Trimming your work force without smart legal advice is like performing surgery without a doctor. You may remove what you intended, but the complications could be deadly.
Even if you do everything right, a disgruntled worker may still file a lawsuit. Doing your homework upfront will get you out of court faster.
If layoffs haven't hit your company yet, consider this: U.S. firms cut more than 650,000 jobs in the first five months of this year, more than they did in all of 2000, according to Challenger, Gray & Christmas.
Avoid the pitfalls:
Set the stage correctly
Your foundation for defending layoff decisions is grounded in other good employment practices. That includes making sure that employees understand when their employment is "at will," and either they or you can terminate it at any point.
In some cases, you may have to rescind a job offer even before the new employee starts work. So be careful about what you promise a prospective employee if you don't want to be held to that agreement.
To take the sting out of the loss, some employers are offering to repay any money new workers shelled out to move to the city, plus pay for services to help them find other jobs.
When laying off existing workers, it's important to have solid, objectivein the worker's file. This will make it easier to explain your selections for termination.
Anticipate the impact
Legal action usually results from thoughtless criteria for selecting workers to be laid off. Acceptable criteria include objective job reviews, job titles, experience, seniority, abilities and training. Don't use pay as a criterion; it may disproportionately hurt older workers.
Also, when developing your layoff list, analyze it for workers who fall into protected classes. If you're planning to get rid of a substantially higher proportion of minority employees, for example, that should raise a red flag.
If you're laying off a large number of employees, you may be subject to the Worker Adjustment and Retraining Notification (WARN) Act. Among other things, the law requires most companies with 100 or more employees to provide the employees and government officials with at least 60 days' notice of the layoffs.
If you have 20 or more workers and you offer group health insurance, you'll also have to notify your employees and their beneficiaries of their rights to continuing coverage under the federal COBRA law. You must notify the plan administrator of the event qualifying them for COBRA, and the administrator must follow strict rules for notifying the beneficiaries.
Another concern: waivers. Because of the laws' complexity, it's best to get legal advice when writing waivers that ask departing workers to sign away their right to sue you. For example, the Older Workers Benefit Protection Act sets strict requirements for waiving age discrimination claims.
Note that new rules from the Equal Employment Opportunity Commis-sion also say that workers who accept severance payments in exchange for waivers don't have to return the money while they challenge those waivers in court.
Layoff advice: 3 resources
- Get a copy of our free, three-page report, The Right Way to Fire, faxed to you by calling us at (800) 543-2055. To have it e-mailed to you, send us a request at firstname.lastname@example.org and put "Right Way to Fire" in the subject line.
- Visit the U.S. Labor Department's site, www.doleta.gov/layoff/employers01.asp, for government layoff rules and assistance for laid-off employees.
- Order our book, Fire at Will, (Publication N235C), which helps bosses assert their right to fire employees when it's necessary. Cost: $29.95. Call (800) 543-2055 or order at www.nibm.net.
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