Fluor Employees Losing Jobs Won’t Get Severance or Benefits

Fluor Corp. disclosed Thursday that it will not provide severance pay or benefits to the 5,000 employees it will be firing over the next nine months, a move that labor experts said could hurt the company in the long run.

The international engineering and construction services giant will be providing so-called outplacement services to help the workers, mainly engineers and other professional staff, brush up their resume writing and interviewing skills, a spokeswoman said. Employees will be given at least two weeks’ notice before being dismissed.

But there will be no extra pay or extended health-insurance benefits to help those who remain unemployed for any length of time--part of Fluor’s hard-nosed approach to cost containment under its new chairman, Philip J. Carroll.

About half the employees to be fired work in the United States, including as many as 700 at Fluor’s corporate headquarters in Irvine, the company said.

Fluor, which has more than 30,000 salaried employees worldwide, said earlier this month that it needs to slash operating expenses to offset a shrinking business base.

Cutting the 5,000 jobs will save $160 million a year, the company said when it announced the plan last week.

The decision not to offer severance pay underscores how serious the company is about cost cutting.

Attorneys who represent both management and workers in employment cases said the decision could have negative and long-lasting effects.

Severance pay isn’t required by law. “But not doing it, especially if you are dealing with employees who have been there a long time, sends out a pretty negative image,” said Don D. Sessions, whose Mission Viejo firm specializes in representing employees in wage and employment cases.

It can encourage employees to search for reasons to file wrongful termination suits, he said.

“It can also hurt the employer’s relationship with employees who remain,” said Richard J. Simmons, a Los Angeles labor attorney who specializes in representing management. “If they perceive that the employer is less than generous, they are less likely to feel any overarching commitment or loyalty,” he said.

Among large companies like Fluor, “a substantial majority do provide severance pay,” Simmons said.

Fluor is profitable, but it has seen its stock price slide to below $30 a share from a high of $75 two years ago as revenue and earnings have fallen in the face of a soft world economy.

Carroll, who joined the company as chairman in July, said the firings and a complete restructuring of Fluor are needed to enable the company to remain competitive.

Even with the immediate savings from the job cuts and the closing of 15 of Fluor’s 75 worldwide offices, it will be two years or more before the financial picture improves, Carroll said this month.

He presided over a bigger payroll-cutting campaign a decade ago as chairman of Shell Oil Co. in Houston. He is credited with turning a weak performer into the financial star of Royal Dutch Shell’s corporate empire.

Fluor officials began meeting with employees this week to lay out plans for the coming year. Only a few termination notices have gone out so far, but the company told employees that it expects to cut 1,000 to 1,300 jobs at its Houston offices, where 3,200 people now work; 500 to 700 jobs in Irvine, which has 2,700 employees; 300 to 500 of the 2,300 jobs at its Greenville, S.C., facilities, and 100 to 150 of the 400 jobs at its Cincinnati offices. Job cuts at overseas offices have not been disclosed yet, nor has the company announced which of its offices will be closed.

Fluor said it has hired the outplacement counseling firm of Lee Hecht Harrison to provide in-house services to employees who receive termination notices. That assistance will consist of a two-day seminar on interviewing, resume-writing and job-hunting skills followed by a third day of one-on-one counseling for those who request it. Employees will be able to repeat the sessions, even after their jobs have ended.