Q. We are closing our California facility soon. We plan to lay off some of our employees and offer jobs to others in our facility in another state. We are also giving a select few of our employees the option to work from home. One of the employees to whom we gave this telecommuting option has declined it and requested severance instead. Our severance plan offers employees severance in just two situations: if the employee (1) fails to perform his or her assigned duties satisfactorily, or (2) refuses a transfer to another job at the same or higher pay grade at a location within 25 miles of his or her prior location. We do not want to pay severance to the employee. Are we obligated to pay him severance?
A. An employee’s right to severance depends on the terms of your company’s severance plan. In this case, your plan does not clearly address the situation at issue.
Arguably, if the employee refuses to perform any duties, he would be ineligible for severance under the first prong of your policy—in that he is failing to satisfactorily perform his duties.
The second prong does not directly refer to telecommuting. However, the plan administrator could reasonably conclude that if the employee refuses to work from home, he has refused a transfer under that part of the policy.
In this case, the plan administrator or other company official could conclude that the employee is not eligible for severance under the plan. But, the administrator should document the decision.
In addition, the plan administrator should also be very careful to make sure that any complaints by the employee are handled in accordance with the plan’s claims procedures.
Perhaps most important, the administrator should ensure that the employee is not being denied severance based on any unlawful reason or characteristic. That is, the company should take care to ensure that it is not singling out the employee and that it is treating him as any other similarly situated employee.