A years of service plus age protocol is relatively common, i.e., the employee is eligible for a severance package if his years of service plus his age exceed a number selected and announced by the employer to achieve its employee reduction goal. 2022; 2021; 2019; 2018; 2017; 2016; 2015; Compensation; Performance; Basic Appraisal System; Executive Development; Payments (also known as buyouts) which are tools agencies may use to avoid or lessen the impact of reductions in force (RIF). Employers should conduct rehearsals (perhaps even role-playing) of the exit meetings in order to confirm that the selected managers are up to the task and know the script.. Frequently asking "Is this right?" RIF-related laws include: Gather but selectively disseminate data. The possibility of a RIF is yet another reason why an employer should mandate regular job performance evaluations of all employees. The goal is to make the separation benefits cost-effective, that is, high enough to induce employees to elect departure but low enough to minimize the cost to the company. Unexpected RIFs often seem to generate the most lawsuits. Communications from management, ideally in person, often speed a return to normality. Build specialized knowledge and expand your influence by earning a SHRM Specialty Credential. Investigate and resolve any apparent disparities in the preliminary list (e.g., Hispanic women or workers over 40 being selected at a higher than expected rate). Were sorry, but Coda doesnt work properly without JavaScript enabled. The COVID-19 pandemic has popularized states' "work share" programs by which approved employers may reduce employees' hours (often up to 40 percent) and retain them on the payroll while entitling them to a proportionate state unemployment benefit which, in turn, entitles them to the $600 weekly benefit provided by the federal CARES Act. WebStep One: Find Your Goals, Start Your List As SHRM states, it is valuable to break your RIF checklist into sections to keep everything as easy to follow as possible. Reductions in force are typically permanent because the roles of those let go are usually. If the explanation for a RIF is "we're out of money," don't give huge bonuses to senior executives shortly before or after the RIF. The laws are numerous, complex, sometimes conflicting in their requirements/prohibitions, often contain harsh penalties for non-compliance, and frequently are the basis for both individual and class-action lawsuits against employers. The RIF process should be strictly confidential until formally announced. Question assumptions and the wisdom of anticipated actions. Featured. Click "accept" below to confirm that you have read and understand this notice. Written by experts from Ogletree Deakins Nash It is an unfortunate but increasingly common fact of business life in these troubled economic times that even successful organizations are being forced to reduce the numbers of their personnel in order to maintain economic viability. or "Would a stranger understand and accept this?" Unexpected RIFs often seem to generate the most lawsuits. Train senior staff how to respond to threats/violence. Managerial Reduction In Force ffi. The hallmark of Holland & Knight's success has always been and continues to be legal work of the highest quality, performed by well prepared lawyers who revere their profession and are devoted to their clients. The employees need not be given all the facts about the RIF but what they are told must be truthful. There are various documents created in a RIF, including working papers, statistical analyses and separation agreements and their exhibits. Employers sometimes conduct rehearsals (perhaps even role-playing) of the exit meetings in order to confirm that the selected managers are up to the task and "know the script.". The complexities of the benefits/tax laws require careful consideration and the advice of an experienced benefits lawyer during the RIF-planning process. These alternatives to RIFs may not be as cost effective but they likely are less risky. Many employers selecting employees to be included in the RIF engage in employee "rating" the RIF candidates (giving a grade to each worker) or "ranking" (sorting the workers by skills, value/contribution, etc.) The employer may have continuing obligations to visa holders. Please confirm that you want to proceed with deleting bookmark. Decide eligibility criteria/deadlines. Consider whether a prepared press release (rather than spur-of-the-moment answers to a reporter's questions) will most effectively position the employer in the eyes of the general public. RIFs may occur for several reasons, including when a business pivots or restructures, shutters an office or branch, undergoes a merger or acquisition, moves to a new location, or faces financial hardship. The criteria must be business-related and consistent with both the employers contractual and collectively bargained obligations and announced policies. Webdownload this RIF checklist to: Keep track of everything you need to determine before conducting a RIF. Since it is possible that support staff of decision-makers might otherwise be able to access emails and other confidential information pertaining to the RIF process, it is advisable to confirm in advance which decision-makers allow staff personnel access to their email). Too often, however, companies are both unsure and unaware of the different types of criteria that they may use to do so. There also can be state law requirements for waiver agreements, including the obligation to include specific language in the separation agreement. While no one wants to let go of staff, the economic realities may force you to do so. Eligible employees must be