Terminations can occur for a variety of reasons including Reductions in Force. Letting employees go due to declining business performance or changing business priorities is tough and can often feel like it came out of left field for the employee. This can be an emotional time for both parties, yet as the employer it is your responsibility to ensure your company is approaching the RIF process appropriately to avoid litigation. Preparation is key. Here are 6 things to consider when preparing for a RIF:
The selection criteria should be designed to identify the employee traits that will be instrumental in meeting the company’s goals moving forward. Factors to be considered can include seniority, performance, job classification, or job knowledge/skills. Make sure to review the selected employees for the RIF to determine if an adverse (disparate) impact exists for a protected class.
WARN Act Regulations
Employers must determine if the WARN Act (Worker Adjustment and Retraining Notification) will apply. The WARN Act requires employers (with 100 or more employees) conducting a large-scale layoff (temporary or permanent) to provide 60 days’ notice to affected employees. A number of states have enacted “mini-WARN” legislation that extends notice requirements to smaller businesses conducting layoffs.
If releases from age discrimination are used in exchange for severance pay, they must comply with the OWBPA (Older Workers Benefit Protection Act) to effectively release claims under the Age Discrimination in Employment Act.
Determine Severance Packages
Employers are not obligated to provide severance to employees under federal law, but severance packages may lessen the chance of legal action. Severance packages may include salary continuation, vacation pay, continued employer-paid period of benefit coverages, employer-paid COBRA election premiums, outplacement services, counseling and resume workshops to name a few. Some states have additional specific criteria for required severance.
Separation agreements should state the position has been eliminated, list the last day of employment, the amount of severance and how it will be paid, how any unused vacation will be compensated, the kind of job-transition assistance to be provided, and information on health insurance including COBRA. We advise having an employment attorney review RIF-related separation agreements.
Tuesday mornings tend to be a good time to conduct the RIF because you stay in control of the remaining employee’s reactions. If you conduct the RIF on a Friday, chances are your employees will be on the phone all weekend – leading to rumors. Avoid conducting RIFs first thing Monday morning, end of day on Fridays, or before a holiday weekend.
Terminations, whether voluntary or involuntary, are a necessary part of business. However, with the right preparation, the message can be delivered with tact and compassion – not to mention keep you out of hot water down the road. Looking for additional advice on how to best approach an upcoming reduction-in-force? Give us a call. We help out clients navigate these tricky waters every day with poise and professionalism.