Not All Layoffs Are Created Equal: Layoffs In The PERM Looking Glass
Harry Truman used to say that a recession is when your neighbor is out of work, but a depression happens when you get the pink slip. The PERM rules on layoffs guard against both. As is so often the case with labor certification, DOL has acted from a good motive in trying to make sure that hiring foreign workers is the last option that employers turn to only after all qualified Americans who are looking for a job have been considered and found wanting. No one can object to this. Yet, as always, the devil is in the details and the manner in which DOL has elected to go about making sure that unemployed Americans have a shot will serve to frustrate employers without protecting those it is designed to serve. This is because DOL has imported into the PERM regulations concepts from traditional labor law without taking with them the nuance and context that provide both meaning and balance. Torn loose from their moorings, such principles will be difficult to understand or enforce and are most likely to promote confusion to the detriment of all concerned. The goal, therefore, of any honest critique is not to attack DOL for trying to advocate for the jobless but, rather, to make such advocacy logical and effective. In many ways, the PERM treatment of layoffs goes way too far; in others, it does not go far enough. Making labor certification more difficult is not the best way to protect the legitimate interests of US workers whose cause deserves our attention and commands our support.
How does PERM define layoff? For that, we turn to 20 C.F.R. Section 656.17(k)(1) which says the following: “A layoff shall be considered any involuntary separation of one or more employees without cause or prejudice.” The employer must “document it has notified and considered all potentially qualified laid off (employee applicant ) U.S. workers of the job opportunity.”  Preliminary comments to such definition  clarify that the scope of a layoff “includes, but is not limited to, personnel actions characterized by an employer as reductions in force, restructuring or downsizing.”
There are several key qualifiers and unresolved issues that surround this definition:
Now that we have our text, we know what DOL thinks a layoff is. We still are left wondering what it is not. It would seem that a retirement is not a layoff. What if the employee claims the retirement was coerced by the actions of the employer or that it was offered up only to avoid termination? It would seem that a voluntary resignation is not a layoff. Do things change if the employee now says she resigned under duress? After all, a retirement is generally deemed involuntary if obtained in response to an employer’s duress or coercion. Is there no statute of limitations to protect the employer against a false change of heart? Who is to judge whether the resignation was voluntary? By what standard? Did the employer misinform or deceive the employee?  Did the employer threaten adverse action against the employee? Did the circumstances leave the employee with no alternative but to accept the terms imposed by the employer?  Is there an appeal? What is to happen to the labor certification while this drama is being played out? Does it simply wither on the vine? PERM provides no mechanism to determine if a separation was involuntary or consensual. Compare that to the “involuntary separation” of a federal civil service employee. The phrase “involuntary separation” is defined for this purpose by the U.S. Civil Service Commission. Under S-11-2: Meaning of Involuntary Separation, it says that “ the responsibility for determining whether a separation is involuntary for retirement purposes rests with the Commission.”  When shall we witness the appointment of a PERM commission to determine if a separation was involuntary?
In some ways, PERM does not go far enough. It would seem that a reduction in hours from full to part-time is not a layoff but, here again, does this not leave the employee vulnerable ? Do we have a layoff when the employer transfers the employee to another job, arguably even a lower paying one? There is no involuntary separation here but the legitimate interests of the US worker are clearly at stake. If the PERM layoff rule does not prevent an adverse impact on the wages and working conditions of US workers, the very purpose of Section 212(a)(5)(A) is undermined. It is hard to understand why such actions by the employer would not come within the spirit of the layoff rule. The same would be true if there was a reduction in benefits or salary. These also are not PERM layoffs. An employee on a leave of absence, with or without pay, has not been laid off for PERM purposes, nor would an employee on disability leave come under its sheltering arms. Seniority is no defense against a PERM layoff nor will the employer be helped by demonstrating the absence of bias against, or disparate impact upon, women, the disabled, older workers, or people of color. Similarly, while contract workers can be sent packing with seeming impunity, probationary workers, perhaps even interns or trainees, cannot. In the world of 21st century business, there will be fewer permanent employees and more contract workers who do not have to be paid benefits. By placing them outside PERM looking in, is the DOL creating an inducement that unscrupulous employers may find hard to resist? Not only are contract workers cheaper than employees, but they can be shed with impunity.
