Author: LP

Preparing for 2024: Employment Law Update

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Please join us on September 21st for a complimentary webinar geared towards human resources professionals, in-house counsel, business owners, and senior leaders. We will review developments over the past year and discuss what you need to be doing to be ready for 2024.

Topics will include:

  • New job posting and pay disclosure requirements
  • Illinois’ new PTO requirements and other PTO/leave-related developments
  • Increased scrutiny of non-competes and non-solicits
  • Employment law implications of data privacy and AI
  • Required changes to standard policies and documents to comply with new NLRB standards
  • Changing independent contractor classification standards
  • Supreme Court’s religious accommodation and affirmative action decisions
  • State law developments that will impact your business, including new non-discrimination, expense reimbursement, and marijuana laws

CLE & HRCI credits available

Thursday, September 21, 2023 | 11:00 am – 1:00 pm CDT

Register Here

‘Quiet Quitting’ Is Getting Louder – 7 Ways Employers Can Bolster Employee Engagement and Address the Risks of ‘Loud Quitting’

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Author Becky Canary-King

Employers have been concerned about “quiet quitting” for some time now, looking for ways to foster employee engagement and productivity. And new data shows the importance of doing so because “quiet quitting” has turned into “loud quitting.”

According to a new report from Gallup of more than 120,000 global employees, 18% of global employees are loudly quitting or actively disengaged. Contrary to quiet quitting, when employees do the bare minimum of their job, “loud quitting” is when employees do things that directly harm the company, undermine the company’s goals, or rebel against leadership. Loud quitting can look like a social media post bashing company leadership or vociferously complaining to co-workers about the organization.

If the underlying causes aren’t fixed, they can lead to resignations and recruiting challenges, so it’s important that employers take these risks seriously. To exacerbate the problem, the negative energy of loud quitting can spread throughout the company, hurting morale and making it harder to address.

In addition to the 18% of global employees engaged in “loud quitting,” the same survey revealed that 59% are quiet quitting. Only 23% of survey respondents said they are thriving or engaged at work.

There are several ways to foster a positive workplace culture that encourages employee engagement and promotes productivity. Many of these suggestions will help fend off quiet quitting before it turns loud.

7 Tips for Bolstering Employee Engagement and Promoting a Productive Workforce

  1. Ask for Feedback – and Listen. Employers should regularly seek feedback in a way that facilitates honest and helpful information. And employers should let employees know that they are listening. When an employee doesn’t feel like they are being heard, their feedback may become louder and unhealthy. Even if you can’t directly address an employee’s concern, acknowledge it and explain why you cannot do what they are asking now.
  2. Conduct Exit Interviews. Employers can gain valuable information during exit interviews, and it may also prevent someone from voicing their complaints to a wider audience. Listen to their concerns and use the feedback to address any issues.
  3. Give Consistent Feedback. Performance reviews should not be limited to the end of the year. Instead, check in with employees to address performance concerns as they arise, so there is no hiding from responsibilities. For instance, at LP, we recently transformed our process for giving and receiving feedback via casual “check-ins” and annual reviews to “F2=Feedback + Future” conversations, which are intentional discussions between group leads and their team members to share feedback and discuss future plans and goals. For more information on our revamped feedback process, see Feedback Is a Vital Tool of Lifelong Learning—How We’ve Revamped the Process.
  4. Create Clear Job Descriptions. Employees should have clear expectations for their position, even if they are expected to have some flexibility and jump in as needs arise. If their job duties change significantly, their job description – and title and compensation – should also be updated.
  5. Reward High Performers. Employees who don’t see upward mobility or their role in the company’s future may struggle with motivation, thinking there is no point in working hard. Creating a work environment where high performers are rewarded with promotions or increased compensation motivates employees to continue putting their best foot forward.
  6. Foster Positive Social Connections. Particularly in remote or hybrid work environments, workplace “silos” can become prominent, and employees can feel disconnected from their teams. Conversely, employees who are integrated into their work teams are more motivated to not let their team members down with poor performance or missed deadlines. Social connections within the workplace can also foster a sense of camaraderie and fulfillment. But be mindful of the potential for cliques that inhibit inclusivity and the risk of loud quitters hurting company morale.
  7. Foster a Compassionate Workplace. The hustle culture often ignores mental health and can lead to burnout or quiet quitting. By paying attention to employees’ well-being – physical and mental – employers can reduce absenteeism, boost productivity, and improve morale. A compassionate workplace also helps employees feel respected and recognized.

