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. Keep the RIF working papers and analyses in locked storage when not in use. 1. 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? WebThe following is a checklist of legal and practical issues to be reviewed in connection with a reduction in force. Highlights The COVID-19 crisis has The possibility of a RIF is yet another reason why an employer should mandate regular job performance evaluations of all employees. Identify decision-makers. 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. Be careful: It is important to comply precisely with the requirements to avoid penalties or lawsuits. Such technology is already a part of many workplaces and will continue to shape the labor market. Decide eligibility criteria/deadlines. There are a few exceptions to the plant closing laws (such as faltering company and unforeseen business circumstances), but the exceptions are very limited and generally permit only less than normal notice (and not, Discrimination laws: Federal and state statutes prohibit treating employees differently because of their gender, race, age, religion, pregnancy, disability and other legally protected categories. Knowing the ideal outcome will permit the employer to structure the eligibility criteria and severance package to achieve those goals. While the result may look the same (employees being let go), there are some subtle differences. However, challenging economic conditions have made extended planning time a luxury many employers can no longer afford. Economic Security Act (CARES Act), often exceeds $1,000 per week for up to 26 weeks. Reduction Did you hold a job other than one that was brief, nonrecurring? Similarly, the amount of severance typically is within the employer's discretion; many employers use a "two weeks' pay for every year of service" rule of thumb, with minimum and maximum amounts. Reduction in Force; Presidential Rank Awards. There should be two management personnel in the exit meeting: a spokesperson and a "non-speaking" witness. The managers should allow the employee to vent but should not engage in argument or debate and should remain firm (not implying that discharge decisions can be changed). What if only the best workers opt to leave? 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). This template provides a simple checklist for things to think about if you are thinking about going down this path. You may be trying to access this site from a secured browser on the server. A single designated spokesperson to answer all post-RIF questions from both inside and outside the organization is often the most effective way to disseminate accurate and consistent information about the RIF. Ensure "voluntary" is really "voluntary." The employee should be told of the decision, the available severance benefits and any conditions to receipt of the benefits (such as signature and return of a separation agreement), the transition procedures (return of company property, requirements of any company-sponsored benefits plans such as group health coverage, stock options, bonuses), and any transition of duties and responsibilities. Thus, ensure that workers eligible for the voluntary RIF are given sufficient and accurate information about the benefits, deadlines and consequences of electing a severance package and separation from the company. Conduct reality checks. The WARN Act and any applicable state "plant closing" laws might require, and collective bargaining agreements generally do require, that the employer furnish notice of the RIF (and, often, some basic information about it, such as the numbers of employees being released and the timing of the separations). WebThere are two broad avenues of challenge to a reduction in force: (1) the employer discriminated against an employee in selecting that employee for layoff; and (2) there was Formally assess as part of the planning process the potential for violence, sabotage and theft by employees to be included in the RIF. My Account. 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. 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). All rights reserved. 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. These alternatives to RIFs may not be as effective in reducing costs, but they may be less risky. Checklist Information contained in this alert is for the general education and knowledge of our readers. 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. The meetings should be short, simple, clear, informative, unemotional and final. There are other separation benefits that can be provided, including reimbursement of employees' premiums for continuing group health coverage (COBRA coverage), outplacement assistance or jobs training, eligibility for recall to work, more-than-neutral letters of reference, etc. 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). Reduction in Force Toolkit - Highpoint Insurance Group 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. COVID-19 RIF Checklist: Key Issues to Consider in Reductions in Force Holland & Knight Alert William B. deMeza Jr. Reduction in Force 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 (containing a comprehensive release of claims). Arrange for advice. 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. Equal Employment Opportunity Commission (EEOC) and the jury will not like you. Positions become redundant, business objectives change, and a shift in management means a new way of doing things. Do not send any privileged or confidential information to the firm through this website. The employees, the U.S. Communications from management, ideally in person, often speed a return to normality. One thing leads to another. Identify the goals. 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. Analyze pre-layoff statistics in consultation with counsel. The employees, the EEOC and the jury will not like you. Develop a preliminary list. WebExplore Reduction-In-Force (RIF) Checklist A template and checklist for implementing a reduction-in-force or layoffs at your company. RIF Checklist: Key Issues in Managing a Reduction-In-Force Find out what to include when preparing employee separation After reviewing the requirements for the content of such notices, draft and transmit them. 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). Determine whether the severance scheme (particularly any installment pay-out protocol) is a plan governed by the federal Employee Retirement Income Security Act (ERISA) and, if so, comply precisely with its requirements. Limit the dissemination of sensitive demographic data about employees. Not all of these items will necessarily apply to your situation, but we - 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. 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. The economy may change and, with luck, an employer may in a few months wish to rehire a worker that was part of a RIF this month. If a union represents any portion of the workforce subject to the RIF, carefully examine the collective bargaining agreement and consider the National Labor Relations Act for limitations on the RIF. So be careful about what is written and how it is phrased: A jury may be looking over your shoulder in two years. 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. Managerial Reduction In Force ffi. Elimination or Consolidation of jobs? There are also legal reasons for implementing a Reduction-In-Force but I won't get into that here. Examine what locations and/or positions will be terminated. 