“Layoff” is a well- recognized doctrine in traditional labor law. The DOL has long been involved with understanding and applying it, as have numerous other federal agencies. What is most striking is that the PERM interpretation of “layoff” is vastly different in several key ways from virtually all other statutes and provides significantly less protection to affected US workers. It is possible that the distinctive nature and purpose of labor certification accounts for this contrast. It is also possible, however, that the DOL has imported a mainstream labor law concept into a culture for which it is ill-suited and is now attempting to apply it in a manner and for a purpose that simply does not fit. Let’s see what “layoff” means outside the PERM looking glass.
The most obvious candidate for comparison is the Worker Adjustment Retraining Notification Act of 1988 (WARN), which, like PERM, seeks to protect American workers against the winds of change. How does it stack up side by side with PERM? The WARN Act coverage kicks in when the employer terminates at least 50 workers who constitute at least 33% of the total at a single plant. PERM imposes no such minimum loss of employment; even a single layoff suffices. WARN requires a layoff of more than 6 months. Not so in PERM where even a temporary job loss qualifies as a layoff. Interestingly, while PERM, as noted above, does not protect against a reduction in hours, however drastic, the WARN Act views a reduction in hours of more than 50% as tantamount to being fired. WARN recognizes that sometimes an employer has to act under the pressure of unforeseen business emergencies; hence, WARN excludes a reduction in force resulting from an entire plant closing, while PERM does not take into account such stark reality. How does PERM notice to laid - off workers compare with what the WARN Act demands? The WARN Act requires written notice to each affected employee at least 60 days before a plant closing, while PERM is silent on what kind of notice must be given, when it must be given, and whether oral notification will suffice. This can create problems, for example, in the case of a unionized plant where the collective bargaining agreement may require that the employer has to go through the union to contact laid off workers rather than dealing with them directly
Unlike traditional labor law, PERM does not consider the reasons for the layoff, how long it is likely to last, what the rest of the industry is doing, or how this particular employer is likely to act in the future. All of these criteria have been articulated by the National Labor Relations Board to determine if there is a layoff under WARN. PERM makes no distinction between layoffs, which may be temporary, and terminations, which, by definition, are permanent. Ordinarily, these are separate actions with very different consequences. There is no temporal quality to a PERM layoff. Compare that to the definition of layoff presented in Fishgold v. Sullivan Drydock & Repair Corp. where the Supreme Court told us what Congress mean when it used the word “discharge” in the Selective Training and Service Act of 1940, 50 U.S.C. 301 (repealed 1955). In distinguishing a “layoff” from a “discharge”, the High Court characterized the former as a “period during which a workman is temporarily dismissed or allowed to leave work; that part or season of the year during which activity in a particular business or game is partly or completely suspended; an offseason.” In the wide world beyond PERM, “layoff” generally means a temporary status without work for non-disciplinary reasons. The Roberts definition also clarifies that laid-off workers “usually retain seniority rights and other protection under contract or company practice.” Not true in PERM where layoff equates to discharge. Roberts goes on to say that the layoff may, on occasion, be a disciplinary penalty for a particular misconduct and that “ the employee is generally re-employed…” Again, not so under PERM. Not only is there no element of temporariness under PERM, but there is no concept of a partial as opposed to a total lay off. Traditional labor law does make this distinction. When discussing employee benefits under the Redwood National Park Expansion Act of 1978, for example, Congress carefully made sure that partially laid-off employees could still collect some pay or benefits, up to 10% less, as opposed to being relegated to a no duty/no pay employment status. PERM, by contrast, focuses exclusively upon an irrevocable severing of the employment relationship. There is little concern wasted upon those who still have jobs, but only at the price of a deterioration in the terms and conditions of employment. PERM does not seem to care what happens before they go or whether they might come back.
One of the sharpest lines of demarcation between a PERM layoff and a layoff under traditional labor law is that PERM fails to consider whether those laid off are likely to return to work. This is a core concept in labor law. It is, for example, well-settled that laid off employees cannot vote in a union representation election unless they have a “reasonable expectation of recall in the foreseeable future.” In the PERM world, by contrast, DOL thinks that all US workers who have been sent home are entitled to come back, thus ignoring the realities of the global economy. In determining whether such a “reasonable expectation of recall” exists, traditional labor law examines 4 factors, none of which the PERM rule mentions: (1) employer’s past experience; (b) employer’s future plans; (3) the circumstances surrounding the layoff and (d) what the employer told the employees about the likelihood of recall. No mention of any of these informs the PERM regulation. PERM also fails to consider whether the employer had a policy of giving laid off employees first crack at any vacancies in the event of recall. Unlike traditional labor law, PERM does not ask if the employer, at the time of the layoff, advised those losing their jobs not to look for new ones. If so, this creates in the mind of the employees, a reasonable expectation of return. If DOL wanted to encourage the retention of American workers as a core element of the employer’s work force, why does not the PERM rule ask and answer these and many other related questions that probe the reasons for the layoff and the circumstances surrounding it? PERM manages to make labor certification more difficult without protecting American jobs.
