June 10, 2008
REDUCTIONS IN FORCE:
Here We Go Again
Ashley Scheer
Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
214.953.6016
214.953.5822 (Fax)
[email protected]
Before implementing a RIF,
consider other alternatives
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reduction of work hours
reduction of expenses
hiring freeze
voluntary exit incentive program
Before establishing the selection
criteria the decision makers should:
• Ensure that there are no existing policies that must be
followed in the selection process.
• Consider whether there are any business units and/or
job functions that will be eliminated completely or
outsourced.
• Consider whether the future needs of the company
after the RIF will require that certain business units
engage in deeper reductions.
• Consider whether to request that each separate
business unit reduce a percentage of its payroll or a
specific number of employees.
• Consider whether employees whose jobs have been
eliminated will be retained at the expense of another
employee holding a different position.
Documentation to be reviewed and
considered by the decision makers include:
• The selection criteria
• A listing of the job positions being
considered by decision makers as well as
any job descriptions
• Personnel files of all individuals being
considered including performance
evaluations and any disciplinary
documentation
• Informational materials from the decision
makers
While not required to do so, companies will
often offer severance benefits to selected
employees.
• Ensure that there are no existing severance
policies.
• Identify a method for determining the amount
of severance (e.g., one year of service equals
two weeks of compensation).
• Determine when the severance will be paid.
• Determine whether any employees affected by
the RIF have any severance rights by virtue of
offer letters and/or employment agreements.
ADEA and OWBPA
Requirements
• Clearly Written Agreement
• Additional Consideration
• Consideration Period
• Revocation Period
• Group Terminations
Pagliolo v. Guidant Corp.
• A lesson on how not to conduct a
RIF.
Specific Carve Outs:
• FMLA
• Unemployment insurance
• Worker’s compensation
• Administrative charges
WARN Act Requirements
• Applies to employers with 100 or more
employees.
• Covered employers required to give
employees 60 days advance notice of
plant closings which result in loss of
employment for 50 or more employees, or
mass layoffs which result in loss of
employment for 500 or more employees,
or in loss of employment for 50 employees
and 33% of the workforce.
Contents of Notice
• The notice to employees who will be losing their
jobs must contain the following:
– the planned action and whether it will be
permanent or temporary;
– the expected date of the planned action and
the employees’ expected separation date;
– an indication of whether any bumping or
transfer rights exist; and
– the name and telephone number of a
company official to contact for further
information.
Exceptions
• Excluded Employees
• No Notice Required
• Less Than 60 Days’ Notice
Avoiding Future Litigation
• Preparation for the Meeting
– Plan, plan, plan
• Who will attend
• Where will meeting be held
• When will meeting be
• How will meeting be conducted
Be prepared to answer
• Severance pay
• Entitlement under pension and other
retirement plans
• Accumulated sick and vacation pay
• Eligibility for unemployment insurance
• Job references
• Continuation of medical benefits
• Whether employee can use facilities to look
for another job
• The last day of work
Success After a RIF
June 10, 2008
REDUCTIONS IN FORCE:
Here We Go Again
Ashley Scheer
Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
214.953.6016
214.953.5822 (Fax)
[email protected]