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What's Fair

Dear Dave
We need an outside opinion on a recent personnel matter to see if we handled it correctly or, if not, to learn from it for future reference. We had resignations late last year from two employees. A white male, “Steve”, who has worked for us for 14 years, and “Ellen”, who happens to be a minority lady and has worked for us for 7 years.

Steve gave us his resignation December 11th. He worked the last 5 years in our land development department. Steve had been at odds with two new recent hires. One of which was the new manager of the land development department. Steve had not been very cooperative to their requests and seemed not willing to work with them. We believe he feels that he was passed up with these new hires. Steve received a civil technology degree rather than a civil engineering degree. He still does not have his license and does not seem to be driven to complete his paperwork and file an application to sit for the exam.

Ellen gave use her resignation on December 12th. She is a very quite person and kept to herself. Ellen did attend graduate school part-time while working with our firm and we reimbursed her for educational expenses up to a maximum of $3000 per year. Her department mgr had a hard time keeping her motivated. In fairness, I think that might have been more of a department management issue than an Ellen problem.

Steve resigned effective December 28th. Ellen resigned effective December 27th. Our management team met to discuss the resignations and a decision was made to make December 21st their last day at work, but still pay them through their last days referenced in their resignation letters. After that meeting, Steve met with our HR manager to discuss the process for leaving the firm. Our HR manager informed Steve that he had to be on the payroll on December 31st, to be eligible for the profit sharing and ESOP contributions for that year. Hearing this, Steve wanted to change his resignation date until January. Our HR manager told Steve she would have to get back with him about changing his end date. Ellen never did talk with the HR manager before she left on December 21st.

Since we cut them loose on December 21st, and yet paid them through their date of resignation as specified in their letter, neither was eligible for 2007 benefits for the profit sharing plan and ESOP. We worry that information will be heard throughout the office and create a lot of ill feelings. If we agreed to Steve's amended request to extend his employment through the end of the year and not Ellen's, we are not following our HR guidelines and are providing special considerations for a certain white male employee. If we extended Steve’s employment date, we felt we would have had to extend Ellen's employment date to provide her the same benefits. If we did do this, where do we draw the line in the sand with future resignations in December? If someone provides a resignation letter say on December 1st, do we have an obligation to carry them to December 31st? Along the same lines, what if someone decides to quit after their 995th hour of employment in any given year, are we obligated to tell them to work 1000 hours in order to earn credit for that year? How would you have handled this?

Dear CO
There is an adage that goes something like “no good deed goes unpunished”. Even though it seems like it would have been a perfectly innocent gesture of goodwill to extend Steve and Ellen’s last day to get them through the end of the year, I would not recommend doing so due to the precedent you will have established going forward.

You raise excellent points. Where do you reset the line once you move the line? Ultimately, you end up with no line at all. The rules for participation in qualified plans were designed to protect not only the interest of participants, but the firms who sponsor such plans. I know it might feel severe, but rules are rules. Stick to them or you’ll end up opening yourselves in the future to the unintended consequences of being nice guys.


Wahby and Associates