well as to improve culture, processes, management and development.

  • The timing of final paychecks
    The federal government does not set a timeline for payment of final paychecks, but most states do. Employers should be sure they understand the rules in their states, because the timeline is often short – in many cases even immediate. Companies sometimes unwittingly violate these state regulations, which can leave them open to fines, penalties and interest payments. To ensure they meet state timelines, companies should consult the labor departments in their states. FindLaw, a website for small business owners, has compiled a list of final paycheck requirements by state.5

  • What’s included in final paychecks
    Final paychecks include payment for hours worked and, in the case of fired employees, any severance pay. But what about vacation time and sick time? The government’s Fair Labor Standards Act does not outline the rules on whether vacation and sick time should be included in a final paycheck. Instead, the decision about whether to compensate workers for unused sick or vacation hours is left up to the individual states. Ideally, a company’s human resources department will have a policy in place that is outlined in its employee handbook.

  • Health insurance benefits:
    When an employee covered under a company’s health plan leaves to take another job, he or she is protected by the Health Insurance Portability and Accountability Act. If new group health insurance coverage is available, either at the worker’s new job or through his or her spouse’s employer-sponsored plan, the departing worker must request enrollment in the new plan within 30 days. To ensure that pre-existing conditions are covered under the new plan, the worker’s former employer is required to provide a certificate documenting previous continuous coverage.

    Workers who are laid off, quit or retire from companies with 20 or more employees and who participated in their employers’ group health plans may qualify to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Employers must provide these departing workers with written notice explaining their rights under COBRA, and the workers have 60 days from the date of notice or the date coverage ended – whichever comes later – to sign up for COBRA coverage. COBRA coverage remains in effect for 18 months, or longer in some cases.

    Some employers offer workers the opportunity to enroll in voluntary health care benefits in addition to major medical insurance plans. These voluntary benefits vary from company to company and may include disability insurance, long-term care insurance, accident and hospitalization insurance, cancer or specified-disease insurance, and more. When meeting with exiting workers, employers should discuss their enrollment in these plans. In some cases, coverage terminates when employment ends. In other cases, coverage may be portable and remain in place as long as the worker continues to pay the policy premiums.

  • Retirement benefits
    Employers should provide departing workers with copies of their retirement plan summary descriptions, as well as with individual benefit statements. The summary description should explain whether and when benefits can be collected – either at retirement age or in a lump-sum payment – as well as whether benefits can be rolled over to an IRA or to a new employers’ plan.

Saying goodbye to an employee – whether the worker is leaving by choice or by force – isn’t as simple as a handshake and “Good luck.” No matter what the situation, the departure should be handled as amicably, professionally and unemotionally as possible. Companies should develop standard exit policies that apply to all departing workers, as well as checklists that ensure employees’ questions are answered clearly and promptly. By doing so, they will engender the good will of workers who have made the decision to move on and ease the discomfort and anxiety of workers who are laid off or fired.

Additional reading for employers and workers:

“Your Health Plan and HIPAA … Making the Law Work for You” - http://www.dol.gov/ebsa/publications/yhphipaa.html

“An Employee’s Guide to Health Benefits under COBRA” - http://www.dol.gov/ebsa/publications/cobraemployee.html

“What You Should Know about Your Retirement Plan” - http://www.dol.gov/ebsa/publications/wyskapr.html

Sources

1 The Bureau of Labor Statistics Employee Tenure Summary, accessed June 13, 2013 - http://www.bls.gov/news.release/tenure.nr0.htm
2 2013 Aflac WorkForces Report, a study conducted by Research Now for Aflac, accessed July 1, 2013 - http://www.aflac.com/aflac_workforces_report/2013/executive_summmary.aspx 
3 Society for Human Resource Management/CareerJournal.com Survey, accessed July 1, 2013 - http://humanresources.about.com/cs/retention/a/turnover.htm 
4 PwC Saratoga 2012/2013 U.S. Human Capital Effectiveness Report, accessed  July 1, 2013 - http://www.pwc.com/en_us/us/hr-saratoga/assets/pwc-saratoga-human-capital-effectiveness-executive-summary.pdf
5 FindLaw, “Final Paycheck Laws By State,” accessed June 25, 2013 - http://smallbusiness.findlaw.com/employment-law-and-human-resources/final-paycheck-laws-by-state.html