Building an engaged workforce is an ongoing process for each employer’s work environment. LP’s employment and executive compensation attorneys can help you develop a strategy for boosting employee engagement. If you have questions, please don’t hesitate to reach out.

New York Poised to Enact Broad Ban on Non-Compete Agreements

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Author Becky Canary-King

On June 20, 2023, the New York State Assembly approved legislation banning non-competes for employees and independent contracts, regardless of wage or salary. The New York Senate had approved the bill on June 7, 2023, and it is now awaiting the governor’s signature. If Governor Kathy Hochul signs the law, it would go into effect 30 days after it’s signed.

The proposed ban would prohibit non-competes for all New York employees and independent contractors, regardless of their salary or wage. The law has limited exceptions, which include:

  • Agreements for a fixed term of service, which likely would permit “garden leave” agreements.
  • Non-disclosure agreements for trade secrets or confidential and proprietary client information.
  • Non-solicitation agreements covering clients of the employer that the covered individual learned about during employment.

Notably, unlike other states that have banned non-competes, New York’s proposed law does not include an express carve-out for non-compete agreements related to the sale of a business.

The proposed law authorizes individuals to sue companies that violate the law. There is a two-year statute of limitations on legal action, with the clock starting to run at the later of the following: (i) when the prohibited non-compete was signed, (ii) when the individual learns of the prohibited non-compete, (iii) when the employment or contractual relationship is terminated, or (iv) when the employer takes steps to enforce the prohibited non-compete agreement. Employers that violate the law may be liable for liquidated damages, lost compensation, and attorneys’ fees.

The law would go into effect 30 days after it’s signed and would not apply retroactively. Accordingly, employers should prepare to take immediate action to revise template restrictive covenant agreements upon signing, but do not need to revisit existing agreements.

If signed, New York would join a growing number of states that have banned or restricted the use of non-compete agreements, including Minnesota, California, North Dakota, and Oklahoma. On the federal level, the Federal Trade Commission (FTC) proposed a new rule earlier this year restricting the use of non-compete agreements as an “unfair method of competition” in violation of Section 5 of the FTC Act. The proposed rule would (i) ban employers from entering into non-compete agreements with workers and (ii) require employers to rescind existing non-competes.

We will continue to monitor legal developments regarding non-competes. If you have questions about non-competes or other employment matter, do not hesitate to reach out to LP’s Employment & Executive Compensation Group. 

Minnesota Bans Employee Non-Compete Agreements

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Author Becky Canary-King

In May 2023, Minnesota passed legislation that bans nearly all non-compete agreements between employers and employees, with few exceptions. The new law, which was part of the state’s omnibus spending bill, takes effect on July 1, 2023 and only applies to agreements entered into on or after the effective date.

The law applies to all non-compete agreements between an employer and an employee or individual independent contractor, with two exceptions:

  1. During the sale of a business, sellers of the business and the partners, members, or shareholders of the business may agree not to carry on a similar business within a reasonable geographic area and for a reasonable length of time; and
  2. Upon or in anticipation of a dissolution of a partnership, limited liability company, or corporation, the partners, members, or shareholders may agree not to carry on a similar business within the geographic where the business was transacted.

A covenant not to compete is defined as an agreement that restricts the employee, after the termination of the employment, from  (1) performing work for another employer for a specified period of time; (2) performing work in a specified geographical area; or (3) performing work for another employer in a capacity that is similar to the employee’s work for the employer that is aparty to the agreement.

