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Safe Layoffs: A Systematic Approach To Downsizing

No one likes a layoff. But if you must reduce your workforce, you can reduce the risk of subsequent lawsuits by applying a systematic approach outlined in the following checklist:

Preliminary matters:

  • Clearly identify the reason for the reduction in force.

  • Document those reasons and prepare a memorandum describing the expected results.

  • Identify criteria that will be used for selecting participants in the reduction in force.

  • Have the criteria reviewed by legal counsel.

  • Review employment documents including offer letters, employment contracts, collective bargaining agreements, and employee handbooks or policies that may apply to employees affected to be sure the reduction is consistent with those documents.

  • If selection criteria is based upon performance, identify the performance criteria that will be used to evaluate performance.

  • Compare performance criteria with performance criteria used during evaluations to ensure consistency.

Implementing the plan

  • Have supervisors and/or managers complete a current performance review using approved criteria, or rank employees based upon most recent evaluations.

  • Create an ordered list of employees based upon the performance review.

  • Compare the most recent review with reviews from the last two evaluation periods to ensure consistency.

  • Prepare an EEO review to identify any adverse impact based upon race, religion, gender, national origin, age or disability.

  • Discuss the results of the EEO review with legal counsel.

  • Prepare a list of individuals affected.

  • Determine applicability of WARN act and comply with its requirements if necessary.

  • Prepare a release and/or severance agreement.

  • Decide upon the severance to be offered in exchange for the release. Verify that severance pay is something new, and that all communications with employees condition receipt of the severance pay upon the employee's signing of the release.

  • Compare the release and severance agreement to existing policies to ensure consistency.

  • Have release and severance agreement reviewed by legal counsel.

  • Establish dates for reduction in force and for returning releases.

  • Prepare communication plan for workforce and news agencies.

  • Identify contact person who can answer questions concerning the reduction in force.

  • Prepare a question and answer sheet for use by contact person that addresses anticipated questions about the reasons for the reduction, the selection criteria used, and the terms of the separation agreement and release.

  • Have the Q&A sheet reviewed by legal counsel.

Carrying out the RIF

  • Announce reduction in force personally to employees.

  • Follow-up with affected employees.

  • Verify return of releases.

  • Follow-up with employees who refuse to sign releases.

For more information about safely reducing a workforce, contact David T. Barton at 602.230.5526, Eric Johnson at 602.229.5425, or your Quarles & Brady attorney.

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