given time to consider carefully their options (and seek advice of counsel) before being required to make a decision and should be given the RIF information (including a copy of the separation agreement they will be expected to sign) well in advance of the decision deadline. Ensure security. Such ratings and rankings should be as objective as possible, and employers should compare an employee's RIF-related ratings/rankings to the employee's prior performance evaluations to ensure there are no suspicious, inexplicable discrepancies). Retaliation/whistleblower laws: Many statutes include protections for workers who complain to their employers about or oppose suspected violations of those statutes. and/or "What's the worst that someone could make of this?" While taking a leave does not insulate the employee from being discharged in a RIF, employers should carefully analyze the employees tentatively selected for separation to ensure that workers who have been on or are on leave have not been targeted. Each page in this template has a checklist along with a "worksheet" for you to actually fill out the information with the relevant team members on your Reduction-In-Force task force. often leads to catastrophe avoidance. Consider whether a prepared press release (rather than spur-of-the-moment answers to a reporters questions) will most effectively position the employer in the eyes of the general public. The disadvantages of furloughs include ensuring the proper payment of salaried "exempt" employees (who must be paid their normal salaries if they do any work during a furlough week). It is important to assess ERISA issues early in the planning process and consider such questions as: are the terms of the proposed voluntary RIF program consistent with the terms of the employers retirement plan and applicable benefits laws? Explore. Points to consider for these voluntary separations include: Determine desired outcomes. Is the RIF going to eliminate job titles (perhaps by combining two jobs into one) or reduce the number of people in certain jobs or both? Formally assessas part of the ongoing planning processthe risks of violence, sabotage and theft by employees who will be RIFd. There are specific federal statutory requirements for waivers of age discrimination claims in a RIF, including, most notably, that the employee be (a) expressly advised in writing to consult a lawyer before signing the agreement, (b) given 45 days to consider the agreement before signing it (a period the employee can waive voluntarily), (c) given seven days (a period that cannot be waived) after signing the agreement to revoke it (that is, the waiver is not effective until the seven-day period passes without revocation), and (d) given disclosures consisting of general information about the RIF decision process as well as specific information about the job titles and ages of persons selected and not selected for separation in the RIF. Given the complexity of the applicable laws, and the desire to have the agreements be binding and enforceable to bar future claims, the agreements should be prepared or reviewed by counsel before presentation to the departing employees. The checklist is divided into four sections: Section I Planning, Section II Involuntary RIFs, Section III Voluntary RIFs and ERIs, and Section IV Problem The RIF decision makers may be here today but RIFd tomorrow. Ensure that the overall business and its individual departments and production lines can continue to function after the RIF (the use of "before" and "after" reporting relationships and staffing charts often are helpful), and that the RIF is not inadvertently eliminating persons with critical skills. A handout summarizing the available post-employment benefits often simplifies the meetings and minimizes post-meeting follow-up questions. The information is general in nature and cannot cover every situation. A Reduction in Force (RIF) may occur for reasons such as budget constraints, shortage of work, changes in the organization, or a need to abolish SHRA positions. to assist in the selection. Perform a "disparate impact" analysis of the preliminary list of persons to be released by comparing their demographics with those of workers to be retained in order to ensure that employees in protected classes are not inadvertently being selected for separation at a higher rate than their percentages in the workforce. Appendix B: Managements Decision to Implement RIF Checklist. This Holland & Knight alert includes a checklist that is designed to provide an overview of the RIF process and assist organizations contemplating personnel "downsizing" to identify the critical elements and legal principles of planning and implementing a RIF. There should be two people representing the company in the exit meeting: a spokesperson and a non-speaking witness. Most employers use at least a) an announcement of the voluntary RIF in which the eligibility criteria, available severance benefits and deadline dates are clearly set forth, and b) a separation agreement with a comprehensive release of claims. 