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Legal documents reveal how ad giant IPG is laying off and furloughing hundreds of staffers

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  • Ad agencies have cut thousands of jobs since the coronavirus pandemic first hit, and internal documents reveal how ad holding company IPG has processed job cuts.
  • The documents show that the company does not know when the furloughs or pay cuts will end and cannot promise a return to full employment.
  • Affected employees also received confidentiality agreements and were told not to discuss the changes.
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The advertising and PR industry has shed tens of thousands of jobs across the giant advertising holding companies WPP, Omnicom, Publicis, IPG, Dentsu, and MDC Partners as a result of the coronavirus outbreak.
Internal documents show how one big PR firm, IPG's Weber Shandwick, carried out layoffs and furloughs earlier this week. The documents were provided by two employees who are known to Business Insider but requested anonymity to protect their jobs.
A spokesman for IPG said all agencies within the company use standard language in these agreements. Weber Shandwick declined to comment.

Furloughs are a new way for holding companies to mitigate the pandemic's economic blow

Furloughs have been rarely used in the ad industry because it costs a lot of money to provide continued benefits to people when ad revenue is sharply down, said Jay Pattisall, principal analyst at Forrester. Agencies have usually used layoffs as they're the quickest way to protect their liquidity.
Pattisall said a combination of salary reductions, discretionary spending cuts, and redeployment of staff to areas like healthcare and technology that are less affected by the pandemic has allowed holding companies to use furloughs widely, at least for now.
An advantage of furloughs for employers is that they can be extended, Ed DaSilva of consultancy R3 said. Agencies initially thought business would return to normal in mid-May but now know they will need more time.

Internal documents show IPG can't guarantee a return to full employment

IPG's internal documents show the company does not know when the current furloughs will end and cannot promise those furloughed will be able to return. HR will contact affected people to discuss next steps toward the end of the initial furlough period or the end of the calendar year for those whose hours were cut.
The documents show furloughed employees won't receive any compensation or accrue any paid time off, while those with reduced hours have their pay and PTO cut accordingly.
Furloughed employees will get two months of company insurance but must repay their portion of those benefits if and when they return to work. They may be eligible for COBRA benefits after two months.
Under the recently passed CARES Act, everyone on furlough qualifies for unemployment, but policies vary widely by state.
Linda Goldstein, a partner at BakerHostetler who leads the firm's advertising and digital media practice, said non-payment is standard practice in furloughs. For some employees, getting furloughed is preferable to being laid off because the loss of health benefits would be more crippling than going without a salary.
Both letters are embedded below.
IPG/Weber Shandwick Notific... by Patrick Coffee on Scribd
IPG/Weber Shandwick Schedul... by Patrick Coffee on Scribd

Affected employees were reminded of confidentiality agreements and told not to discuss the matter

The furloughed employee received a "Code of Conduct" document laying out confidentiality, non-solicitation, and non-disparagement agreements.
For example, employees are not allowed to do business with any companies that had been their clients for one year after leaving the company. They are also prohibited from trying to employ or work for anyone who had been with IPG during the previous six months.
The document, embedded below, says no employee can say, write, or "cause to be said or written" anything considered defamatory to IPG.
IPG Confidentiality Reminder by Patrick Coffee on Scribd

The second employee said they didn't receive that document but said management told them not to discuss the changes or post about them on any public forum in order to protect the reputations of IPG and Weber Shandwick.
Goldstein said these policies are almost never relevant except when applied to senior executives, and their primary purpose is to protect IPG's relationships with its clients.
The benefits documents are embedded below.
Summary of Benefits While o... by Patrick Coffee on Scribd
2020 Summary of Benefits Sa... by Patrick Coffee on Scribd

Got more information about this story or another ad industry tip? Contact Patrick Coffee on Signal at (347) 563-7289, email at pcoffee@businessinsider.com or patrickcoffee@protonmail.com, or via Twitter DM @PatrickCoffee. You can also contact Business Insider securely via SecureDrop.
SEE ALSO: In leaked memos, Sir Martin Sorrell frames the pandemic as an opportunity to acquire 'distressed' ad agencies and reveals that his firm S4 Capital has applied for government subsidies
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https://www.businessinsider.com/leaked-documents-show-how-ad-giant-ipg-processes-furloughs-layoffs-2020-5?IR=T


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