When laid-off workers have a difficult time finding a new job, they are more inclined to sue their former employers. Such suits may be more prevalent in the current economic downturn than in more prosperous times. Meanwhile, according to a recent Society for Human Resource Management (SHRM) poll of public and private company human resources executives, about 60% of employers are likely to institute layoffs in the next year, and 48% have done so in the past year.
In conducting a layoff there are two important considerations: The first and easiest is where a position or product line is eliminated. The second and harder is when management decides which positions to eliminate. To do the second with the least legal liability potential requires selecting the individuals without discrimination or violating the numerous protective statutes. Here the selection criteria to follow to avoid the legal traps.
- Base selection on quantifiable and objective factors, such as: 1) length of service or seniority (this is the safest criteria); 2) elimination of unnecessary job classifications; 3) elimination of certain categories of employees, e.g., temporary, part-time, or contract workers; 4) pre-existing job appraisal data related to successful performance of critical post-reduction functions; and 5) disciplinary actions taken for severe or persistent performance problems.
- Identify the individual abilities of similarly-situated employees in necessary positions to perform essential job duties. Analyze the comparative performance and skills of employees with emphasis on fulfilling the post-reduction job functions and requirements. Whenever possible, base performance comparisons on current or prior performance appraisals.
- See if there will be any disproportionate effect on minorities, women, or workers 40 years of age or older. If so, evaluate whether the selection of these individuals can be justified by business necessity, or in the case of older workers, by reasonable factors other than age. If not, consider alternative selections of individuals who are outside the protected classifications.
- Management can reduce their exposure to individual and class-wide claims of discrimination dramatically by obtaining releases of such claims from employees who participate in voluntary and involuntary workforce reduction programs. Strict compliance with legal requirements is critical to the effectiveness of any release. Check with an employment law attorney to be certain the release meets all requirements.
After completing a voluntary resignation program or an involuntary reduction in force, management should take affirmative measures to optimize the company’s stronger and leaner position and re-energize remaining employees to meet new challenges.