Safe Handling of a Reduction-in-Force
In this litigious era, employers contemplating a reduction-in-force (RIF) must be very careful in how they handle this super-sensitive issue. So how CAN employers protect themselves from lawsuits? A lawsuit about a 12-year-old layoff that was JUST resolved in court indicates how a RIF can be handled correctly. As in all HR actions, the key is document, document, document!
BACKGROUND
Spirit Aerospace Systems conducted a 10% RIF in 2013; but they did it after considering (and documenting) a number of different options, including temporary layoffs, early retirement incentives, pay freezes (or even cuts), shortened work-weeks, or unpaid leaves of absence. They also considered ways to reduce management overhead, more stringent performance requirements that could lead to termination, changing hiring requirements, shift optimization and voluntary severance packages for long-term employees. They also adjusted their performance evaluation program. None of those, however, produced the necessary reductions in cost. Theirs was a “sensitive” environment because they also had an older workforce.
PROCESS
All of the options they considered above, along with the original reason for the RIF, were recorded in writing. After determining that a RIF was still needed, they followed these steps:
A. Carefully choose and document the selection criteria along with the business reasons for the RIF. Criteria can include which departments are to be affected, employee skill sets and performance history, pay levels, coverage of the duties of laid-off employees, etc.
B. Train managers in the overall selection process and criteria, and the application of those criteria to employees.
C. Review the above with legal counsel to avoid any potential pitfalls.
D. Control dissemination of information carefully to avoid premature disclosure (which almost inevitably would lead to misinterpretation and trouble).
E. Ensure that all managers involved are consistent in the message conveyed to employees. [In the case of the RIF at Spirit, one manager was quoted as saying that young people were “key” to the company’s future. In that case, the company avoided trouble because the manager was not involved in key RIF decision-making, and the remark “lacked context”; otherwise, it could have been a landmine.
F. Develop careful external communication to avoid potential legal and PR problems.
G. Plan ahead on how to handle key logistics on the day they execute the RIF, such as how to handle the termination meetings (including for remote employees), paperwork (including any severance agreements, final pay and required disclosures), potential security concerns, return of company property, disconnecting access to IT systems, and how to address any follow-up questions from remaining employees. Managers and HR members who are to meet with affected employees should receive specific training on conducting the termination meetings, including delivery of the news with respect and compassion. How to respond to common employee questions related to the RIF is also important. Guidance documents, such as talking points and FAQs, also can help personnel stick to the script and ensure consistent messaging for each affected employee.
H. Have a plan for remaining employees, including a communication plan giving the reasons for the RIF, the fact that it is complete (at least for now), and answers to anticipated questions from those employees. The outlook for the near future should be reviewed generally – without statements regarding business or employment security that could be interpreted as specific commitments.
I. Ensure compliance with all applicable federal and state laws regarding layoffs, including WARN and state “mini-WARN” Acts (if applicable), ADEA and OWBPA, release documents, etc.
J. Ensure documentation is in place to combat any potential post-RIF challenges.
K. Keep legal counsel informed in all steps.