The Evolution of the Pink Slip

The Worker Adjustment and Retraining Notification Act (WARN) requires that companies with 100 employees or more notify staff well in advance before shutdowns or bulk terminations, and the Older Workers Benefit Protection Act (OWBPA) was intended to prevent older workers from bearing the brunt of mass layoffs and offers protections for their employee benefits.

However, Mandelman attributes employers’ more careful planning prior to a termination less to these significant changes in legislation and more to the larger number of employees becoming versed on the rights that federal and state laws provide to them.

“Terminated employees are more likely to consult with a lawyer these days to see they if have a claim,” Mandelmann says. “Employers are much more concerned about having lawsuits filed against them.”

The desire to minimize litigation with disgruntled former employees, Mandelman says, has led most companies to offer all employees some type of severance package upon termination, no matter what the reason behind the firing may be.

These packages will vary, though Mandelman says one to two weeks of pay for each year of service has become a popular go-to formula, and are given in exchange for employer’s signature on a form that waives their right to sue.

Once an agreement has been reached, an employer will provide the employee with a formal letter outlining the terms.

“These days, severance package documentation is the new pink slip,” Mandelman says. He adds that most states require that companies provide employees with a written letter outlining the date that the termination went into effect and explaining when extended benefits, such as COBRA health insurance, can be optioned.  These formal letters mirror pink slips in function, if not color.

Dotting the “I’s” in Termination

Also markedly different is the fact that most companies no longer allow terminated or laid off employees to work two weeks past their initial notice of dismissal.