Notably, the new law does not cover nondisclosure agreements, confidentiality agreements, non-solicitation agreements, or agreements that limit the use of client lists. Accordingly, these provisions remain permissible.

In addition to the ban on non-competes, the new Minnesota law also prohibits choice of law provisions that would require an employee who lives or works primarily in Minnesota to adjudicate a claim outside of Minnesota or deprive an employee of the substantive protections of Minnesota laws for disputes arising in Minnesota.

As the law does not apply retroactively, employers do not need to change their existing agreements, but should update their forms to ensure compliance moving forward.

Minnesota is just one of a number of states and jurisdictions to ban or significantly limit the use of employee non-competes. California, North Dakota, and Oklahoma also have similar prohibitions on non-compete agreements, and other states, like Illinois, have laws that prohibit non-competes for lower-wage employees.

On the federal level, the Federal Trade Commission (FTC) proposed a new rule earlier this year restricting the use of non-compete agreements as an “unfair method of competition” in violation of Section 5 of the FTC Act. The proposed rule would (i) ban employers from entering into non-compete agreements with workers and (ii) require employers to rescind existing non-competes.

We will continue to monitor legal developments regarding non-competes. If you have questions about non-competes or other employment matter, do not hesitate to reach out to LP’s Employment & Executive Compensation Group. 

Three Takeaways from the EEOC’s Guidance on the Use of AI in Making Employment Decisions

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Author Becky Canary-King

Artificial intelligence (AI), algorithmic programs, and software tools continue to have far-reaching (and sometimes unlikely) effects, including in our professional lives. There are now a wide variety of AI and algorithmic tools available to assist employers in recruitment and employee management.  

However, these tools come with some risks, including unintentional discriminatory effects. Title VII and the ADA prohibit employers from using selection procedures that disproportionately exclude employees or applicants based on race, color, national origin, religion, disability or sex, unless the procedures are job-related and consistent with business necessity. Even if job-related, employers must consider if there are available alternatives.  

The Equal Employment Opportunity Commission (EEOC) recently issued a technical assistance document on assessing adverse impacts when using AI. This guidance builds on previous guidance from the EEOC on AI and the Americans with Disabilities Act.  

Below are three key takeaways for employers who use, or are interested in using, AI or other algorithmic tools to assist in hiring, performance management, or other employment decisions: 

  1. Employers cannot assume that AI tools are non-discriminatory. 

While AI tools may appear neutral, they can result in unintentional discriminatory effects. For example, an AI tool may automatically screen out applicants based on large gaps in employment. This could have a disparate impact on the basis of sex, as gaps in employment may be result of pregnancy or leaving the workforce to raise children. This tool may also screen out individuals with disabilities who have gaps in employment for disability-related treatments.  

The EEOC encourages employers to proactively analyze their employment practices, including software and AI tools, on an ongoing basis to ensure there are no such adverse impacts. 

  1. Employers should consider available alternatives if AI tools cause an adverse impact. 

Employers can assess whether a selection procedure has an adverse impact on a particular protected group by checking whether use of the procedure causes a selection rate for individuals in the group that is “substantially” less than the selection rate for individuals in another group. The general rule of thumb is that a selection rate is substantially different than another if their ratio is less than four-fifths (or 80%), however, courts often look to statistical significance when assessing adverse impact.  

If the selection procedure has an adverse impact, the employer should consider whether the use of the tool is job-related and consistent with business necessity and whether there are alternatives that may have less of a disparate impact. 

  1. Employers can be responsible for AI tools designed or administered by a vendor. 

The guidance makes clear that an employer can be responsible for adverse impacts in their selection procedures, even if the tool was developed by an outside vendor or carried out by an agent administering the tool on its behalf.  

The EEOC suggests that employers ask the vendor, at a minimum, if it has assessed whether the tool causes a substantially lower selection rate for individuals within a protected group. Additionally, language can be built into vendor contracts requiring the use of non-discriminatory selection tools.  

