Improved technology, changes in customer demand, and the need to control costs in today's challenging business environment are just three of many reasons why employers consider and proceed with reductions in force (RIFs).
A RIF is a difficult task for employers, both in terms of potential legal costs and with respect to morale, productivity, and loyalty in the workplace. Adequate planning and preparation are crucial to minimize your legal risks. Perhaps the best way to minimize legal exposure when implementing a RIF is to create a record of your decisionmaking and implementation processes. Doing that will help you withstand later legal challenges.
A number of critical legal issues loom on the horizon of every potential or planned RIF, including:
Worker Adjustment and Retraining Notification Act (WARN Act). WARN is a federal law requiring employers of more than 100 employees to give written notice at least 60 days before any plant closing or "mass layoff."
Discrimination statutes. Federal and state discrimination laws, such as the Age Discrimination in Employment Act (ADEA), protect against RIFs having an unlawfully differential impact on members of protected classifications.
Family and Medical Leave Act (FMLA). Employees on FMLA leave may be protected against a RIF unless it can be shown that they would have lost their positions even if the leave hadn't been taken.
Uniformed Services Employment and Reemployment Rights Act (USERRA). USERRA requires employers to reinstate returning members of military services to the jobs they would have held had they not been serving. The law also might protect an employee from layoff unless you can show that "circumstances have so changed as to make such reemployment impossible or unreasonable . . . or such employment would impose an undue hardship on the employer."
COBRA. This federal law requires most employers that sponsor group helath plans for their employees to allow certain employees and their dependents who would otherwise lose coverage under the plan due to termination of employment or certain other events – such as a layoff -- to pay to continue that coverage for a specified period of time.
Employers face a difficult choice when contemplating a RIF. The use of objective criteria may be the best legal protection, but it isn't necessarily an effective means of preserving the most productive employees. Subjective criteria focuses more on the quality of the remaining workers but leaves you more vulnerable to claims of favoritism and discrimination. Either way, careful planning is critical to a successful RIF.
Related articles on RIFs from the State Employment Law Letters designates additional valuable resources available exclusively to Employment Law Letter subscribers
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