1. A workplace run by AI is not a futuristic concept. The meetings should be short, simple, clear, informative, unemotional and final. Employees can be informed about the future (as it then appears to management), warned that there will be a normal adjustment period in light of the reduced jobs/staff and friends, and enlisted to help the organization stabilize and prosper. The Purpose of VSIP The Voluntary Separation Incentive Payment (VSIP or buyout) Authority allows agencies to offer lump-sum payments to employees who are in surplus positions or have skills that are no longer needed in the workforce, as an incentive to separate. More. WebEmployer's Reduction in Force Checklist. State laws: Every state (and a few counties and cities) has discrimination, wages and wage payment and other laws protecting employees and imposing requirements on employers, laws which impact RIFs. There should be a limited number of individuals making decisions as to which employees will be released. Meet with "survivors." A list of employees showing their genders, age, minority/disability/whistleblower status, leave/workers compensation status and other characteristics protected by law will be necessary for the "disparate impact" analysis discussed below. The goal is to make the separation benefits cost-effective, that is, high enough to induce employees to elect departure but low enough to minimize the cost to the company. Public relations are important. The same legal requirements for employees' waivers of claims in involuntary RIFs (discussed above) apply to voluntary RIFs. Although a reduction in force (RIF) often can improve an entity's financial picture, there can be serious legal and financial consequences if it is not properly conceptualized, designed and implemented. to assist in the selection. The economy may change and, with luck, an employer may in a few months wish to rehire a worker RIFd this month. Section I: Identify Goals/Objectives 1.) Given the complexity of the applicable laws, and the desire to have the agreements be binding and enforceable to bar future claims, the agreements should be prepared or reviewed by counsel before presentation to the departing employees. Employers can offer lower severance benefits to retiring older employees under very limitedand complicatedcircumstances if otherwise consistent with any existing retirement plans; a competent employment/benefits lawyer must be consulted if it is planned that the inducements for a voluntary RIF/ERI will vary based on age. Ensure, to the extent possible, that the supervisors of all departing employees are in agreement with their employees being placed on the list. Voluntary RIFs are most often challenged in the courts on the basis that the process was not truly voluntary; that is, the former employees were threatened, coerced or mislead into taking the package and signing a waiver of claims. These alternatives to RIFs may not be as effective in reducing costs, but they may be less risky. Management should carefully avoid promises about the future because additional RIFs/terminations/restructurings might be necessary. Reducing employees' pay or hours, or sending them home on unpaid furloughs for weeks (or months), often are effective short-term measures to preserve cash, capital and employment relationships but sometimes are simply insufficient to ensure the long-term survival of a business. - Objectives for your RIF and the task force to run the process, - Criteria you can use to determine layoffs, - One place to track all benefit policies for laid off employees, - Plan to communicate RIF to employees, 3rd parties, and the public. Employers can legally limit voluntary RIFs to employees who have reached a certain minimum age, to certain departments/work groups, to personnel with certain years of credited service and to certain time periods (e.g., departure during a specified but limited "window" period). Attorney Advertising. It often is helpful to state the goals more specifically (such as "reduce payroll expenses in the finance department by 10 percent" or "convert the ketchup production line to hand sanitizer production") and to put the goals in writing so decision-makers will have an ongoing point of reference in carrying out their missions. The most commonly stated RIF goals are to reduce payroll expenses and to better align personnel resources with available work. For example, certain severance pay plans and even less formalized severance arrangements may be plans governed by ERISA. (The required RIF data disclosures for a large employer often are time-consuming to prepare so the company must allow sufficient time to draft them.) Voluntary RIFs are most often challenged in the courts on the basis that the process was not truly voluntary, that is, employees were threatened, coerced or misled into taking the package and signing a waiver of claims. The most common advantages of furloughs over RIFs include easier employee departures (because, most often, the federal/state "plant closing"/"mass layoff" notifications need not be given), easier returns to work (because those personnel have remained in the payroll/benefits systems), and the preservation of employment relationships that might be vital to the employer's recovery and return to normalcy. Get tips for composing a RIF notification letter. In addition to furloughs (discussed above), payroll expense reductions and personnel-work alignments often can be achieved by other means, such as a) waiting for normal workforce turnover/attrition, b) reducing hours being worked by hourly personnel or changing jobs from full-time to part-time, c) job sharing, d) pay freezes or pay cuts, e) implementing short-term (one or two-week) layoffs or plant shutdowns, f) allowing employees to volunteer for unpaid leaves of absence, and/or g) transferring existing personnel to different jobs, departments or facilities. !.E) Checklist
Request for RIF Memorandum