We continue to monitor and stay abreast of developments related to the rapidly changing world of AI and will provide updates as necessary. If you have any questions about the use of AI or algorithmic decision-making tools in your workplace, please don’t hesitate to reach out. 

Don’t Let Employment Issues Derail Your Accounting Firm’s Deal – Part 2

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Authors Laura Friedel, Russell Shapiro

Partners Russell Shapiro and Laura Friedel recently spoke at the 2023 BDO Alliance USA Conference on employment issues that impact accounting firm deals. In Part 1 of our two-part article, we share insights and tips on avoiding potential diligence deal killers, restrictive covenants, and other potential issues to help accounting firms avoid situations where employment issues could derail – or devalue – a potential merger or acquisition. You can read Part 1 here, where we share tips on transferring employees.

Tip #1: Be aware of potential due diligence deal killers.

Three issues, in particular, can be potential “deal killers,” and even if the deal moves forward, they could have a material impact on the purchase price:

  1. Questions about the ownership of books of business. A seller can only sell something they own, so any question regarding whether the selling firm owns the client relationships can kill a deal (or at least result in a significant purchase price reduction). Look at the language in employee and partner agreements that reference “your” book or “your” clients. Even in the absence of language suggesting that an individual (rather than the firm) owns a book of business, as lack of explicit language indicating that all relationships are the firm’s property can have a material impact on the deal. The issue will also have a legal effect on which clients an individual can be prohibited from soliciting/working with.
  2. Misclassification of independent contractors. Misclassification of independent contractors (namely, treating someone as an independent contractor where they don’t meet the legal standards to be one) is a high-risk issue generally, and in the M&A context, it can have serious ramifications. Buyers should determine early in due diligence whether the seller engages individual independent contractors and, if so, work with counsel to determine if they are properly classified as such. If they aren’t, the buyer will likely require a significant special escrow or purchase price reduction to cover the associated risk.
  3. Exempt vs. non-exempt. The presumption is that all employees are entitled to overtime, and if the employer wants to establish that they are exempt (not eligible for overtime), they have to establish both that they meet the salary minimum and that they satisfy one of the job duties tests. This can create two issues in deals. First, misclassification of employees (by treating them as exempt when they should have been eligible for overtime) can lead to very significant liability. Where the buyer believes that this liability exists, it likely will insist on a significant escrow or purchase price reduction. Second and more problematic, where the buyer is going to “reclassify” employees post-closing (either because of perceived legal risk or to align to the buyer’s practices), there can be issues with employees who were previously treated as exempt and are suddenly required to track hours and be paid overtime. These employees are less likely to join and remain with the buyer because of a perceived “demotion.” In addition, having been reclassified, these employees are more likely to look back and realize that they should have been paid overtime during their time with the seller. To mitigate these risks, buyer and seller should pay close attention to how any reclassification is messaged and make sure that the purchase agreement is clear on who is liable if reclassified employees use their reclassification as evidence that they should have been receiving overtime pay in the first place.

To try and avoid these (and other) employment issues derailing your deal, firms considering selling should have an employment attorney conduct a review of employment law compliance at least 18-24 months before a transaction is anticipated so that the firm has time to correct any issues before due diligence begins. In addition, buyers should make sure to conduct adequate due diligence on employment compliance early in the process and prioritize obtaining meaningful responses from the seller.

Tip #2: Take care when assigning restrictive covenants.

The ability to enforce restrictive covenants (non-solicits and non-competes) is critical to accounting firm deals, but often insufficient thought is given to where covenants are set out, what covenants bind non-equity partners, whether covenants are assigned, and who will be responsible for responding to breaches.

