Employers sometimes use sequential RIFs: a voluntary RIF and then, if that does not result in sufficient employee departures, an involuntary RIF. The advice of a competent RIF lawyer is highly recommended. The economy may change and, with luck, an employer may in a few months wish to rehire a worker RIFd this month. COVID-19 RIF Checklist: Key Issues to Consider in Reductions in Force Holland & Knight Alert William B. deMeza Jr. The most commonly stated RIF goals are to reduce payroll expenses and to better align personnel resources with available work. Provide necessary notices. The information is general in nature and cannot cover every situation. Attorney Advertising. Agreements for management-level employees typically are longer and more comprehensive than those for non-management employees. 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). Reductions in force are typically permanent because the roles of those let go are usually. Appendix B: Managements Decision to Implement RIF Checklist. (The required RIF data disclosures for a large employer often are time-consuming to prepare so the company must allow sufficient time to draft them.) Develop a preliminary list. SHRM's HR Knowledge Advisors offer guidance and resources to assist members with their HR inquiries. REDUCTION IN FORCE - UNC Human Resources reduction in force 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. Explain and document need for layoffs. Retaliation/whistleblower laws: Many statutes include protections for workers who complain to their employers about or oppose suspected violations of those statutes. RIF Checklist: Key Issues in Managing a Reduction-In-Force The usual issues are much more complicated now during the 2020 COVID-19 crisis with the overlay of the rapidly enacted and untested pandemic laws and regulations. Guide to Voluntary Separation Incentive Payments - OPM Home Some employers may wish to consider voluntary RIFs as an alternative to involuntary RIFs. It cannot, by its nature, cover all of the nuances or explain in complete detail all aspects of the RIF process, or describe the variations among state laws, and of course a checklist is no substitute for situation-specific advice from a RIF-experienced employment lawyer. Severance pay (particularly severance in excess of any normal sums previously paid by the employer to departing employees) or early retirement benefits are common components of a voluntary RIF severance package. Consistency in selection and application of criteria is critical, recognizing that certain criteria may not be applicable from department to department or from job to job; consistency in use of criteria in successive RIFs is desirable but not essential if the RIFs, in fact, vary in size, scope and motivation. Formally assessas part of the ongoing planning processthe risks of violence, sabotage and theft by employees who will be RIFd. or "Is this fair?" Although a reduction in force (RIF) often can improve an entity's financial picture, there can be serious legal and financial consequences if it is not properly conceptualized, designed and implemented. Management should carefully avoid promises about the future because additional RIFs, terminations or restructurings might be necessary. Ideally, the decision-makers should be a diverse group of objective, credible executives who have been trained (or can be trained quickly) on how to conduct the RIF in a careful, non-discriminatory manner. A reduction-in-force that would have included the person would be an example. Be careful: It is important to comply precisely with the requirements to avoid penalties or lawsuits. 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. 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. A single designated spokesperson to answer all post-RIF questions from both inside and outside the company is often the most effective way to disseminate accurate and consistent information. Reduction In Force (RIF) checklist - University System of Georgia Payroll expense reductions and personnel-work alignments also often can be achieved by other alternatives, such as (a) waiting for normal workforce turnover/attrition, (b) reducing hours being worked by hourly personnel or changing their jobs from full-time to part-time, (c) job sharing, (d) pay freezes or pay cuts, (e) implementing short-term (one or two-week) layoffs or plant shutdowns, (f) allowing employees to volunteer for unpaid leaves of absence, and/or (g) transferring existing personnel to different jobs or departments or facilities. Determine and document the business rationale for the RIF. The employees must be given sufficient time to consider their options (and the separation agreement) before being forced to make a decision; several weeks is not uncommon, while large voluntary RIFs sometimes allow the employees 30-45 days to opt-in, in addition to the 45-day consideration period required to obtain a valid waiver of age claims under federal law. Here's how employers and employees can successfully manage generative AI and other AI-powered systems. Make plans to exclude the departing employees from the building and computer/telephone systems immediately upon being informed of their separations, to the extent feasible. This checklist is intended to be a concise, plain-English and practical summary of the most significant components of a RIF. Arrange for advice. Determine whether any employees to be laid off hold visas or have applied for green cards. A detailed organization/jobs chart, showing the existing (pre-RIF) reporting relationships and numbers of job incumbents, will be useful to compare against a similar "after the RIF" chart. Provide these materials to managers who will be conducting the exit meetings. 