Workforce Reduction Checklist

Bob Dunlevey

Bob Dunlevey is an attorney with Dunlevey, Mahan & Furry (www.dmfdayton.com) in Dayton, Ohio. He is well recognized for his counseling and defense of businesses having employment-related issues, including federal and state court litigation and OSHA proceedings, wage-hour compliance, collective bargaining, wrongful discharge defense, and regulatory compliance. He can reached at rtd@dmfdayton.com.

July 1, 2009

An employer having to reduce its workforce must go about it properly, or it may very well face litigation expenses at one of the most inopportune times. Today’s employees frequently contest their layoffs both in our courts and before state and federal agencies.

Any reduction must be scrutinized for compliance with numerous laws. It is not the time to let go everyone who in the last few years filed for workers’ compensation or took Family and Medical Leave. Sound business criteria must be used to select those who must be separated from employment. Remember, a “layoff” connotes an expectancy of recall; therefore, most employers don’t want to label the reduction a layoff. After all, those going out the door are probably the least desirable employees, so why do you want to let them back in your door if things get better? The good workers who are separated can always re-apply.

Here are some things to think about when facing a reduction in force (RIF).

  • Review your company’s employment-related documents that may contain procedures and restrictions, e.g., engagement letters, employment contracts, employee handbooks, collective bargaining agreements, and layoff policies.
  • Determine and document the true reasons for the workforce reorganization: Cost cutting? Needed change in workforce mix because of new technologies or customers? New business plan?
  • Define the parameters of the workforce reduction. Identify departments or teams to be affected and involve your managers and department heads in projecting staffing needs and possible numbers for RIF. Are there part-time or temporary employees who can be let go first? Should outsourced operations be returned to in-house personnel? Establish a preliminary RIF plan with dates, procedures, and communications.
  • Analyze the workforce, both current and future. What are the skills, abilities, qualifications, performance ratings, attendance record, and attitude of each employee? Which employees are the least satisfactory based on all these factors? Do your employee evaluations verify these conclusions? Audit personnel files carefully to ensure they support your decisions. Identify the skill set needs of your surviving organization. Do any of the employees targeted for RIF have special protection because of their age, race, utilization of workers’ compensation, FMLA leave, etc.? Do any of them have disabilities?
  • Prepare a matrix of the employees intended for RIF, identifying name, classification, date of service, age, race, sex, previous filings with state and federal agencies, and other special circumstances.
  • Conduct an EEO audit with legal counsel or an objective third party savvy in human resources. Is there a statistical imbalance between the prior and new workforces? Is the motive for selecting an employee for RIF less than bona fide? Has a targeted employee filed any type of legal action against the company in the past or threatened it?
  • Communicate effectively. Consider giving general notice of impending RIF. Meet one-on-one with targeted employees, briefly explaining the reasons for the employee being separated and that the RIF affects others as well. Treat the employees with dignity and respect.
  • Communicate with remaining employees and control rumors. This will improve morale.
  • Give Worker Adjustment and Retraining Notification Act (WARN) notice to employees at least 60 days in advance if the employer has at least 100 employees (consult your employment counsel).
  • Consider severance benefits, such as pay-out of vacation, sick time, or other paid time off entitlements; COBRA insurance conversion; and unemployment compensation.
  • Develop a public relations plan. If the reduction is significant, consider a press release that places the company in the best possible light.
  • Devise a tentative re-employment plan, including who will be eligible for reinstatement and what procedures will be used if the workforce needs to be reinstated.
  • Consider using severance agreements. In return for money, an employee may release any possible claims and agree to non-competition and non-solicitation restrictions under certain circumstances.
  • Consider confidentiality and security issues, e.g., computer access, confidential documents, property theft or sabotage, locks, keys, and pass cards.
  • Avoid hiring new employees to the greatest extent possible shortly after the reduction.

Reductions in force are tricky and sticky. Make sure you don’t get stuck.

This article has been reprinted with the permission of Central States Insulation Association and the author.