Restrictive covenants are generally viewed with scrutiny – but the level of scrutiny depends on the circumstances under which the covenants are entered into. Covenants in purchase agreements, where the buyer is purchasing the goodwill of the seller’s business, are viewed with the least scrutiny and, thus, generally, can be broader and are the easiest to enforce. At the other end of the spectrum are covenants entered into with employees, which are viewed with the greatest scrutiny, need to be the narrowest, and are least likely to be enforced. Somewhere in the middle are covenants between equity partners in shareholders and partnership agreements. In the M&A context, this means that putting covenants in a purchase agreement (or layering the covenants in the purchase agreement over those in the shareholders, partnership or employment agreement) increases the likelihood of enforceability – which is in both parties’ interest if there is any kind of earn out, profit sharing or deferred compensation. For this reason, we strongly recommend that covenants be included in the purchase agreement or an exhibit to the purchase agreement rather than in an shareholders /partnership agreement or an employment-related agreement.

This is particularly true where a partner who had an ownership interest in the seller becomes an income partner with the buyer. Regardless of what an income partner is called or whether they sign the shareholders /partnership agreement, an income partner is generally considered an employee. That means that unless the covenants are in the purchase agreement (where they are given in exchange for the buyer’s purchase of goodwill) they will be viewed with the highest level of scrutiny and will need to be narrow if they are going to be enforceable.

Another key decision is whether or not the buyer assumes the seller’s existing restrictive covenants (in a shareholders/partnership agreement or an employment agreement). There are various reasons why the seller, the buyer, or both would want to rely on pre-closing restrictive covenants. For instance, they could want to enforce covenants against someone who left prior to or at closing, they could want to take advantage of the fact that the agreement was signed in the past (before new requirements for restrictive covenants were implemented), or they could prefer the language in the seller’s covenants to that in the buyer’s. If the covenants are not assigned to the buyer, the seller may have difficulty enforcing them. This is because courts often require that a firm trying to enforce a restrictive covenant show that it has a “legitimate business interest” in enforcing the covenant, and a seller which is no longer engaging in the business may have trouble establishing that their financial interest in an earn-out or deferred compensation is a “legitimate business interest.” For this reason, it is almost always to the parties’ advantage to provide for the assignment of restrictive covenants as part of the purchase agreement.

Finally, there is the question of which party – buyer or seller – should be responsible for enforcing restrictive covenants. If covenants are assigned, then the buyer would have the legal right to seek enforcement. If not, vice versa. But that doesn’t mean the buyer needs to call the shots or pay for the enforcement. In many situations what makes the most sense is to agree in the purchase agreement that the party that wants the covenant enforced pays for the enforcement and that the other will cooperate fully (including by filing suit if necessary). This approach serves to avoid disputes between buyer and seller down the road.

Tip #3: Don’t forget about other potential issues.

What happens to those partners who don’t want to join the buyer?

The best way to avoid this situation is to revise the shareholders/partnership agreement before the sale process begins to provide that partners who don’t sign on to the deal are deemed to voluntarily withdraw immediately before closing, and that the restrictive covenants in the agreement will continue to apply. If you don’t have that provision in your shareholders /partnership agreement, make sure that you consider and follow all of the requirements relating to partner separations – including especially notice and payments.

What happens if there are unexpected life events during the gap between signing and closing?

People can die, become disabled, and get divorced, just to name a few of the life events that can happen between signing and closing. Sellers should consider these possibilities in advance and make sure that the deal is structured so these events don’t disrupt closing. This includes being prepared in case key personnel announce that they are leaving the firm.

Should partners and employees have legal representation separate from the firm’s legal counsel?

When there are multiple tiers or levels of partners who will be treated differently under the terms of the deal, or where employees are being required to sign new employment agreements, it is often helpful for them to have separate legal counsel. Other situations where it makes sense to have separate legal counsel are when individual and firm interests don’t completely align and where separate legal counsel would put the buyer in a better position to enforce the agreement (for instance, where state law allows for certain provisions only if the individual had counsel). The bottom line is that if an individual’s interests differ from the firm’s, separate legal representation is probably appropriate.

If you are considering an accounting firm considering a sale or acquisition, please don’t hesitate to reach out. LP knows accounting firms. Our attorneys are trusted advisors for managing partners, executive committee members, key stakeholders, and HR professionals working in and for accounting firms.

