Sometimes business is booming. Other times, not so much. We appear to be heading into a downturn, and that means you may have to make some hard decisions, including terminations of some long-time employees. Is there a way to do so compassionately? According to lawyers at Littler participating in a recent webinar—Conducting Compassionate Reductions in Force—the answer is yes. Here’s how to do so.
Consider alternatives to RIFs. You don’t always have to cut employees entirely, especially if you think business will improve soon. One alternative is using furloughs to get costs down, but leaving open the possibility that you may soon need those workers back. A furlough is, by definition, a temporary absence from work without pay. It can include continued health and other benefits. Furloughs can also include pay reductions with reduced work for both hourly and exempt workers. Just make sure exempt workers still earn at least the minimum weekly pay for their classification and your state for any week they perform any work.
Voluntary exit incentive plans. Littler attorneys suggested that employers seeking a permanent reduction in staffing levels might choose to look for volunteers to leave in exchange for an incentive. If enough workers choose to voluntarily leave, others may not have to go involuntarily, creating goodwill for the employees accepting the incentives and those retaining their jobs. Be aware that special rules apply to older workers agreeing to accept incentives.
When a RIF is the logical answer. Employers who can’t make a furlough or voluntary exit plan work may have no choice but to conduct a RIF. If that’s the case, make certain that you identify and apply selection criteria that are both legal and fair. This should include careful documentation on a manager selection sheet.
Check that managers aren’t considering illegal reasons when ranking employees for inclusion in the RIF. That means excluding FMLA-covered absences from performance reviews and analyzing the final list for disparate impact on protected statuses like age, sex, race, disability and so on. Share this information only with your attorneys for protection under attorney-client privilege. You will likely need a statistics expert to help with the analysis.
Compassionate severance agreements. With most RIFs, you will want to get a severance agreement that includes a promise not to sue in exchange for a payment. You can add terms that make the agreements “compassionate.” These include terms like outplacement services, payment of bonuses not yet due and limited health insurance continuance.
Actual termination. Finally, make sure you perform the actual termination in a sensitive and compassionate way. Avoid termination by text message, for example.
