Knowing risk level key to making tough decision

Dealing with an employee who has been arrested is a matter of balancing that employee's rights and the concerns of the workplace. (istockphoto.com)

Q. The company that I have worked for the past 32 years has been sold to a much larger corporation that is in a similar type of business. This sale occurred three months ago, and I was just told that I had a choice about whether to continue working with the new ownership. They have told me that I can choose to take the severance pay package of one week for each full or partial year of service, which gives me a payout of 33 weeks, or I can accept a job offer in a different location a few miles further from my home at a large reduction in pay. I started working here when I was 26 and I have been with this company and with many of my co-workers for all this time. I am now 58, and I feel I am too old to be hired by another company. My wife wants me to take the money, look for another job closer to home, and save whatever is remaining to put toward our retirement. In this economy I don't think that I have a very good chance of getting a job that I am capable of doing that would include good medical insurance. I have been given three more weeks to decide and I find myself going back and forth between the two choices. Do you have any suggestions for how to look at this situation that may help me decide?

A. The toughest choices are those that present us with both positive and negative aspects in both alternatives. We don't seem to agonize over the more one-sided choices.

The keys for you and others making difficult decisions of this type are knowing your risk-taking comfort/discomfort level and your personal agility in dealing with change.

In the matter you have described, your personal ease or anxiety level in taking risks and in dealing with change will have a lot to do with your individual personality and your preferred way to spend the next few years.

At this point, with only three weeks left to decide, you will need to do some serious soul searching about what matters most in your life, and equally important, what are your personal priorities at this time in your life.

Consider alternatives such as: The security of having a job with benefits versus a potentially rigorous job search and paying for your own insurance coverage. Weighing the pluses of feeling free of that same old grind versus knowing you will be ready and able to retire in seven years or less. Fear of looking for a job for the first time in many years versus spending your time in completely different ways. Fulfilling a dream of retiring early versus worrying about money problems when your severance pay runs out. Starting your own small business versus expanding the time you spend on a hobby that excites you while you have the security of a job.

Compare the possible embarrassment of going to a much lower paying job versus knowing your work very well and continuing to have seniority in the company.

Perhaps staying in the same industry where your knowledge is so broad may also lead to other opportunities in this new company or with one of their vendors at a future date.

These are all very individual considerations; there is no formula here.

Looking at financial tradeoffs is another necessary exercise.

Do a detailed calculation of the financial sides of the equation considering the cost of all benefits, not just medical insurance. Include the amount of your 401(k) match and the advantage of your pretax contribution, what about your company's pension plan, dental insurance, life insurance, long term disability insurance, paid vacation time, etc. Which benefits will you need to replace and at what cost?

Review your household and living expense budget to insure that you can maintain, or make reductions in, the lifestyle you choose with either the lower salary or your retirement savings. Consider including your wife in the process.

No matter how these calculations and personal assessments come out, the overriding issue will remain your heartfelt instincts about how you personally are affected by the deep insecurity or significant joy of a major change and the resulting lifestyle.

A. Medicare is the federal health insurance program for those who are 65 and older.

Your friend is correct that you cannot receive it before age 65 with two exceptions. The exceptions are: if you are under 65 but you have certain disabilities that qualify you as disabled according to the rules and regulations of the Social Security Administration or if you have end-stage renal disease.

Another common misunderstanding about Medicare coverage is that it is free to those who collect Social Security benefits. In fact there are four parts to Medicare coverage and only the first part, Part A, is free to most recipients. To clarify further, there is no cost to recipients if they or their spouse has worked for 40 or more Medicare covered quarters or for approximately 10 years.

Part A is primarily for inpatient care in a hospital or other approved facilities and for home healthcare when certain conditions are met.

Part B is for doctor visits, outpatient services, certain forms of preventive care, and specified other medical services. In 2008, Part B costs recipients who get free Part A coverage $96.40 per month.

This charge and other Medicare-related costs are reviewed and changed each fall and effective the following January.

Part C plans are managed by private insurance companies approved by Medicare and they combine parts A and B and sometimes Part D.

Part D is the Medicare prescription drug coverage. The cost of this coverage varies according to the plan that you choose.

For actual costs and detailed benefits including how to apply for Medicare, I suggest you either visit your local Social Security office, visit the website medicare.gov, or call 1-800-Medicare.

A. When it affects you directly, it's sometimes hard to remember that in our justice system the accused are innocent until proven guilty. With employees it is always best to think of the consequences of our actions over the long term. What if your employee is found to be innocent? What if his roommate was hiding the guns and your employee knew nothing about it?

What if he has a previous conviction for doing the same thing? Did you do an authorized criminal background check when you hired him? Protecting your employees as well as respecting his rights are the most important considerations here.

I recommend that you immediately discuss this matter with your attorney. One of the things that he or she can do for you is to check the details of the police report and any accompanying information regarding your employee's arrest and explain any of the legal terms to you that may provide more details about your employee's situation. Although this information is technically part of the public record, your lawyer probably will know how to get access quickly. This information may help to guide your approach to this difficult situation.

Given the understandable fear of other employees, one option is to consider suspending the employee pending additional information that will enable you to make a more informed decision.

The challenge for you is then to decide whether the suspension should be with or without pay. Some employers will put an employee on an unpaid leave and if they are found not guilty, will pay the full amount lost. The problem with this choice is that a potentially innocent employee will not be paid for what could be months at a time.

Another alternative could be to pay him while he is out of work working on his defense until his hearing date and reconsider at that time pending the outcome of his hearing.

You should consider asking your lawyer whether it is advisable to have a direct conversation with your employee about his expectations in this situation.

Linda J.Lerner is an executive coach and a human resources consultant to small businesses and individuals. She can be reached at linda@lernerconsulting.com.

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