Situation
A leading technology retailer employing 6500 employees and managing 103 retail stores nationwide was acquired by an investment firm (“firm”) for the purpose of selling and/or liquidating the company’s business and assets. After the acquisition, the firm sold 16 of the retail stores to another party and developed a phased plan to close the remaining retail locations over a three-month period.
The firm realized the need to wind down the retailer’s Human Resources (HR) and Benefits Programs in a legislatively compliant manner that took into consideration the financial and emotional impact the closing would have on current and former employees. Benefit Partners was already a trusted partner of the technology retailer, providing consulting advise, brokerage, and benefits administration outsourcing services. Faced with the challenges ahead, the firm engaged BP to develop a socially responsible termination action plan for these areas of the business.
Solution
BP’s team of Human Resources and Benefits Administration professionals met with senior managers of the investment firm and the technology retailer to develop a termination action strategy that met their financial and social goals. The action strategy included, but was not limited to:
- Control Group – Determining the control group relationship with the acquiring organization and the impact the relationship would have on existing benefit plans, e.g., medical, dental, COBRA liability, workers’ compensation, and 401(k) plan termination.
- Issues – Identifying hot issues, e.g., employee concerns, WARN Act, severance pay, severance agreements, demutualization, 409(a), voluntary correction program, vendor and state notification requirements, health plan reporting and termination, COBRA, tax reporting responsibilities/deadlines, retirement plan reporting, termination and conversion,
- Action Items – Developing a detailed HR/Benefits Termination Task List, assigning a responsible party to each task, and setting completion target dates.
- Plan Terminations – Developing a termination action plan for each insurance program including those covered through state agencies, e.g., billing and eligibility audits, claims run-out projections, funding, transitional coverage options, COBRA. In addition, planning, developing and coordinating discrimination testing, tax reporting, audits, communications, and the termination and conversion of two retirement plans.
- Communication Plan – Conducting on-site meetings and developing targeted letters, notices, and FAQ documents to educate current and former employees of the upcoming facility closings, plan terminations, participant rights, coverage options, and providing a 1-800 number to contact for assistance and/or questions. In addition, employees were provided:
- Employee assistance/counseling services
- Resume preparation training
- Interview skills training
- Unemployment claim filing instructions
- Access to an on-site job fair
Results
BP developed a termination action plan for the client’s Human Resources and Benefits Administration areas that:
- Saved the client over half a million dollars in consulting expenses.
- Reduced the client’s payroll and benefits costs.
- Provided all employees with clear, timely, and detailed communications regarding the business closure.
- Provided current and former employees with the information, tools, and resources they needed to prepare themselves emotionally and financially for the business closing.
- Met the client’s goal of conducting a socially responsible business closing by considering the impact the closing would have on it’s employees and the communities it served.
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