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Limit Legal Exposure - April 2008

By Adrienne Fox Society for Human Resource Management (SHRM) - HR Magazine, April 2008

Profits fall, and staff must be cut. Managers convene and start making decisions on who should be laid off. They may say things like, ?Mark is not really that great of a worker, let?s put him on the chopping block.? Or ?Sue hasn?t been as productive since she started taking intermittent Family and Medical Leave Act leave.? Or, ?I know Brenda hasn?t been meeting her sales goals lately, but I have a gut feeling that she?s going to be a better performer in the long run than Bob, who has been her a long time.? The managers come up with a so-called ?blacklist? of names for layoffs and write it all down.

Only then does someone say, ?Let?s contact human resources? and ask if there are any problems with the list.

The above scenario demonstrates exactly what shouldn?t happen but often does when planning layoffs, says Michael J. Underwood, an employment lawyer at Porter, Wright, Morris & Arthur in Columbus, Ohio, adding ?You?ve already dug a hole, and you have to hope it?s an OK hole.?

Instead, Underwood advises HR professionals to get in front of the layoff process and to help managers ?focus on what they want the organizations to look like after the reductions. Ask managers, ?What are the job functions that have to be performed, and how are we going to manipulate job functions by either combining jobs or eliminating jobs??

?Identify those objectives and then begin to analyze the jobs that remain after the reduction in force,? advises Underwood. ?The mistake managers make is saying. ?Who are the folks we want to let go?? and then (trying) to justify that decision later.?

In addition to reviewing strategic elements, managers making a reduction in force (RIF) need to review termination decisions and ask whether the termination decisions will leave the company open to lawsuits or discrimination charges based on age, race, sex or disability.

?In any RIF, there is a possibility of one or more terminated people challenging the decision,? says Underwood. ?Frequently, the claim made is a discrimination claim, and it?s common for that claim to be an age discrimination lawsuit.?

Seek counsel for advice on layoff targets, Underwood advises offering severance pay and requiring the employees to sign a general release of potential claims in return for the pay. Also, company leaders must determine if they are obliged to give prior notice to employees under the federal Worker Adjustment and Retraining Notification Act. (WARN) or similar state laws. WARN required employers with 100 or more employees (generally not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week) to provide at least 60 calendar days of advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment.

Also, Underwood says, ?if affected employees are represented by a union, determine if there are any applicable labor contract provisions and evaluate the duty to bargain with the union.?

He concludes, ?Follow a structural approach, seek legal counsel before final decisions, and offer severance pay and waiver documents. Then, you?ve done everything you can to minimize legal risk.?

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