The PERM rule on layoffs is one of strict liability, something that traditional labor law has usually eschewed in favor of a deeper analysis. The PERM regulation, for example, does not seek to probe the motives behind the layoff that the employer might have entertained. Did the employer use the layoff to further a substantial and legitimate commercial objective? Did the employer display a bias against the laid off workers? PERM never asks. What criteria did the employer use in deciding who would be laid off? Was such criteria arbitrary or reasonable? Did the employer actually follow through in good faith? Silence. More questions present themselves for urgent resolution. Did the laid off employee receive specific written notice that the employer intended to let him go? Did he, at least, receive general notice of a reduction in force that would eliminate his job or otherwise make it redundant? Was she laid off after refusing relocation to another commuting area? Did the employer deceive the employee and provide misinformation to elicit the resignation, thereby vitiating its voluntariness? Did the employer prompt the resignation after threatening to take disciplinary action despite knowing that the threat could not be carried out?
These questions, and many others like them, may not arise from most PERM layoffs but the conspicuous failure of the PERM rule to raise virtually any of them suggests that the architects of PERM have adopted a strict liability rule where the circumstances surrounding the layoff simply do not matter. This is a dangerous notion that most employers and workers will find very hard to understand. Should not honest employers who act in good faith out of rational motives be treated differently than their unscrupulous competition? Should not DOL alter the PERM rule on layoffs to reward such conduct? Are all layoffs alike? By taking this viewpoint, is PERM nurturing American jobs or making them more vulnerable?
It would appear that a dismissal for “cause” is not a layoff. What if the two sides disagree on whether cause existed? Does “cause” mean different things for different industries? When the PERM rule uses the word “cause”, does this include economic cause or is it limited to incompetence or insubordination? In other words, what if the employer did not act to rid himself of the services of a poor employee but out of other motives, no less rational or worthy of respect? Is that a PERM layoff? Once again, traditional labor law would not consider such a discharge to be wrongful or deserving of punishment. A termination of an otherwise competent employee due to adverse business circumstances, such as where the business is shutting down because it cannot survive, is not a wrongful discharge. In Boynton, the Sixth Circuit held that a discharge for economic reasons was termination for cause. “ To hold otherwise, “ in words that we commend to our brethren at PERM Central, “ would impose an unworkable burden upon employers to stay in business to the point of bankruptcy in order to satisfy employment contracts and related agreements terminable only for good or sufficient cause.”
The PERM layoff rule not only does not do much to help US workers who have lost their jobs, it can actually make their predicament worse. Here’s how. Most major employers have severance plans under the Employment Retirement Income Security Act (“ERISA”). Though not obligated to do so, employers offer separation pay as part of their overall benefits package. It is attractive to new hires and it provides current workers with a safety net, which, from the employer’s perspective, hopefully discourages them from accepting other employment when faced with rumors of a planned layoff or an economic downturn. As part of such separation plans, severed employees typically sign a waiver of all claims against the employer, including the possibility of future employment. If an employee under an ERISA-qualified severance plan has waived the right to future employment as a condition of receiving separation pay earlier at the time of layoff, is such a waiver valid for PERM? Can the employee waive the right to notice and consideration with respect to a future job opportunity for which a labor certification is filed? It is far from certain that DOL will honor such a waiver. DOL might wonder if the employee understood what was being waived? Whether the employer advised the employee in writing to consult a lawyer before making a decision? Is it possible for the employee to revoke the waiver? Did the waiver specifically refer to any claims that might later arise under PERM? How long did the employee have to consider the waiver before signing? All these bear directly on whether any waiver of PERM rights was a knowing and intelligent one.
Traditionally, the DOL has been hostile to such waivers made as part of severance agreements. The plain language of 29 C.F.R. Sec. 825.220(d)(2004) makes any attempted waiver of rights under the Family Medical Leave Act of 1993 (FMLA) unenforceable as a matter of law. In general, waivers of federal remedial rights are not easily or lightly inferred. Prospective waivers of ERISA claims are void as against public policy. Is this not what the DOL response would be in PERM if the employer tried to rely upon a wavier executed within six months related to severance? Is it not highly likely that the DOL would argue, not within some justification, that any rights that might later arise under PERM were neither contemplated nor specifically encompassed by the language of the release?