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. Determine and document the business rationale for the RIF. WebList the employees who would be laid off or terminated based on your layoff/RIF criteria. For more information, seeHow to Conduct a Layoff or Reduction in Force. 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. The complexities of the benefits/tax laws require careful consideration and the advice of an experienced benefits lawyer during the RIF-planning process. Consistency in RIF selection criteria among successive RIFs is desirable but not essential if the RIFs in fact vary in size, scope and/or motivation. A reduction in force (RIF) is when a company permanently eliminates positions with no intention of refilling them in the future. If departing employees have continuing obligations to the company (e.g., transition assistance, confidentiality, non-disparagement or non-competition), paying severance in installments over time rather than in a lump sum will encourage compliance with the ongoing obligations. RIFs typically are "involuntary" (i.e., the employer identifies the employees to be discharged) or "voluntary" (i.e., the employer offers a severance package to a specified group of employees who individually decide whether to take the package and leave the company). A separation agreement containing a waiver/release of claims is commonly used. or "Would a stranger understand and accept this?" Section 4312 (d) (1) (B) / 20 CFR 1002.139 (b) / 20 CFR 1002.5 (n) Service Member Checklist; Service Member Obligations Yes No Reference; 1. 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. Depending on the terms of the employer's benefits plans, furloughed employees may remain eligible for benefits. 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. 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. Anticipate the need for a RIF. Communication. The Identify the company's obligations if those workers are included in the RIF and then make arrangements to satisfy any such obligations. A workplace run by AI is not a futuristic concept. For example, certain severance pay plans and even less formalized severance arrangements may be plans governed by ERISA. Discover steps you can take to make both transitioning and remaining employees feel valued and supported during this difficult time. The company should consult with counsel about methods for maintaining certain documents as protected by the attorney-client privilege. Be careful about what is written and how it is expressed; a jury may be looking over your shoulder in two years. Attorney Advertising. An involuntary RIF often can be conceived, planned and implemented in seven to 10 days in smaller organizations, but larger employers will require more time to ensure that the process is thoughtful and legally defensible. This checklist is designed to help organizations contemplating personnel "downsizing" identify the critical elements of a RIF. Keep such rehiring possibilities in mind in planning a RIF when (a) setting severance pay (because it may be awkward to rehire an employee who was given a huge severance package in a recent RIF) and (b) releasing employees with critical but scarce skills (because, once gone, employees may not come back when the company needs them).Reductions-in-force are never easy or pleasant. Reduction-In-Force (RIF) Checklist - Coda The coronavirus pandemic has demonstrated that even historically successful organizations may be forced to reduce employee headcount to maintain economic viability. If the departed employees will have continuing obligations to the employer (e.g., transition assistance, confidentiality, non-disparagement), consider paying severance in installments over time rather than in a lump sum in order to encourage compliance with such obligations. 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). The checklist is designed to provide employers with an overview of the RIF process that allows them to plan for these unpleasant (and potentially risky) events.The checklist is divided into four sections: Section I Planning, Section II Involuntary RIFs, Section III Voluntary RIFs and ERIs, and Section IV Problem Avoidance. Prepare papers. Look to the future. The management personnel who must inform the departing employees of the decisions are, as the saying goes, the point of the spear, so it is essential that only capable managers are selected for the task: supervisors who are not emotionally equipped to deliver bad news (and face employees anger and tears) are likely to make mistakes and put the company at risk. 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). Keep such rehiring possibilities in mind in planning a RIF when a) setting severance pay (because it may be awkward to rehire an employee who was given a huge severance package in a recent RIF) and b) releasing employees with critical but scarce skills (because, once gone, such employees may not come back when the company needs them). 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). RIFs are frequently attacked for being discriminatory against older workers. The information is general in nature and cannot cover every situation. Tax laws: The deferred compensation regulations in the federal Internal Revenue Code (Section 409A) provide serious penalties, primarily for employee recipients of the monies, for certain types of severance pay arrangements (typically those in which large sums are paid over an extended period of time). For example, if 85 of 100 employees on a production line are under age 40, it would be anticipated that only roughly 15 percent of that production line's employees being part of the RIF would be over 40 (that is, persons protected by the age discrimination law). Workforce Restructuring USERRA Copyright 19962023 Holland & Knight LLP. There are separate whistleblower laws in many states. Identify any immigration issues. 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. Checklist for a Reduction in Force in Troubled Times . Civil Rights, Discrimination and Retaliation, OSHA, Workplace Safety and Whistleblower Claims. Voluntary RIFs (also called "buyouts," and which are sometimes in the form of early retirement incentive plans) often are less disruptive and emotionally painful, and may result in greater long-term cost savings (because employees nearing retirement frequently are among the most highly paid workers and more willing to accept an attractive severance opportunity). Will the RIF or ERI create any deferred compensation/Section 409A issues? Consider worst case scenarios: what if everyone eligible for a package opts to take one and leave? 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. For example, the federal WARN Act requires employers with more than 100 employees (excluding part-time employees) to provide 60 days notice to certain workers, government agencies and unions of a layoff that will result in employment losses by at least a third of the workforce at a single site of employment if that number is at least 50 employees. 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. The checklists included in this template are not limited to other activities that may be relevant for your specific company, industry, or financial situation.
reduction in force checklist
1
Jul
Jul
reduction in force checklist