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. A, is more permanent, and there is no expectation that the employee will be re-hired due to the financial situation of the company, the elimination of entire groups at the company, and workforce planning has deemed the employee's role to not be essential. Reduction in Force Checklist Determine its scope. 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). Further, RIF-related lawsuits often are easier for employers to win if there are recent detailed, specific, accurate and fact-based written job performance evaluations of the released employees showing that they were not performing as well as the workers who were retained. Identify the ideal number of personnel to be released from individual departments. (However, be careful of special deals; enhanced severance benefits for a select few employees can generate discrimination lawsuits.). Share. 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. Question assumptions and the wisdom of anticipated actions. Unless an employer has competent professionals on staff, it should ensure, in advance, that there is ready access to such advisors familiar with RIF-related issues. There are specific federal statutory requirements for waivers of age discrimination claims in a RIF, including, most notably, that the employee be a) expressly advised in writing to consult a lawyer before signing the agreement; b) given 45 days to consider the agreement before signing it (a period the employee can waive voluntarily); c) given seven days (a period that cannot be waived) after signing the agreement to revoke it (that is, the waiver of age discrimination claims is not effective until the seven-day period passes without revocation); and d) given disclosures consisting of general information about the RIF decision process as well as specific information about the job titles and ages of persons selected and not selected for separation. Severance pay is not generally required by law unless (a) the employer previously has committed to pay it (by employment contract, collective bargaining agreement or severance pay plan), (b) there is some state or local requirement, or (c) it is being paid as consideration to buy an employees signature on a release/waiver of claims against the employer. Agreements for management-level employees typically are longer and more comprehensive than those for non-management employees. However, developing a comprehensive, thoughtful game plan, paying attention to details and obtaining appropriate professional advice will allow employers to downsize with minimal risk and, perhaps, to rehire competent employees when the pandemic abates. It often is helpful to state the goals more specifically (reduce payroll expenses in Finance department by 10 percent; eliminate ketchup bottle production line) and to put the goals in writing so that the decision makers will have an ongoing point of reference in carrying out their mission. Please purchase a SHRM membership before saving bookmarks. Prepare papers. Provide these materials to managers who will be doing the exit meetings. Many statutes impact RIFs, including laws that vary from state to state. You have successfully saved this page as a bookmark. ERISA has specific and sometimes burdensome requirements for covered plans. However, the statute also provides certain attractive benefits to employers (including preemption of many state laws and for non-jury trials of ERISA claims). Checklist Managers should be sympathetic but not defensive or overly apologetic (which may imply employer wrongdoing) or too talkative (because extensive explanation/justification of the RIF may encourage unproductive debate, suspicion, questions or mistakes). A reduction in force (RIF) occurs when a position is eliminated with no intention of replacing it, resulting in a permanent cut in headcount. Prepare the papers (and waivers). The goal is to make the separation benefits cost-effective, that is, high enough to induce employees to elect departure but low enough to minimize the cost to the company. Gather materials necessary for the exit meetings. Many employers selecting employees to be included in the RIF engage in employee "rating" the RIF candidates (giving a grade to each worker) or "ranking" (sorting the workers by skills, value/contribution, etc.) Please enable scripts and reload this page. Consider "worst case" scenarios: What if everyone eligible for a voluntary separation package opts to accept it and leave? Meet with "survivors." to assist in the selection. is when an employee is let go from a company due to budgetary reasons, workforce planning initiatives, position eliminations or other right-sizing events. 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. 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. More. The coronavirus pandemic has demonstrated that even historically successful organizations may be forced to reduce employee headcount to maintain economic viability. Contact your labor and employment attorney early on in the Will the RIF create any deferred compensation/Section 409A issues? Identify inducements. What if only the best workers opt to leave? RIF la Carte - Littler Mendelson P.C. Immigration laws: The federal immigration laws often provide that a visa holders legal status to remain and work in the United States ends when the employment ends. Maintaining confidentiality will minimize both employees' anxiety/distraction as well as preemptive claims by worried workers trying to "guarantee" their jobs (that is, thinking "they won't include me in the RIF next month if I announce I'm disabled or make a sexual harassment claim this month"). Although a reduction in force (RIF) often can improve an entity's financial picture, there can be serious legal and financial consequences if it is not properly conceptualized, designed and implemented. Investigate and resolve any apparent disparities in the preliminary list (e.g., Hispanic women or workers over 40 being selected at a higher than expected rate). 