If the company anticipates certain employees becoming violent or disruptive, notify building security or law enforcement in advance of the RIF to put them on notice and inform key personnel of the contact information for key security personnel (but recognize that some departing workers will be offended or become unruly if they suspect they are being disrespected by an obvious police presence). Management should carefully avoid promises about the future because additional RIFs, terminations or restructurings might be necessary. Impermissible criteria, in addition to the characteristics protected by law, include whistleblowing (not only the prior filing/voicing of claims of employment discrimination but also allegations that the employer is not complying in some manner with the laws regulating its business), use of disability or FMLA leave, filing a workers compensation claim and support for or affiliation with a union. Limit the dissemination of sensitive documents and data, and password-protect electronic RIF documents and communications among decision-makers and advisors. Investigate any apparent demographic disparities in the preliminary list (e.g., Hispanic women or workers over 40 being selected at a higher than expected rate) and, if necessary, adjust the preliminary list (and perhaps repeat the "disparate impact" analysis on the revised list). All rights reserved. Determine its scope. WebThe following is a checklist of legal and practical issues to be reviewed in connection with a reduction in force. Managers should be sympathetic but not defensive or overly apologetic (which may imply employer wrongdoing) or too talkative (because extensive explanation/justification of the RIF may encourage unproductive debate, suspicion, questions or mistakes). Subject: Reduction In Force Approval Procedures and Managerial Checklist Reference 62 BIAM 11.43 Reduction In Force - requirements for requesting a Reduction In Force has changed for concurrence and approvals, however the process and the required documentation has not changed. Will any ERI be deemed an ERISA plan and thus subject to that laws participation, vesting, funding, reporting and disclosure requirements and, if so, can the plan be restructured to avoid ERISA coverage? If the explanation for a RIF is were out of money or we have too many people, dont give huge bonuses to senior executives or engage in major recruiting efforts shortly before or after the RIF is announced. WebREDUCTION IN FORCE PLANNING Checklist of Considerations and Tasks to Complete Involve your employment and labor lawyer early on in the process. All rights reserved. However, "buyouts" often give the employer less ability to retain the best personnel. Will the RIF or ERI create any deferred compensation/Section 409A issues? The coronavirus pandemic has demonstrated that even historically successful organizations may be forced to reduce employee headcount to maintain economic viability. Gather materials necessary for the exit meetings. Provide these materials to managers who will be doing the exit meetings. Pay. Ensure, to the extent possible, that the supervisors of all departing employees are in agreement with their personnel on the list (to ensure that all management personnel "are on the same team" and prepared to defend any employee's claims). Positions become redundant, business objectives change, and a shift in management means a new way of doing things. Consult with counsel about methods for ensuring that certain documents are protected by various legal "privileges.". Employers can offer lower severance benefits to retiring older employees under very limited and complicated circumstances if otherwise consistent with any existing retirement plans. The laws are as numerous and various as the states, counties and cities themselves. Partner with an industry expert to ensure your reduction in force goes as smoothly as possible for everyone at your company. Employee benefits laws: The federal pension laws (including ERISA) impact RIFs. There should be a limited number of individuals making decisions about employees to be released. It generally is preferable to inform the departing workers individually. If the employee population is sufficiently large, the assistance of professional statisticians can be very useful in the "disparate impact" analysis (and their reports may be helpful in defending any lawsuits arising from the RIF). The most common RIF goals are to reduce payroll expenses and to better align personnel resources with available work. Anticipate the need for a RIF. Plant closing laws: Federal law and similar laws in several states are not limited to RIFs in which there is an actual closing. The laws require employers to furnish advance notice of their intent to release specified portions of the employee population even if the plant remains open. Control communications. Such ratings and rankings should be as objective as possible (and, of course, employers should compare RIF-related ratings and rankings to prior performance evaluations to ensure that there are not inexplicable discrepancies). 1. Discharged workers seem more ready to accept their fates (and severance packages offered in exchange for waivers of claims) if they know in advance that the organization is in financial trouble. Employees can be informed about the future (as it then appears to management), warned that there will be a normal adjustment period in light of the reduced jobs/staff, and enlisted to help the company stabilize and prosper. It generally is preferable to inform the departing workers individually and in person if possible. After reviewing the requirements for the content of such notices, draft and transmit them to the employees, the government recipients and any unions. Comply with the law. Though not a method of reducing payroll expenses, the recent U.S. Small Business Administration's Paycheck Protection Program (providing forgivable loans to certain employers who keep employees on the payroll) may allow a company to bridge the pandemic to happier times. A successful workforce reduction process requires careful and early planning. This template provides a simple