Don’t Let Employment Issues Derail Your Accounting Firm’s Deal – Part 1

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Authors Laura Friedel, Russell Shapiro

Partners Russell Shapiro and Laura Friedel recently spoke at the 2023 BDO Alliance USA Conference on employment issues that impact accounting firm deals. In Part 1 of a two-part series, we share tips on transferring employees from the seller to the buyer to help accounting firms avoid situations where employment issues could derail – or devalue – a potential merger or acquisition. You can read Part 2 here, where we share tips on potential diligence deal killers, restrictive covenants, and other potential issues.

Tip #1: Make sure your plan to transfer employees is consistent with your deal structure.

Employment issues rarely drive the decision on whether a deal will be a stock sale or an asset sale, but the deal structure dictates what the buyer and seller need to do to transition the employees.

In an asset sale, the employment relationship is terminated and a new one is created. This means that the seller needs to do all the things that an employer would normally do when terminating an employee, including paying out final wages and vacation pay (where required by contract or state law). Notice of termination, stay bonus, and severance provisions may also be triggered by an asset sale, so it is important to be aware of those requirements and either terminate them (by agreement with the employee) or honor them.

On the other hand, in a stock sale or merger, there is a continuity of employment – whether you want it or not. This means that you don’t need to worry about things like payment of final wages and triggering severance provisions. But if a firm plans to change one or more employees’ employment terms or plans not to continue the employment of certain individuals post-closing, those changes will need to be implemented in the same manner they would have been at any other time during employment, taking into consideration relevant contractual or legal requirements.

Tip #2: Decide early how you will handle the logistics of transferring employees from the seller to the buyer.

Often overlooked as part of deals, the logistics of getting employees from the seller to the buyer is the greatest opportunity for error.

Documenting the transfer.

In almost all cases, it makes sense to provide employees with a formal document that notifies them of the deal and of how (if at all) it will impact them. What this document looks like will depend on a number of factors, including the deal structure and what is changing. In an asset deal, it is important to confirm whether it’s possible to assign any existing agreements or whether it’s necessary to enter new ones, as well as whether there are any provisions in the existing agreement that the buyer wants to make sure do not continue post-closing. In a stock deal, it’s even more important to understand existing employment terms, and if there are any the buyer does not want to take on, make terminating those agreements or provisions a closing condition. Finally, if the buyer is entering a new jurisdiction, be sure to confirm that the firm’s standard agreements comply with local requirements, or risk having important provisions (such as non-solicits) be unenforceable.

Payment of Wages.

If the deal is an asset sale, the closing triggers the requirement that employees be paid final wages. Depending on state law, payment may be required as early as the closing day itself, which can create logistical challenges, as payroll generally has to be run at least a few days in advance, and the closing date is often confirmed just the day before. If the transaction is a stock sale, there’s no legal requirement to pay final wages, but the purchase agreement may require payment of wages earned through the closing date.

PTO and Vacation Pay.

There are two primary issues relating to PTO/vacation time: whether it needs to be paid out and how to transition employee from the seller’s policy to the buyer’s policy.

As with final wages, pay out of PTO/vacation time isn’t an issue for stock deals but is an issue in asset deals. Whether a seller must pay employees the value of PTO/vacation time depends on state law and the seller’s policies. If either the law or policy requires payment for accrued and unused PTO/vacation on termination of employment, then it technically must be paid based on the transition to buyer’s employment, though there may be the opportunity to carry an employee’s PTO/vacation balance over with their agreement. When PTO/vacation is paid out, it is also wise to provide employees with a corresponding amount of unpaid leave with the buyer so that prearranged plans aren’t put in jeopardy.