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. Written by experts from Ogletree Deakins Nash Smoak & Knowing the ideal outcome will permit the employer to structure the RIF eligibility criteria and severance packages to achieve those goals. There should be two people representing the company in the exit meeting: a spokesperson and a non-speaking witness. Our RIF Checklist is the starting point to planning a strategic and compassionate layoff. All Insights; Guides; Gartner Business Quarterly; Strategic Planning; Generative AI; Leadership Vision; Recession Guidance; Future of Work Reinvented; Sustainable Business Strategy; Anticipate the need for a RIF. Please log in as a SHRM member. Written by experts from Ogletree Deakins Nash eliminated with the termination of employment. Other Benefits. Economic Security Act (CARES Act), often exceeds $1,000 per week for up to 26 weeks. For questions or more information about a reduction in force specific to your organization, contact Holland & Knight Partner Bill deMeza, who has guided a number of employers in various industries through successful RIFs, or another member of the firm's Labor, Employment and Benefits Group. One thing leads to another. However, developing a comprehensive, thoughtful game plan, paying attention to details, and obtaining appropriate professional advice will allow employers to downsize with minimal risk. Civil Rights, Discrimination and Retaliation, OSHA, Workplace Safety and Whistleblower Claims. 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. Review and maintain appropriate documentation retention policies. RIFs are useful but often are expensive and sometimes lead to lawsuits. Global Reductions in Force: A Practical Checklist What can be achieved in a day (or a couple of months if WARN applies) in the U.S. can take months (and yes, Maintaining confidentiality will minimize both employees anxiety/distraction and preemptive claims by worried workers trying to guarantee their jobs (that is, employees thinking they wont include me in the RIF next month if I announce Im disabled or make a sexual harassment claim this month). The COVID-19 crisis has demonstrated that even historically successful organizations may be forced to reduce employee headcount to maintain economic viability. , the result is still the same. Employees must be given sufficient time to consider their options (and the separation agreement) before being forced to make a decision; several weeks is not uncommon, and large voluntary RIFs sometimes allow the employees 30-45 days to opt in (in addition to the 45-day "pondering" period required to obtain a valid waiver of federal age claims). WebThe following is a checklist of legal and practical issues to be reviewed in connection with a reduction in force. Will the RIF or ERI create any deferred compensation/Section 409A issues? A list of employees showing their genders, age, minority/disability/whistleblower status, leave/workers compensation status and other characteristics protected by law will be necessary for the "disparate impact" analysis discussed below. The most legally defensible criteria are objective (such as length of service, demonstrated skills, education, quantity of production, written performance evaluations, discipline history), but subjective criteria (such as "enthusiasm," "versatility," "personality") also are permissible if they are actually required for the job and are not applied in a discriminatory manner. 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. 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 Copyright 19962023 Holland & Knight LLP. Further, RIF-related lawsuits often are easier for companies to win if there are recent detailed, specific, accurate, fact-based and written job performance evaluations of the released employees (providing tangible evidence they were not performing as well as workers who were retained). 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). If the company anticipates violence or disruption, notify building security or law enforcement in advance of the RIF (but recognize that some departing workers will be offended or become unruly if they suspect they are being disrespected by an obvious on-site police presence). / REDUCTION -IN FORCE CHECKLIST - HRMorning Many employers selecting employees to be RIFd engage in employee rating (giving a grade to each worker) or ranking (sorting the workers by skills, value/contribution to the organization, etc.) (Credibility is useful in obtaining employee buy-in if the identities of the decision makers become known.). Please note that email communications to the firm through this website do not create an attorney-client relationship between you and the firm. Employers must know and comply with any local requirements. Aspects Explained - Video Game News, Reviews, and Walkthroughs Explore possible union issues. Anticipate litigation. Reduction in Force (RIF Evaluate the costs of layoffs (e.g., leave cash-outs, severance, etc.). The checklist is divided into four sections: Section I Planning, Section II Involuntary RIFs, Section III Voluntary RIFs and ERIs, and Section IV Problem State/local protections and requirements are often more protective and burdensome than federal laws (such as state or local laws protecting gay, lesbian, bisexual and transsexual employees).
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