checklist for things to think about if you are thinking about going down this path. So be careful about what is written and how it is phrased: A jury may be looking over your shoulder in two years. Ensure confidentiality. Economic Security Act (CARES Act), often exceeds $1,000 per week for up to 26 weeks. Further, RIF-related lawsuits often are easier for employers to win if there are recent detailed, specific, accurate and fact-based written job performance evaluations of the released employees showing that they were not performing as well as the workers who were retained. WebChecklist: Preparing For Your Reduction-In-Force Voluntary or involuntary layoff? When the agency determines a RIF is likely, the agency should review its delegations of authority to determine which individual or organization in the agencys chain of command has authority to approve the RIF actions. Although a reduction in force (RIF) often can improve an entity's financial picture, there can be serious legal and financial consequences if it is not properly conceptualized, designed and implemented. Many employers use a two weeks pay for every year of service rule of thumb, with minimum and maximum amounts. Various recommended employer strategies for RIFs also provide protection in furloughing personnel. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Using the selection criteria, the decision-makers should prepare a confidential preliminary list of jobs/employees to be eliminated in the RIF. The usual issues are much more complicated now during the 2020 COVID-19 crisis with the overlay of the rapidly enacted and untested pandemic laws and regulations. Using the agreed-upon selection criteria, the decision makers should prepare a confidential preliminary list of jobs/employees to be eliminated in the RIF. This demographic data obviously is very sensitive so should have very limited circulation and should not be given to those persons selecting employees for separation before they make those decisions so that it cannot later be claimed that an employee's protected status was any factor in his or her selection for separation. Moreover, the laws of each jurisdiction are different and are constantly changing. Most employers want departing employees to sign a legally binding document releasing the company from any claims and bringing the employment relationship to an amicable end without legal controversy. The approval process may vary WebOur Reduction-in-Force Checklist is a 10-page PDF available for immediate download when you pre-pay with your credit card. A Severance pay (particularly severance in excess of any "normal" sums previously paid by the employer to departing employees) or early retirement benefits are common components of a voluntary RIF severance package. Please consult a lawyer to understand the full ramifications of a Reduction-In-Force should you decide this is the right path for your company. For example, an employer likely will have to offer the holder of a H-1B visa terminated in a RIF the reasonable cost of returning to the home country. Copyright 19962023 Holland & Knight LLP. Identify the goals. Is the RIF going to eliminate job titles (perhaps by combining two jobs into one) or reduce the number of people in certain jobs, or both? Explain and document need for layoffs. Voluntary RIFs frequently are complicated, sometimes controversial and subject to litigation so a) ensure that there are a limited number of very well-informed company representatives who are designated to answer employee questions and that other (less-informed) management personnel are instructed not to speak to employees about the plan or the process; b) send employees with questions to only those designated company representatives; and c) carefully craft all internal and external announcements, explanatory memoranda and other communications to ensure clarity, completeness and accuracy. Think about the value of obtaining promises from departing employees of non-disparagement, confidentiality, and non-solicitation of customers or other employees. Frequently asking Is this right? or Is this fair? or Is this respectful? or Would a stranger understand and accept this? and/or Whats the worst that someone could make of this? often leads to catastrophe avoidance. For questions or more information about a reduction in force specific to your organization, contact Holland & Knight Partner Bill deMeza, who has guided a number of employers in various industries through successful RIFs, or another member of the firm's Labor, Employment and Benefits Group. The employees must be given sufficient time to consider their options (and the separation agreement) before being forced to make a decision; several weeks is not uncommon, while large voluntary RIFs sometimes allow the employees 30-45 days to opt-in, in addition to the 45-day consideration period required to obtain a valid waiver of age claims under federal law. RIFs are useful but often are expensive and sometimes lead to lawsuits. Written by experts from Ogletree Deakins Nash Smoak & Managers should remain calm and sympathetic but not defensive or overly apologetic (because it may imply wrongdoing) or too talkative (because extensive explanation/justification of the RIF may only encourage unproductive debate, suspicion, questions or mistakes). Try clicking the next to your doc name or using a keyboard shortcut (, As the COVID-19 crisis drags on, many companies large and small have to deal with letting employees go.
Request for RIF Memorandum