The end result, however, of such a DOL response would be to hurt US workers by making employers more reluctant to grant severance, unless they determine in the best exercise of their business judgment that the other benefits of doing so outweigh this drawback. If not, and the jury is assuredly out on this one, a US employee who gets severance pay when laid off will be confronted with a Hobson’s choice of giving back the money in order to be considered for a job under PERM, or keep it and, by so doing, becoming “unavailable”. The employee cannot have it both ways. While a defective waiver can be set aside at the election of the employee, once he learns that the release is voidable but keeps the money anyway, such acceptance is a ratification or reaffirmation of the original release.
The proper constitutional objection to the PERM layoff rule is not “that it requires a person to conform his conduct to an imprecise but comprehensible normative standard, but…that no standard of conduct is specified at all.”  For this reason, when you drill down through all of the arguments recited above, you arrive at a place where it is hard not to conclude that the PERM rule on layoffs “simply has no core.”  As Justice Sutherland reminded us all long ago, a law that “either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law.”  It is certainly true that the PERM layoff regulation is not unconstitutionally vague simply because it is hard to understand. It is also true that, when dealing with regulations that seek not to regulate First Amendment activity or impinge upon the rights of those accused, far more leeway is given by the courts. The regulation of business is not held to the same high standard under the void for vagueness doctrine.
Having been properly forewarned, and knowing that we must tread lightly, people of good will must consider the possibility that the PERM layoff regulation is constitutionally infirm because it is so imprecise and so vague as to be no standard at all. It is hard to resist the conclusion that the PERM layoff rule is void for vagueness because it is “substantially incomprehensible” in a way that leaves even informed observers guessing as to how to comply, what compliance really means, and what the true meaning of the regulation is meant to be.
If the purpose of the PERM layoff rule is to frustrate employers, then the rule is a success. If the purpose is to make it more difficult to get cases approved, here too, the DOL has done what it set out to do. However, if the purpose is to preserve and protect top quality working conditions for US workers, little is accomplished. It is not possible to take a concept like “layoff” that was born and grew up as part of traditional labor law, rip it out of such a familiar context and apply it in an unfamiliar setting without any of the nuance that gave it meaning and effectiveness. The DOL certainly has the power to do that but little of substance is gained. Despite what the architects of PERM may think, not all layoffs are created equal. No layoff rule will do much at all unless and until it recognizes that. Why employers lay workers off and the circumstances surrounding such layoffs must be examined. Beyond that, the constitutional challenge that may be brought against PERM is ready for those who wish to pick it up.
The DOL has never liked the labor certification program, rightly viewing it as a diversion from its true and historic mission of making life better for American workers. PERM may simply reflect that long-held antipathy. The DOL may end up getting rid of the program after all since, if PERM goes down, the business community will compel Congress to step in and we are likely to see the Department of Homeland Security be saddled with this thankless task. We might even witness the adoption of an entirely new system of labor market controls, perhaps one based on a point system which has much to commend it. Yet, until the future arrives, we and DOL are stuck with PERM. DOL has made too much of an investment, in time, energy, money and institutional prestige, to abandon even a failed experiment. So, PERM is going to be with us for some time yet. That being so, trying to make it work, is worth the effort. It will not be easy. Perhaps, we can take some consolation in the knowledge that unearned suffering is redemptive. There should be plenty of that to go around in the months to come.
 69 Fed. Reg. 77326, 77394 (Dec. 27, 2004)
 at p. 77355(f) of the Federal Register version of the PERM rule
 69 Fed. Reg. 77326, 77355 (Dec. 27,2004).
 69 Fed. Reg. 77355
 Black’s Law Dictionary 896 (7th Ed. 1999).
 Braun v. Dep’t. of Veterans Affairs, 50 F. 3d 1005, 1007-08( Fed. Cir. 1995).
 See 26 C.F.R. 1.501©(17)(-1); Rev. Rul. 77-43, 1977-1 C.B.151; 1977 IRB Lexis 567(Jan.1977).
 Pitt v. United States, 190 Ct. Cl. 506, 513, 420 F.2d 1028, 1032(1970)(termination resulting from possible criminal prosecution); Autera v. United States, 182 Ct. Cl. 495, 389 F. 2d 815 (1968)(termination for incompetence).
 Deal v. United States, 508 U.S. 129, 131 ( 1993)( Scalia, J.).
