We're leaving and I want you to sign the dotted line saying that we're a-okay after this point.
September 17, 2008 5:43 PM   Subscribe

Can my company force employees to sign a resignation letter during an acquisition?

My company provides benefits and payroll for a company and we are severing our relationship and they are taking benefits and payroll in-house. My company is worried that they have not fully researched this move and will be unable to provide benefits, worker's comp and unemployment insurance to the current employees after we leave next week. My company is trying to determine if we are able to require the employees to sign a letter of resignation that stipulates that they cannot claim and WC/UE/Benefit expense to my company after 10/1. Does anyone have any experience with this, or company contract terminations? I've googled like mad, as well as consulting an attorney, but both have turned up weird and inconsistent results/answers.

Anon because company departure is strictly confidential until the actual day we leave. I know, weird, but the parent company requested it. I guess the whole "keep them in the dark as long as possible" is what has me worried about my company's release.
posted by anonymous to Work & Money (13 answers total) 1 user marked this as a favorite
You cannot require an employee to resign. That's called firing.
posted by Netzapper at 5:51 PM on September 17, 2008

If you are asking on behalf of the company, I'd encourage you to talk to counsel, you can get into a pickle screwing up this sort of thing.

You aren't the employer, nor were you ever, it sounds like, you are a contractor that charges for a service. I would assume that the employees in question are employees of Company A, not your company, so just because you processed their payroll, which I assume you were paid to do, does not give them standing to pursue you for benefits as if you were an employer.

Talk to a professional.
posted by Ponderance at 5:56 PM on September 17, 2008

Um... that doesn't actually sound like a resignation letter, as you described it.

To clarify: It sounds like you want them to sign a letter that says "AnonyCompany is no longer contracted to your employer, and so we will not be providing you benefits no matter how much you want it."

You probably don't need their signature; you probably just need a formal letter to them telling them so. After all, you don't need their permission to deny them what you believe you have the right to deny them!

But this is irrelevant; this is a matter for lawyers, and I am not one even remotely.
posted by Tomorrowful at 6:08 PM on September 17, 2008

The short answer to the question "Can an employer make an employee sign X" is always going to be "No." There might be some ways to persuade an employee to do such a thing, but it will always be an option not to.

I am not a lawyer, I am not your lawyer. If your lawyer and the internet disagree, believe your lawyer.

That said.

I find it highly unlikely that the employees are actually party to your agreement with the employer and highly likely that what contractual relationship you DO have with the employees is predicated on there being an existing relationship with the employer.

What your company could do, in any event, is get the employer to agree that they will cover any claims against you by the employees. A typical indemnification agreement. Unfortunately, you can't really force THEM to sign that either.

Really this is far too complex a matter to leave to metafilter. Hire a lawyer and do what they tell you to do.
posted by toomuchpete at 6:37 PM on September 17, 2008

To the tune of "Mary had a little lamb"

Poster had a legal issue, legal issue, legal issue
Poster had a legal issue -- consult a lawyer now.
posted by lockestockbarrel at 7:34 PM on September 17, 2008 [4 favorites]

a resignation is voluntary. forcing someone to sign a document makes that action involuntary. there is a word for passing an involuntary action off as a voluntary one and that's fraud.

if my employer tried to get me to resign (and by extension give away benefits they had previously agreed to in a binding contract), they'd better make it worth my time. this is what golden parachutes are all about. employee saves employer the embarrassment of xyz and employer makes up the financial losses of employee times two, three or four.

the moment you try to worsen the deal for the employee using coercion you are opening yourself up for one hell of a public relations disaster and (perhaps worse) a costly and very easy to prove lawsuit.

IANAL but I have been involved in exactly this kind of shitstorm and I won.
posted by krautland at 7:38 PM on September 17, 2008


This is a classic case in which we have neither enough specific information about your circumstances nor the relevant expertise in contract and labor law to answer your question. You need competent, licensed professional help to indemnify yourselves.

I repeat: LAWYER!!
posted by decathecting at 7:47 PM on September 17, 2008

My company is trying to determine if we are able to require the employees to sign a letter of resignation that stipulates that they cannot claim and WC/UE/Benefit expense to my company after 10/1.

I agree with others that you should lawyer up, but this sounds rather equally innocent and incompetent, actually. The company seems to be trying to communicate a firm end date for benefits claims. Which it can do by firing people. But they don't want to "fire" people, so they're calling it "a letter of resignation." Maybe because they don't want to pay additional unemployment? I dunno.

