I recognize I’m about 3 years too late with this post. The truth, however, is that employers can be forced (or strategically choose) to reduce their workforce even outside a recession.† So, without further apology, here are my 6 steps to effecting a layoff in a way that eliminates, or at least reduces, your exposure to employment-related discrimination or retaliation claims and suits:
1. Be forewarned about the WARN Acts. The biggest challenge for employers contemplating a “mass layoff,” plant closure, etc. can be WARN Act compliance. California employers are required to comply with the Federal WARN Act (29 U.S.C. 2101, et seq.) and the more rigorous California version (Cal. Labor Code Secs. 1400, et seq.). The specific ins and outs of what triggers Act compliance, exceptions and consequences are unbloggably‡ complicated. You should consult a knowledgeable employment lawyer* on this–no exceptions!
2. Offer severance in exchange for a release. I feel like a flight attendant describing how to use a seat belt, but I’m amazed that there are employers that do not premise a severance payment on execution of a release/waiver of claims. In order to “buy your peace,” the severance must give the employee something to which he/she is not already entitled. In other words, don’t propose the release after you’ve already agreed to pay severance. This kind of release/waiver agreement needs to comply with certain requirements, including timing and lack of ambiguity. You cannot demand the employee sign the waiver on the spot. Depending on the circumstances, you’ll need to allow the employee some time to consider the terms. Again, involve experienced employment counsel.*
3. Develop, and preserve evidence of, objective, nondiscriminatory criteria justifying both the need for the workforce reduction and why the affected employees were selected. Maintain this evidence for up to 4 years. I’m thinking here of meeting minutes, Power Point decks, etc.
4. Review the list of affected employees. “Issue spot” each employee to evaluate the risks associated with the layoff. These include, not only risks of a claim that an individual employee was the victim of discrimination, but also that the architecture of the reduction disparately impacts a protected class. Look at age (40+), race, gender, disability and religion, FMLA leave, etc. Here, again, use knowledgeable employment counsel* to assist in this analysis.
5. Have upper level management, one or more layers removed from immediate managers and supervisors, decide who will be affected by the layoff. This helps reduce the likelihood of claims that an individual manager had a nonobjective discriminatory or retaliatory reason to select a given employee. It also strengthens the theme that the layoff was objective and necessary, as opposed to a mere “pretext” for an unlawful termination.
6. On the day of the layoff, meet separately, in-person, with each affected employee. Ideally, have an additional manager or HR representative in the room. Resist the urge to say more than necessary about the layoff. Remember that anything said to the employee, if later believed by a judge or jury, can be used against the company if a claim or litigation results. Having the second “witness” in the room reduces the likelihood or believability of a fabrication.
Good luck. Oh, and did I mention the importance of involving experienced employment counsel?*
†Yes, I’m aware there are people far smarter than I who believe we haven’t yet escaped the recession.
‡As far as I know I coined this term.
*Shameless use of link for self-promotion is acknowledged. The question becomes whether, by pointing out and acknowledging the self-promotional use of repeated links to my LinkedIn profile which, by implication, advertises me, variously, as “experienced” and “knowledgeable” employment counsel, I am somehow absolved of the sin of shameless self-promotion, or whether, the fact that, in addition to the link, I also used this footnote to attempt to absolve myself of said shameless self-promotion, is itself equally, or even more, shameless. To quote Bill Murray, “We’re getting into a weird area here.”