Whether in a stock sale or an asset sale, moving from the seller’s paid time off approach to the buyer’s can also create confusion and concern for employees if the two approaches are different. For instance, where employees are moving from a traditional accrual policy to a flexible (sometimes called “unlimited”) time off policy, if there isn’t some type of compensation for the accrued time they had with seller, they are likely to feel that they are “losing” their accrued time. When employees are moving from a more generous accrual policy to a less generous policy, they are even more likely to feel that they are being harmed in the transition. To avoid (or mitigate) these concerns, it’s important to plan ahead and focus on messaging. In many cases, a transition period will help temper employee concerns.

Employee Benefits.

Open enrollments do not always line up between companies, and they rarely align with closing dates. When considering the impact of a change in benefits, both the buyer and seller should consider whether employees will be required to restart deductibles and out-of-pocket maximums and, if so, consider offering bonuses or other benefits to make up for the increased cost during the transition period. Also critical in the logistics of transferring benefits is how the seller’s 401(k) plan will be handled. In a stock deal, if the seller’s 401(k) plan is being terminated, it is far easier to do so before closing.

Immigration and Visa Transfers.

Buyers need to analyze whether they want to rely on existing Form I-9s and eVerify searches or request new forms and searches. This analysis will be done in collaboration with legal counsel as part of the diligence process, with the ultimate decision depending on the sufficiency of the seller’s records and the buyer’s preference. In addition, in an asset sale, if any of the transferring employees is on a visa, their visa needs to be transferred to the new employer. Firms with employees on visas that are involved in an asset sale should consult with immigration counsel early in the process so there aren’t any last-minute surprises.

Synchronizing Employment Practices.

Beyond the legal aspects of moving employees, both the buyer and seller have an interest in making sure that employees transition smoothly to new policies. Human resources teams at both firms should spend time together discussing their respective policies and practices and identifying areas where they need to synchronize or educate and transition, including changes to standard policies, compensation (including commission and other incentive arrangements, overtime, and reimbursement limits), and roles (such as exempt status and independent contractors).

Transition Services Agreements.

There are some circumstances where either the buyer isn’t ready to accept the employees at closing, or there is a benefit to keeping the employees employed by the seller for a set period of time. In those cases, the parties should consider a Transition Services Agreement. A Transition Services Agreement allows the employees to stay on the seller’s payroll (and on seller’s employee benefit plans) until the buyer is ready to accept them. Transition Services Agreements can be helpful in a number of situations, including the following:

  • When payroll or employee benefit plans aren’t ready to be transferred
  • To avoid doubled social security deductions
  • To avoid new deductibles and/or out-of-pocket maximums on the new health insurance plan
  • When part of the seller’s business is continuing
  • When part of the team is needed only for a short-term basis

Firms considering a Transition Services Agreement should be sure to check with their insurance, benefits and payroll providers to make sure that such an arrangement is allowed under their agreements. If you are considering an accounting firm considering a sale or acquisition, please don’t hesitate to reach out. LP knows accounting firms. Our attorneys are trusted advisors for managing partners, executive committee members, key stakeholders, and HR professionals working in and for accounting firms.

5 Steps for Managing Layoffs and Workplace Reductions

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Author Becky Canary-King

No one likes to think about layoffs and workforce reductions, but they are a reality from time to time, especially when market conditions are uncertain or unfavorable. Although workforce reductions are unfortunate, there are things that employers can do to facilitate a smooth transition and protect against legal consequences.

If your company is considering making a workforce reduction, following these steps will help you manage the process appropriately:

  1. Comply with state and federal WARN Act requirements. The federal WARN Act requires employers to notify the workforce of a mass layoff, a temporary shutdown, or a closure of all or part of a business. Many states, including Illinois, also have laws similar to the WARN Act. If your layoff is subject to the WARN Act or similar laws, be sure you comply with all notice requirements.
  2. Review employment contracts before making termination decisions. If any employees have an employment contract in place, you’ll want to understand the terms of that agreement before making any employment decisions or discussing termination.
  3. Determine appropriate severance packages. While severance is not required for at-will employees, a severance package can help ease the transition for departing employees and give the employer the protection of securing a release of claims. A common calculation is to provide one to two weeks’ severance for each year worked with the company.
  4. Draft compliant separation agreements. Consult with an employment attorney to ensure your agreements contain an effective release of all claims and comply with applicable law. Requirements vary based on factors such as location, age, and position of the employee.
  5. Handle dismissals compassionately. These conversations are difficult, regardless of the side of the desk you are sitting on. Take time ahead of the conversation to prepare what to say and how you’ll say it. Review our recommendations for handling these conversations compassionately.

