By: Tiffanie Benfer, Esq.
The New York Times reports that 533,000 jobs were lost in November, the largest one-month decline since December 1974.
No doubt that this is a difficult time for both employers and employees. For employees facing layoffs, emotions are obviously running high. For employers, a reduction in force brings many possible pitfalls. An ounce of prevention in the form of careful planning and review of the decisions of managers may prevent many pounds of damage in the form of lawsuits and liability. Here are some suggestions for employers:
1. Take a careful look at the demographics of the people who will be laid off. Consider having someone independent of the managers who made the layoff decisions conduct this analysis. Make sure that employees in a protected class – older workers, women, or any particular racial group – are not being targeted disproportionately. Imagine that you will have to explain any disproportionate impact to a jury.
2. If lower level managers are told to make cuts in their departments, be sure that the decisions are reviewed by someone with more objectivity. Make sure that the reduction in force is not used by those managers as cover for an improperly motivated firing.
3. Watch for workers who may have a retaliation claim. Is there an employee who has called out wrongdoing in the company who is now slated for firing? Be aware that firing this person might be perceived as retaliatory. Is there an employee who has complained of sexual harassment or discrimination? Retaliation for raising these complaints is against the law. What about someone who just returned from FMLA leave? Someone who has asked for an accomodation because of disability? They, also, are protected from retaliation. This is another reason to have someone objective check the decisions of lower level managers.
4. Get a good release in exchange for a severance payment. Work with an attorney to be sure that the release protects the company from future litigation and that the release complies with all of the applicable laws. (For example, age discrimination claims cannot be released unless specific review and revocation times are included in the release.)
5. Find out whether the layoff requires prior notification to the employees under WARN (Worker Adjustment and Retraining Act).
6. Document everything. Document the need for the reduction in force. Document the reasons for choosing to eliminate particular positions. Document any examples of poor performance by employees.
7. Are you about to hire someone new? Think twice. How will you justify this during a reduction in force? Your former employees (or a jury) may view this as a sign that your reduction in force was a pretext for an unlawful firing. Also, be careful of firing long-term employees if you’ve just hired new ones.
8. Be sure to meet your obligations of notification under COBRA.
9. The Golden Rule is always good advice. Be as considerate as you can to the employees whom you are firing. Employees are more likely to sue if they feel that they have been treated with particular disrespect.
10. Caveat to the Golden Rule: Some managers are so uncomfortable with the prospect of firing someone that they try to rationalize it or make it sound not so bad. Off the cuff comments made during the exit interview can come back to haunt you later. Be careful if you are tempted to say something like, “Well, now you can spend more time with your children” (Exhibit A in a gender discrimination case). Equally dangerous: “You were planning to retire pretty soon anyway, weren’t you?” Here comes an age discrimination claim.