Right now, companies of all sizes and industries are facing unexpected and unprecedented pressures due to that insidious, invisible menace known as COVID-19. In addition to questions of safety and health, it’s almost certain that your business is navigating economic issues. You’re likely trying to find the balance between managing the bottom line, staying afloat if possible, and figuring out how to approach your staff count.
Who’s Your HR? has been fielding numerous questions concerning staffing, including what options businesses have if they need to adjust employee headcounts and hours during this stressful and confusing time. Here’s a look at the issues around letting go of employees to help you wade through this difficult staffing decision.
Remember, all the information in this blog post is published in good faith and for general information purpose only. I am not an attorney, nor do I provide legal advice. The information provided is my personal opinion and not that of any organization, business, company, agency or other individuals. The author is not liable for any losses or damages related to actions or failure to act related to the content of this article. If you need specific legal advice, consult with an attorney who specializes in your subject matter. Any action you take upon the information you find on this website (www.hrraw.com), is strictly at your own risk.
Penny Horton | April 6, 2020
Know Your Options
Employees are typically separated in a variety of ways — furloughs, layoffs, reductions in force, and facility closures being the most common in times like these. Here’s a quick overview of the differences and how they impact your organization.
Furlough
What it is:
A cost-saving measure that requires employees to work a reduced number of hours or to take a certain amount of unpaid time off.
Considerations to be aware of if you opt to take this step:
Furloughs affect different classes of employees in different ways.
- For nonexempt employees (those eligible for overtime pay under FLSA guidelines), reducing the hours or days these employees work is pretty straightforward. Just be mindful of the impact this change can have on any benefits you offer them.
- For exempt employees (those not covered by FLSA guidelines), reducing hours worked is tricky. For employees to be eligible for FLSA exemption, companies must compensate them on a salary basis, meaning the employee receives a predetermined amount of pay each week that cannot be reduced due to variations in the quantity of work. A safer bet is to furlough exempt employees for an entire week, since the FLSA states exempt employees do not have to be paid for any week in which they perform no work.
Employers can require all employees go on furlough, or they may exclude those who perform essential services to the organization. There are many options available, but employers must account for the resulting implications of each decision. It makes sense to engage an expert like Who’s Your HR? to help you navigate the complexities.
Layoff
What it is:
A temporary separation of employees from payroll.
Considerations to be aware of if you opt to take this step:
- A layoff is not the same as a reduction in force (described below). Even though layoffs mean the employee loses his/her job, these separations are used when the employer believes current conditions will change, and employees will be able to be recalled back to work at some point in the future.
- Since the intent is to ultimately call the employees back to work, employers should consider allowing the employees to maintain benefit coverage or providing other incentives during a finite period of time to keep the employees interested in returning.
- Employees are still eligible to draw unemployment benefits during the layoff period.
- A process for “calling back” workers also needs to be developed, and you need to ensure that you have mechanisms in place to collect personal contact information for your employees during their exit from the company.
Reduction in Force (RIF) / Downsizing
What it is:
The elimination of a position without any intention of replacing it, in order to lower overall headcount of an organization. Can be accomplished voluntarily or involuntarily.
Considerations to be aware of if you opt to take this step:
- When asking for voluntary separations, it is important that you make this option available to allemployees, not just who you pick and choose. (Or you may be at risk of discrimination lawsuits.)
- Employees must be given a reasonable amount of time to consider this option.
- Employees must be provided sufficient information about the impact of accepting a voluntary separation to make an informed decision.
- For employees who choose this option, documenting that the decision was voluntary is also crucial to help mitigate the business’s risk.
Closure
What it is:
Permanently shutting down the entire operations at a facility or business.
Considerations to be aware of if you opt to take this step:
- The people-related aspects of this option are only one small piece of this complex puzzle. Make sure you put together a team, internal or external, to help you manage this undertaking.
- At a minimum, you will need representation from HR, legal and finance to execute a closure successfully.
Account for the Risks Involved
Any separation of employment involves risk for a business, especially when it comes to discrimination issues and legal compliance.
Avoiding discrimination issues
It’s extremely important to make selections for layoffs, reductions in force and/or downsizing efforts in such a way that the employer doesn’t come under scrutiny for discriminatory selection processes and disparate impact (adversely affecting a group of people in a protected class).
Developing an unbiased selection process can include several factors, such as seniority, performance, job classification, job knowledge, skills, and more. Who’s Your HR? can help you establish the appropriate selection criteria for your organization, develop a sound selection process and review your selections to help you mitigate risk.
Maintaining legal compliance
Regardless of the separation option you choose (furlough, layoff, RIF, or closure), employers need to be careful about when and how the employees are notified. You are impacting the livelihood of your workforce, and there are legal compliance issues around doing so.
Large scale layoffs and facility closures may trigger state and/or federal Workers Adjustment and Retraining Notification Act regulations. Who’s Your HR? has the expertise to help create and implement an effective, empathetic and compliant communication strategy for any action you decide to take.
What to Know about Severance Packages
If you are considering offering severance packages to your displaced workers, there are several factors to consider as well.
Requirements
Keep in mind that most employers are not required to provide severance. Therefore, it is deemed a gift under unemployment guidelines, and employees will still be able to collect unemployment even if they will receive severance pay.
Tip: Make sure you review any employment contracts or written policies that may require severance, typically used for your highly compensated employees.
Benefits
In addition to pay, you may choose to provide extended health care benefits, outplacement services or 401(k) options as part of the severance package. Each of these elements needs to be thoroughly evaluated before being offered to make sure you are in compliance with any relevant guidelines.
Releases
Often, employers will choose to require a release of claims that employees must sign in order to receive their severance package. A release helps protect the employer from specific employment-related charges. A complex legal document, a release often requires specific language and must provide review and revocation periods. And if releases from age discrimination are included, you must make sure they follow the Older Workers Benefit Protection Act (OWBPA) regulations.
Seek professional guidance
For help in determining if you should offer severance packages and how to navigate the complexities of all of the compliance-related issues surrounding them, reach out to Who’s Your HR? today.
Get Expert HR Advice as You Navigate Employee Separations
Executing all of the logistics for any of these options is administratively burdensome, yet it is also extremely important to make sure the actions are handled effectively and empathetically. Who’s Your HR? can help you with any or all of the aspects of the entire process — from determination to selection to execution.
Whether it’s developing a schedule of events, creating internal and external communication elements, crafting documents, providing guidance and advice or even having the difficult conversations with the impacted individuals, Who’s Your HR? can assist and make the process smooth and less stressful for you. The Who’s Your HR? team has handled everything from individual separations to mass reductions to facility closures both domestically and internationally. There is no project too large or too small. Contact us today to learn more and get started.
Help Spread the Word! Share this:
Categories:
Tags: