A large San Diego company could cut up hundreds of jobs after it asked its employees to voluntarily resign last week.
On June 12, many Ashford University employees received a distressing email from their employer, informing them of a “voluntary work-force reduction program." The offices affected include locations in Kearny Mesa and Carmel Mountain in San Diego, and locations in Iowa and Colorado.
WATCH Video: Ashford University asks employees to resign
Now workers face a difficult choice: Leave voluntarily now with a severance package, or risk being laid off later, without those benefits. They are offered three months of severance pay and extended health care coverage if they resign.
Ashford and its sister institution, University of the Rockies, offer online and classroom courses for almost 80,000 students. Their parent company, San Diego-based Bridgepoint Education, confirmed in an email to NBC 7 that if enough employees don't take the voluntary severance package, it "may be followed by an involuntary phase if necessary."
Employment law expert and San Diego State University lecturer Daniel Eaton said companies could reduce risk and save money when employees accept a resignation package, and in return, sign a legal agreement promising not to sue for wrongful termination.
Eaton told NBC 7 San Diego that wrongful termination lawsuits are expensive to defend against, and former employees can win those cases.
"And with that, in many cases, depending on the nature of the claim, the employee can also recover attorney's fees,” Eaton says. “And that can run into a lot of money."
Bridgepoint is a for-profit company and major donor to charitable causes in San Diego. But the publicly traded company has endured some serious setbacks
in recent years.
In public documents filed last month with the Securities and Exchange Commission (SEC), Bridgepoint disclosed problems with accreditation, lawsuits by former employees and allegations of misconduct in recruiting and retaining students.
Attorney Eaton said reducing payroll costs is the single most effective way cut total costs and potentially boost profits, while also increasing the value of a company’s stock.
But Eaton said layoffs have a definite downside, because they generate ill will and bad publicity.
"Because on the one hand, you have an image that a company wants to portray of being concerned about its community, and, on the other hand, it's very real obligation to do the best it can by its shareholders,” he said.
Bridgepoint Education spokesperson Shari Rodriguez, said staff reductions are being made to “better align personnel resources with enrollment activity.”
The statement read, in full:
"To better align personnel resources with current enrollment, Ashford University has implemented a program to reduce its workforce. Participation in the Voluntary Phase of the program is, as the name indicates, entirely voluntary. Ashford’s Reduction in Workforce Program was designed around a strong commitment to academic quality, student success, and operational results, while optimizing the institution for a lower total student enrollment. Ashford University notified employees in all of its locations, including California, Iowa, and Colorado."
Rodriguez said all Ashford employees, except faculty and those in admissions, institutional research, assessment and evaluation, and planning, are being offered the buy-out package.
Ashford has a campus in Iowa, and operations in California and Colorado. Parent company Bridgepoint does not report numbers for individual locations, but states it has a total of more than 9,500 employees.
In its SEC filing, Bridgepoint says it will vigorously defend itself against lawsuits filed by former students and employers, and claims those legal actions have no merit.
Editor’s Note: In the interest of full-disclosure, Bridgepoint Education is a major advertiser of NBC 7 San Diego.
Published at 9:14 PM PDT on Jun 17, 2013 | Updated at 3:06 PM PDT on Jun 18, 2013