Just have them re-state the letter as a letter of employment termination ("This letter notifies you that your employment by company X will end on date Y.") that doesn't need to be signed by the employee, because it's not an agreement, just a statement of fact.
posted by Cool Papa Bell at 7:55 PM on September 17, 2008

Okay, just to clarify... It doesn't actually sound like "letter of resignation" in this case means "quitting" - let's recap:
- You work for Company B, which was contracted to do payroll etc. for Company A
- Company A has released Company B and is taking those services in house as part of an acquisition and subsequent reorganization
- Company B folks speculate that Company A can't handle these services properly, so
- Some at Company B would like employees of Company A to sign a document acknowledging that they're aware that Company B will no longer be providing services and is not liable for any further benefits or payroll coming the employees' way
- You're looking for precedent

So, IA(certainly)NAL, but this sounds like the end of a business relationship, and it's Company A's responsibility to communicate this stuff with its employees. It seems to me that you're just concerned for people knowing who/where to go to when they need benefits information in the future. Chances are, workers who have been around the block a time or two will be aware that things change and they'll just roll with it.

But if I've got it all wrong, yeah, talk to a lawyer.
posted by sadiehawkinstein at 8:20 PM on September 17, 2008

Perhaps I'm misunderstanding, but some small businesses actually contract with an outside company to "hire" their employees. There are a lot of regulations and taxes that small businesses are not particularly well suited to handle (think "core competency"), and so there are a number of companies (at least in the United States) that will act (for a fee) as the official employer.

If that's the case here, then it seems to me that the best that can be done is to (a) notify the individuals who are getting a new legal employer that the transfer is taking place, and that any questions about benefits that are related to work *after* the transfer date should be directed to the HR department of the (new) employer, and (b) to have a letter from the business that has terminated its contract with you, so that should the IRS or the state tax department or other government entities have issues, you can show them the letter and establish that you're not liable. If you in fact don't have such a letter (and that would be odd; terminating a contract isn't normally done orally), then at minimum you want to send out letters (to the head of the business, and the HR department head, and the lawyer of the business, for example) stating that you have been directed to cease being the legal employer, and that they are accordingly now responsible, as of date X, for providing pay, benefits, tax withholding, unemployment filing and taxes, etc., for individuals 1 through NN (list attached).

Bottom line: you can't make another company *do* anything; you can only make it clear to everyone that *you* aren't responsible, as of a certain date, for doing those things any more. (And for god's sake, don't try to *fire* anyone; that just confuses the situation, since the working folks are supposed to continue to show up as usual, even though their legal employer has changed.)
posted by WestCoaster at 8:36 PM on September 17, 2008

To elaborate obliquely on toomuchpete's and krautland's answers — if you were to "force" the employees go sign something, and they refused to sign, what would you do? Fire them? Sue them for failing to resign?
posted by hattifattener at 10:00 PM on September 17, 2008

IANAL No matter what, your company is responsible for Unemployment Comp., Worker's Comp., and any stated benefits for the time period during which employees were employed. You should spend your time making sure every single HR record for every employee is up-to-date, and that parent co. and soon-to-be-orphaned child co. have copies. You should be making sure that you communicate to employees clearly and accurately.

Your company is behaving foolishly, and contemplating actions that could result in large liability. Your company needs competent legal advice.
posted by theora55 at 7:24 AM on September 18, 2008

My background for this answer: I used to work for a payroll and benefits administrator who was NOT a PEO but I am not a lawyer and this should merely be taken as a helpful story from a person on the internet and not as gospel. If you are a PEO (as in you actually hired that company's employees as your own) then I don't know what to tell you and I wish you luck.

If you are only the payroll and benefits administrator then they can't claim any of those benefits from you because you are not their employer, you are simply administering those things on a contract basis for the company. We had a couple companies who thought they could do it on their own and came crawling back a month or two later usually and we had one that successfully made the transition. If you have doubts about their abilities to handle this on their own I'd be prepared for them to come back and maybe start deciding if you actually want that.

In answer to the other part, no you cannot make them sign a "resignation letter" nor can you ask them to sign away their rights to Unemployment Benefits (maybe in some states you can but I wouldn't recommend it).

If you are a PEO you might want to try googling for "PEO + Unemployment" that should tell you who is responsible for those claims while the contract is in place and might give you some ideas about what happens after the termination.
posted by magnetsphere at 2:57 PM on September 19, 2008

« Older Excel worksheet on the web?   |   Where was Bitu from? Newer »
This thread is closed to new comments.