If the company anticipates certain employees becoming violent or disruptive, notify building security or law enforcement in advance of the RIF to put them on notice and inform key personnel of the contact information for key security personnel (but recognize that some departing workers will be offended or become unruly if they suspect they are being disrespected by an obvious police presence). Management should carefully avoid promises about the future because additional RIFs, terminations or restructurings might be necessary. Impermissible criteria, in addition to the characteristics protected by law, include whistleblowing (not only the prior filing/voicing of claims of employment discrimination but also allegations that the employer is not complying in some manner with the laws regulating its business), use of disability or FMLA leave, filing a workers compensation claim and support for or affiliation with a union. Limit the dissemination of sensitive documents and data, and password-protect electronic RIF documents and communications among decision-makers and advisors. Investigate any apparent demographic disparities in the preliminary list (e.g., Hispanic women or workers over 40 being selected at a higher than expected rate) and, if necessary, adjust the preliminary list (and perhaps repeat the "disparate impact" analysis on the revised list). All rights reserved. Determine its scope. WebThe following is a checklist of legal and practical issues to be reviewed in connection with a reduction in force. Managers should be sympathetic but not defensive or overly apologetic (which may imply employer wrongdoing) or too talkative (because extensive explanation/justification of the RIF may encourage unproductive debate, suspicion, questions or mistakes). Subject: Reduction In Force Approval Procedures and Managerial Checklist Reference 62 BIAM 11.43 Reduction In Force - requirements for requesting a Reduction In Force has changed for concurrence and approvals, however the process and the required documentation has not changed. Will any ERI be deemed an ERISA plan and thus subject to that laws participation, vesting, funding, reporting and disclosure requirements and, if so, can the plan be restructured to avoid ERISA coverage? If the explanation for a RIF is were out of money or we have too many people, dont give huge bonuses to senior executives or engage in major recruiting efforts shortly before or after the RIF is announced. WebREDUCTION IN FORCE PLANNING Checklist of Considerations and Tasks to Complete Involve your employment and labor lawyer early on in the process. All rights reserved. However, "buyouts" often give the employer less ability to retain the best personnel. Will the RIF or ERI create any deferred compensation/Section 409A issues? The coronavirus pandemic has demonstrated that even historically successful organizations may be forced to reduce employee headcount to maintain economic viability. Gather materials necessary for the exit meetings. Provide these materials to managers who will be doing the exit meetings. Pay. Ensure, to the extent possible, that the supervisors of all departing employees are in agreement with their personnel on the list (to ensure that all management personnel "are on the same team" and prepared to defend any employee's claims). Positions become redundant, business objectives change, and a shift in management means a new way of doing things. Consult with counsel about methods for ensuring that certain documents are protected by various legal "privileges.". Employers can offer lower severance benefits to retiring older employees under very limited and complicated circumstances if otherwise consistent with any existing retirement plans. The laws are as numerous and various as the states, counties and cities themselves. Partner with an industry expert to ensure your reduction in force goes as smoothly as possible for everyone at your company. Employee benefits laws: The federal pension laws (including ERISA) impact RIFs. There should be a limited number of individuals making decisions about employees to be released. It generally is preferable to inform the departing workers individually. If the employee population is sufficiently large, the assistance of professional statisticians can be very useful in the "disparate impact" analysis (and their reports may be helpful in defending any lawsuits arising from the RIF). The most common RIF goals are to reduce payroll expenses and to better align personnel resources with available work. Anticipate the need for a RIF. Plant closing laws: Federal law and similar laws in several states are not limited to RIFs in which there is an actual closing. The laws require employers to furnish advance notice of their intent to release specified portions of the employee population even if the plant remains open. Control communications. Such ratings and rankings should be as objective as possible (and, of course, employers should compare RIF-related ratings and rankings to prior performance evaluations to ensure that there are not inexplicable discrepancies). 