If you have any questions regarding workplace reductions, please reach out. A member of our Employment & Executive Compensation Group would be happy to speak with you.

5 Ways Employers Can Avoid ‘Quiet Quitting’ and Boost Employee Engagement

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Author Becky Canary-King

The concept of “quiet quitting”— the idea of only performing the bare minimum of the job – went viral this past year, sparking debate and taking over social media with hashtags and commentary. Yet despite its buzzword status, quiet quitting isn’t new. Employees “working for the weekend,” and the underlying issues of employee engagement, are an ongoing concern for employers. 

Quiet quitting can arise when employees feel underpaid, overworked, unappreciated, or unfulfilled in their professional role. There are many ways to foster a positive workplace culture that encourages employee engagement, promotes productivity, and prevents quiet quitting. Here we offer five suggestions for doing so:

  1. Create Clear Job Descriptions. Employees should have clear expectations for their position, even if they are expected to have some flexibility and jump in as needs arise. If their job duties change significantly, their job description – and title and compensation – should also be updated.
  2. Give Consistent Feedback. Performance reviews should not be limited to the end of the year. Instead, check in with employees to address performance concerns as they arise, so there is no hiding from responsibilities. For instance, at LP, we recently transformed our process for giving and receiving feedback via casual “check-ins” and annual reviews to “F2=Feedback + Future” conversations, which are intentional discussions between group leads and their team members to share feedback and discuss future plans and goals. For more information on our revamped feedback process, see Feedback Is a Vital Tool of Lifelong Learning—How We’ve Revamped the Process.
  3. Reward High Performers. Employees who don’t see upward mobility or their role in the company’s future may struggle with motivation, thinking there is no point in working hard. Creating a work environment where high performers are rewarded with promotions or increased compensation motivates employees to continue putting their best foot forward.
  4. Don’t Ignore Social Connections. Particularly in remote or hybrid work environments, workplace “silos” can become prominent, and employees can feel disconnected from their teams. Conversely, employees who are integrated into their work teams are more motivated to not let their team members down with poor performance or missed deadlines. Social connections within the workplace can also foster a sense of camaraderie and fulfillment. 
  1. Foster a Compassionate Workplace. The hustle culture often ignores mental health and can lead to burnout or quiet quitting. By paying attention to employees’ well-being – physical and mental – employers can reduce absenteeism, boost productivity, and improve morale. A compassionate workplace also helps employees feel respected and recognized.

Building an engaged workforce isn’t a one-size-fits-all formula; it’s an ongoing process that is tailored to each employer’s work environment.  LP’s employment and executive compensation attorneys can help you develop a strategy for boosting employee engagement and preventing quiet quitting. If you have questions, please don’t hesitate to reach out.

Reminder: Chicago Employers Must Complete Annual Anti-Harassment Training Requirement by July 1st

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Author Becky Canary-King

The recently amended Chicago Human Rights Ordinance requires all Chicago employers to provide the following anti-harassment trainings on an annual basis:

  • One hour of sexual harassment prevention training for all employees
  • One additional hour of sexual harassment prevention training for supervisors and managers
  • One hour of bystander training for all employees

The amended ordinance took effect July 1, 2022, which means that Chicago employers must provide these trainings by July 1, 2023.

LP offers a training program that meets Chicago and Illinois requirements. Alternatively, employers can use Chicago’s template training materials.  If you would like to schedule a training, please reach out. A member of our Employment & Executive Compensation team would be happy to speak with you.