Layoffs and reductions in force were the topics of a seminar we presented yesterday, during which we reviewed how to plan and implement workforce reductions, requirements for severance agreements and releases, and alternatives to layoffs.
In following up to yesterday’s discussion, here is a list of the “Top 10 Layoff Tips”:
1. Plan your business first.
Your business plan should always be at the forefront of any decision. Don’t let a reduction in force later hamper your ability to compete. Even if they don’t result in costly litigation, short-sighted layoffs can be expensive because when your business picks back up you will eventually need to replace your laid-off employees.
2. Plan your reduction in force second.
Any reduction in force, whether a traditional lay off or an alternative, should complement your business plan. The short-term goal is to cut costs, but a reduction in force should not cut corners.
3. Consider alternatives.
There are many alternatives to traditional layoffs, and their beauty is that you can tailor them to fit your company’s needs. Alternatives include job sharing, reducing employee hours, voluntary sabbatical programs, and cutting benefits. The list is long and varied, so be creative.
4. Document, document, document.
HR professionals who are worth their salt know that good documentation is the first line of defense to an employee’s discrimination claim. Likewise, impeccable documentation of your reduction in force planning and implementation is your first line of defense to discrimination claims that may arise from a reduction in force.
5. Control the process.
Translation: Don’t wait until the last minute. If you think your business is on shaky ground, start thinking about how to reduce your labor costs. Ultimately, you want a reduction that cuts costs, keeps your best employees, and can get your business through the economic downturn. If you wait and make labor cuts your last resort, you will likely sacrifice one of those goals.
6. Involve stakeholders.
Who? The people who can be trusted with the company’s actual financial condition, who have a good reputation with employees, who can think creatively, and who represent affected employees. These are the people who have demonstrated a commitment to your company’s success. Don’t just involve the same managers who make all of the decisions. Think creatively about who to involve in the process.
7. Seek the advice of legal counsel early.
This accomplishes two important things. First, layoffs can lead to angry employees, who are more likely to sue you. Involving legal counsel early can help you reduce your exposure to lawsuits by making sure your reduction in force does not run afoul of any employment or labor laws. Second, your communications with counsel are likely protected by the attorney-client privilege, which is important in litigation. This does not mean that the process should be kept secret, because it shouldn’t. The purpose of the privilege is to give clients the opportunity to speak freely and without the concern that what they say to their attorney will be used against them later. That, in turn, means you can float your creative ideas by your attorney and not have your brainstorming held against you.
8. Thoughtful risk analysis.
Whether you involve legal counsel or not, any reduction in force has to be planned and implemented with an eye on potential legal missteps. If you control the process, you also have an opportunity to think about the potential hazards in a meaningful way. Consider the risks your reduction in force poses and if they are too great, change the plan.
9. Identify WARN notice issues.
We’ve posted about the Worker Adjustment and Retraining Notification (WARN) Act before. Basically, it’s a federal law that requires certain employers to give employees 60 days advance notice of a layoff. If you employ at least 100 full-time employees or 100 full-time and part-time employees who, in the aggregate, work at least 4,000 hours per week, any reduction in force discussion should include consideration for the WARN Act.
10. Special considerations for older workers.
There are laws that pertain only to employees who are forty or older, and those laws have particular requirements for things like releases and severance packages. This is one more reason to involve your legal counsel early so that you can readily address any issues presented by workers who are covered by the Older Workers Benefit Protection Act (OWBPA) and the Age Discrimination in Employment Act (ADEA).