1. Discharged workers seem more ready to accept their fates (and severance packages offered in exchange for waivers of claims) if they know in advance that the organization is in financial trouble. Employees can be informed about the future (as it then appears to management), warned that there will be a normal adjustment period in light of the reduced jobs/staff, and enlisted to help the company stabilize and prosper. It generally is preferable to inform the departing workers individually and in person if possible. After reviewing the requirements for the content of such notices, draft and transmit them to the employees, the government recipients and any unions. Comply with the law. Though not a method of reducing payroll expenses, the recent U.S. Small Business Administration's Paycheck Protection Program (providing forgivable loans to certain employers who keep employees on the payroll) may allow a company to bridge the pandemic to happier times. A successful workforce reduction process requires careful and early planning. This template provides a simple checklist for things to think about if you are thinking about going down this path. So be careful about what is written and how it is phrased: A jury may be looking over your shoulder in two years. Ensure confidentiality. Economic Security Act (CARES Act), often exceeds $1,000 per week for up to 26 weeks. Further, RIF-related lawsuits often are easier for employers to win if there are recent detailed, specific, accurate and fact-based written job performance evaluations of the released employees showing that they were not performing as well as the workers who were retained. WebChecklist: Preparing For Your Reduction-In-Force Voluntary or involuntary layoff? When the agency determines a RIF is likely, the agency should review its delegations of authority to determine which individual or organization in the agencys chain of command has authority to approve the RIF actions. Although a reduction in force (RIF) often can improve an entity's financial picture, there can be serious legal and financial consequences if it is not properly conceptualized, designed and implemented. Many employers use a two weeks pay for every year of service rule of thumb, with minimum and maximum amounts. Various recommended employer strategies for RIFs also provide protection in furloughing personnel. DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Using the selection criteria, the decision-makers should prepare a confidential preliminary list of jobs/employees to be eliminated in the RIF. The usual issues are much more complicated now during the 2020 COVID-19 crisis with the overlay of the rapidly enacted and untested pandemic laws and regulations. Using the agreed-upon selection criteria, the decision makers should prepare a confidential preliminary list of jobs/employees to be eliminated in the RIF. This demographic data obviously is very sensitive so should have very limited circulation and should not be given to those persons selecting employees for separation before they make those decisions so that it cannot later be claimed that an employee's protected status was any factor in his or her selection for separation. Moreover, the laws of each jurisdiction are different and are constantly changing. Most employers want departing employees to sign a legally binding document releasing the company from any claims and bringing the employment relationship to an amicable end without legal controversy. The approval process may vary WebOur Reduction-in-Force Checklist is a 10-page PDF available for immediate download when you pre-pay with your credit card. A Severance pay (particularly severance in excess of any "normal" sums previously paid by the employer to departing employees) or early retirement benefits are common components of a voluntary RIF severance package. Please consult a lawyer to understand the full ramifications of a Reduction-In-Force should you decide this is the right path for your company. For example, an employer likely will have to offer the holder of a H-1B visa terminated in a RIF the reasonable cost of returning to the home country. Copyright 19962023 Holland & Knight LLP. Identify the goals. Is the RIF going to eliminate job titles (perhaps by combining two jobs into one) or reduce the number of people in certain jobs, or both? Explain and document need for layoffs. Voluntary RIFs frequently are complicated, sometimes controversial and subject to litigation so a) ensure that there are a limited number of very well-informed company representatives who are designated to answer employee questions and that other (less-informed) management personnel are instructed not to speak to employees about the plan or the process; b) send employees with questions to only those designated company representatives; and c) carefully craft all internal and external announcements, explanatory memoranda and other communications to ensure clarity, completeness and accuracy. Think about the value of obtaining promises from departing employees of non-disparagement, confidentiality, and non-solicitation of customers or other employees. Frequently asking Is this right? or Is this fair? or Is this respectful? or Would a stranger understand and accept this? and/or Whats the worst that someone could make of this? often leads to catastrophe avoidance. For questions or more information about a reduction in force specific to your organization, contact Holland & Knight Partner Bill deMeza, who has guided a number of employers in various industries through successful RIFs, or another member of the firm's Labor, Employment and Benefits Group. The employees must be given sufficient time to consider their options (and the separation agreement) before being forced to make a decision; several weeks is not uncommon, while large voluntary RIFs sometimes allow the employees 30-45 days to opt-in, in addition to the 45-day consideration period required to obtain a valid waiver of age claims under federal law. RIFs are useful but often are expensive and sometimes lead to lawsuits. Written by experts from Ogletree Deakins Nash Smoak & Managers should remain calm and sympathetic but not defensive or overly apologetic (because it may imply wrongdoing) or too talkative (because extensive explanation/justification of the RIF may only encourage unproductive debate, suspicion, questions or mistakes). Try clicking the next to your doc name or using a keyboard shortcut (, As the COVID-19 crisis drags on, many companies large and small have to deal with letting employees go.