 Boynton v. TRW, Inc., 858 F.2d 1178, 1184(6th Cir. 1988)(en banc).
 Schultz v. United States Navy, 810 F. 2d 1133, 1136 (Fed. Cir. 1987). See also Dumas v. Merit Sys. Protection Bd., 789 F. 2d 892, 894(Fed. Cir. 1986).
 Covington v. Dep’t of Health and Human Services, 750 F. 2d 937,942(Fed. Cir. 1984).
 Cruz v. Dep’t of the Navy, 934 F. 2d 1240, 1251-53 (Fed. Cir. 1991)(en banc).
 Mc Gucken v. United States, 187 Ct. Cl. 284, 289, 407 F.2d 1349, 1351, cert. denied, 396 U.S. 894 (1969).
 Subchapter S11 of the Federal Personal Manual Supplement 831-1 ( issued on May 11, 1964)
 Patterson v. United States, 193 Ct.Cl. 750, 753 (Ct.Cl. 1971).
 29 U.S.C. 2101 et. seq.
 29 U.S.C. Section 2101(a)(3) (2005).
 29 U.S.C. Section 2101(a)(6) (2005).
 29 U.S.C. 2101(a)(3)(A)(2005).
 29 U.S.C. 2101(a)(2005).
 Damion v. Rob Fork Mining Corp., 945 F.2d 121,124(6th Cir. 1991).
 328 U.S. 275, 287 n.11(1946).
 See, e.g., Roberts’ Dictionary of Industrial Relations 377-78 (3d Ed. 1986).
 S& G Concrete Co. 274 N.L.R.B. 895,896 (1985).
 Windsor Woodworking Inc. v. N.L.R.B., 647 F.2d 859,861 (8th Cir. 1981); Sal-Jack Co., 286 N.L.R.B. 113 ( 1987).
 Beloit Corp. Castings Div. V. N.L.R.B., 857 F.2d 1154, 1157 (7th Cir. 1988).
 Windsor Woodworking supra at 762.
 Covington v. Department of Health & Human Servs. 750 F.2d 937,942 (Fed. Cir. 1984).
 Cosby v. United States, 189 Ct. Cl. 528, 417 F. 2d 1345, 1355 (Ct.Cl. 1969); Autera v. United States, 182 Ct. Cl. 495, 389 F. 2d 815, 817 (Ct. Cl. 1968).
 Boynton v. TRW, Inc., 858 F. 2d 1178, 1184 (6th Cir. 1988)(en banc). See also Sahadi v. Reynolds Chemical, 636 F. 2d 1116, 1118 (6th Cir. 1980); F.S. Royster Guano Co. v. Hall, 68 F. 2d 533, 535 (4th Cir. 1934).
 Id at 1183.
 29 USC 1001 et. seq.
 29 USC Section 2601 et. seq.
 Bluitt v. Eval Co. of America, Inc., 3 F. Supp. 2d 761, 763 (S.D.Tex. 1988).
 Watkins v. Scott Paper Co., 530 F. 2d 1159, 1172 (5th Cir.) , cert. denied, 429 U.S. 861 (1976).
 Three Rivers Motor Co. v. Ford Motor Co., 522 F. 2d 885, 896 n. 27 (3d. cir. 1975).
 Wittorf v. Shell Oil Co., 37 F. 3d 1151, 1154 (5th Cir. 1994).
 Grillet v. Sears, Roebuck & Co., 927 f. 2d 217, 220( 5th Cir. 1991).
 Coates v. City of Cincinnati, 402 U.S. 611, 611 (1971).
 Smith v. Goguen, 415 U.S. 566, 578 (1974).
 Connally v. General Construction Co., 269 U.S. 385, 391 (1926)(Sutherland, J).
 United States v. Talbot, 51 F. 3d 183, 188 (9th Cir. 1995).
 Papachristou v. City of Jacksonville, 405 U.S. 156, 162 (1972).
 Jones v. Lubbock, 727 f. 2d 364, 373 (5th Cir. 1984); Exxon Corp. v. Georgia Ass’n of Petroleum Retailers, 484 F. Supp. 1008, 1014 (N.D. Ga. 1979), affirmed sub nom. Exxon Corp. v. Busbee, 644 F. 2d 1030(5th Cir.), cert. denied, 454 U.S. 932(1981).
Gary Endelman practices immigration law at BP America Inc. The opinions expressed in this column are purely personal and do not represent the views or beliefs of BP America Inc. in any way. Gary Endelman is a contributing author to PQ: The PERM Quarterly.