Articles Posted in Reduction in Force (RIF)

I never discuss politics. Never. I don’t have the stomach for it, to be honest, and I avoid the subject like the plague. That said, I did manage to watch part of the Presidential Debate on Tuesday night. There are ample pundits who surely have more insightful (i.e., political) commentary than what I can offer. So I’ll gladly leave the politics to others and stick with what I know–employment law. Here’s one HR-related lesson that I took away from the debate.

One of the hottest topics of post- debate discussion was Mitt Romney’s comment about “binders full of women.” I’ll admit–when I heard him say that, I cringed. It just sounded so wrong.

But I’ll admit that I cringed for another reason. I assume Mr. Romney did not actually plan to say that he’d looked at “binders full of women.” Surely he meant to say that he’d reviewed binders full of resumes of female candidates. But, alas, those were not the words that he said. And now he’s stuck with the ones he did say.

What if your employer announced cut-backs but, instead of announcing who would be subject to layoffs, you were giving the task of making the choice.  How easily could you select which of your coworkers you would “vote off of the island”?   Talk about peer pressure. Talk about cubicle wars!

Would you vote for the employee who never carries his weight?  Or would you invoke the Survivor strategy of voting off the strongest competitors–even though it means you’d run the risk that you’d have to do more or that the business would suffer in the absence of its key performers?  image

Thanks to a  new reality show, viewers can live this decision process vicariously.  In each episode of “Someone’s Gotta Go’,” workers at a struggling business will choose who should get a salary cut or raise and who should be fired based on information about pay and past performance.

Delaware’s largest industrial employer is asking its salaried workers to take at least two weeks’ unpaid leave.  75 of the company’s senior leaders announced that they will take three weeks off without pay in response to the current market conditions.  There are a number of reasons to consider initiating this type of voluntary program instead of involuntary layoffs.  According to the article reported by the Wilmington News Journal:Dupont

Employers appear to be favoring voluntary programs, according to a February survey by Watson Wyatt consulting firm. Eleven percent of the 245 U.S.-based companies surveyed have instituted mandatory furloughs, while another 6 percent expect to launch a program in the next 12 months.  By comparison, 10 percent already have had voluntary furloughs and another 9 percent are expected to ask for voluntary furloughs within the next 12 months, the survey said.

A DuPont representative cited the current preference for flexible work schedules as one reason for its decision to initiate the voluntary program.  Another reason was that it made compliance with foreign laws easier than if an involuntary layoff program had been utilized. 

The four-day work week is very popular among public employers these days.  Employers who have implemented a compressed work week program successfully say they’ve enjoyed benefits such as saved energy costs, decreased absenteeism, and improved employee morale resulting from the change. 

I don’t believe that a four-day work week is the solution of all solutions, as some have claimed.  But I do believe that there are certain organizations that, because of their structure and purpose, can be good models for the program.  The ideal candidates, though, are almost always government employers.  A mandatory four-day work week, generally, is not realistic in the private sector. image

But does that general proposition lose its vigor in a bad economy?  Can the four-day work week be implemented in the private sector more effectively because of the downturn?  It turns out that flexible schedules can have important benefits in an economic downtime, just as they can in times of fiscal health.  The trick, though, is to get employers to be aware of the opportunities.  

The Society of Human Resources (“SHRM”), reports that that Human Resource professionals are preparing for tough times as the holiday season approaches. The results of a recent workplace poll warns that many HR professionals think they will be playing the role of Scrooge by handing out pink slips. The poll indicates 39 percent of HR professionals think that layoffs are “likely” should economic conditions continue to deteriorate.  LAYOFF NOTICE

The poll also contained the following chilling actions as “likely” in their organizations if things don’t improve:

70 percent of HR professionals feel budget cuts across entire organizations will occur
50 percent says bonuses will be cut
45 percent say wages will be frozen
55 percent say hiring freezes will be imposed.

Layoffs are happening. And layoffs have lots of implications-morale implications, business and financial implications, and legal implications.  Any time an employer is considering separating one or more employee for lack of work, a whole host of legal considerations are triggered. For employers with at least 100 full-time employees at a job site, one of the most significant is the Worker Adjustment and Retraining Notification (WARN) Act.  image

In short, the WARN Act requires employers to give advance notice to employees who will be affected by a plant closing.  Generally, 60 days’ written notice is required before closing a plant or implementing a mass layoff.  Failure to comply with the Act can result in serious liability, including back pay and benefits for each affected employee for every day that the notice was not provided, for up to 60 days.  This number can quickly add up to millions of dollars.

Who Is Entitled to Notice?

The U.S. District Court in Wilmington, Delaware awarded summary judgment to BE&K Engingeering Company, finding that the EEOC had failed to show that a 54-year-old engineer, who was laid off during a reduction in force, was replaced by someone significantly younger.

EEOC argued that in a reduction-in-force situation, the ADEA prima facie case analysis should be relaxed. The Commission contended that the EEOC only needs to show that BE&K retained several significantly younger engineers while terminating a member of the protected class.

“The analysis is not that simple,” Magistrate Judge Mary Pat Thynge wrote, as she rejected EEOC’s argument. She cited a district court decision stating that when considering whether an employer gave preferential treatment to younger employees during a RIF, a court must consider “the terminated employee’s ‘fungibility’ or usefulness to the employer in comparison to other employees.”

Layoffs are not the only option for employers who want to cut labor costs.  There are a number of alternatives to layoffs that employers can consider before implementing mandatory reductions in force. I’ll be discussing these alternatives in an audio conference on June 3.  image Here are the details:

Learn how furloughs and other layoff alternatives can actually minimize your organization’s risk of facing a wage and hour lawsuit and reduce costs. 

  • How mandatory furloughs are structured and how to use them to reduce your organization’s legal risks
  • The problems with layoffs: Understanding the real costs of layoffs and why they cost employers money in the long run
  • When — and how — salary reductions can stave off a RIF
  • The pros and cons of using hiring freezes and attritions to alter recruitment programs
  • How other layoff alternatives work, such as sabbaticals and shortened workweeks
  • When it makes sense to convert full-time employees to contractors
  • How to avoid discrimination claims arising from the temporary reassignment or transfer of employees
  • Wage and hour challenges associated with telecommuters, including unique expenses, overtime challenges, worktime verification, rest break enforcement, meal periods and “on-call” time
  • How FMLA coverage and eligibility may be affected when implementing layoff alternatives and how to avoid making an inaccurate determination
  • How to deal with internal roadblocks when implementing layoff alternatives, such as a collective bargaining agreements
  • Policy issues that surface when restricting overtime and eliminating bonuses
  • How to use departmental restructurings to avoid layoffs and improve productivity

To register, visit the HR Hero website’s page on the audio conference:  Hold Off On Layoffs: Furloughs, Salary Freezes, and Other Labor-Cost Cutters.

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