Patty Mazerolle

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Layoff Considerations: Tough Employer Decisions with Significant Implications

In today’s economy, many employers are faced with the difficult task of reducing their workforce. A layoff is oftentimes an end result to preserve the business and to deal with the loss of customers, decline in revenue, lack of work or the need to reorganize the company.

There are several employment laws to consider during the layoff process. To that end, it’s important an employer involve the Human Resource (HR) department and an employment law attorney as soon as the need for a Reduction in Force (RIF) has been identified.

Steps to consider during the layoff process include, but are not limited to the following:

1. Document the reasons for a layoff—What is your business justification? Have you experienced a significant decline in sales, loss of a significant customer(s), outsourcing to save on money and resources?
2. Review the organizational chart—Identify affected positions. Which positions can be consolidated? Which positions can be eliminated? How many positions do you need (i.e., no longer need four sales, only need two)?
3. Review the skills that are needed to achieve business objectives—Focus on the positions, not the individuals.
4. Document objective selection criteria before selecting individuals—How will you justify which employees have been selected for layoff? For example, will you use seniority, work-related certifications/licenses? If evaluating factors such as skills and abilities, retain supporting documentation to include, but not be limited to, an employee’s resume and performance evaluations.
5. Develop a selection tool and train managers/supervisors—Train Decision-makers on the selection criteria and the importance of objectivity.
6. Complete a Disparate Impact Analysis—To ensure protected classes under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and other federal and state laws (i.e. persons 40 years of age or older, or females) have not been adversely impacted, complete an analysis. There are Web sites that offer tools at no charge to help employers complete the analysis process.
7. Confirm or re-evaluate selection criteria after analysis process—Review the analysis to ensure a disparate impact does not exist. Determine if you need to re-evaluate selection criteria and/or the way you weighted the criteria.
8. Develop an employee communication strategy—How will you communicate the decision to those employees affected by the layoff? How will you communicate the layoff to those remaining with the company? It’s important to show empathy and to treat employees with respect.
9. Prepare customized layoff packages—Layoff packages need to be customized for each employee. For example, are you going to offer a separation agreement? There are specific laws to consider when preparing layoff packages in order to maintain validity of the release sought. For example, under the Older Workers Benefit Protection Act (OWBPA), which amended the Age Discrimination in Employment Act of 1967, a release is not valid as to age-related claims brought by individuals 40 years or older unless certain language is included in releases provided to those people.
10. Consider and address the impact of those remaining with the company—How will you address morale issues? How will you address productivity expectations with fewer employees? If positions have changed, new job descriptions should be prepared and signed by the employees.

In summary, because of the myriad laws either directly or potentially applicable to layoffs, it is imperative that employers involve HR and their employment attorneys to limit potential liability during a reduction in workforce.

 

 

 

The information contained in this document is for general, informational purposes only and is not intended to be legal advice. This information is not a substitute for the guidance of a professional and should not be relied upon in reference to any specific situation without first seeking the advice of a qualified HR professional and/or legal counsel regarding applicable federal, state or local laws. HRTools, Insperity and their respective employees make no warranties, express or implied, and make no judgments regarding the accuracy of this content and/or its applicability to a specific situation. A reference or link to another website is not an endorsement of that site or service.