An Overview Of Employers' Legal Obligations During Reductions-In-Force

Author:Susan Sampson Esq
Profession:Lucash Gesmer & Updegrove

Co-written by James J. Rooney, Esq.

Laying off employees is, without a doubt, one of the most difficult aspects of running a business. Unfortunately, this area of employment law is governed by a host of state and federal laws and regulations posing traps for the unwary and compounding the difficulty of the situation. This article provides both an overview of certain significant laws, plus practical advice, in navigating these potentially turbulent waters.

Ensure That The Relationship Is One Of Employment-At-Will From The Outset.

Use offer letters that clearly state that the employment relationship is at-will, and can be terminated at any time by either the employer or employee, for any or no reason. Ensure that no additional documents, such as a non-disclosure, noncompetition, and inventions agreement, or an employee manual or handbook, destroy this employment-at-will relationship.

Refrain From Implementing Progressive Discipline Policies Or Performance Programs.

Progressive discipline policies and performance programs may limit the company's ability to sever an employee's employment relationship as swiftly as business necessity mandates. Such policies typically provide for a timeframe for the employee to show improvement, or procedures for an employee to appeal a decision concerning an adverse employment action (including a layoff) prior to that adverse action being taken. These policies, it also may be argued, may void the parties' employment-at-will relationship. It is preferable to treat each issue that is discipline or performance-related (and, hence, that could potentially lead

to termination of employment) on an individual, case-by-case basis. However, in handling a discipline or performance issue individually, take care to treat all similarly situated employees consistently so as to avoid any appearance of discriminatory preferential treatment.

Set Employees' Expectations Realistically To Help Minimize Elements Of Surprise And Unfairness.

Lay the appropriate groundwork to help minimize employees' sense of surprise and unfairness. Be candid and forthright in giving reviews; do not try to minimize or avoid performance or disciplinary issues. Refrain from setting any unreasonable expectations, for example, during changing economic times, or in context of an acquisition or business refocus, with respect to job security.

It is no secret that recent reversals in many companies' economic fortunes have led to an increasing number of workforce reductions. Layoffs, however, will only enhance a company's efficiency if they are executed in accordance with applicable law. Indeed, a mishandled reduction-in-force can lead to litigation, which may offset the benefits associated with a reduced...

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