How Can Companies Prepare For Furlough, Layoffs or RIFs

Most companies prepare for a layoff either to cut costs in a way or to restructure the company. And this is a difficult process some organizations may have to face.

However, if your organization ever reaches a stage to reduce staff it is important to figure out how to lay off employees in compliance with the law. That being said, below are some basic components to address when companies prepare for a layoff.

The best way to cut costs for any company is always difficult. Enter employees’ layoffs.

1 Determine Whether A Layoff Or Furlough

Before companies decide to prepare for a layoff, it is often best to consider alternatives. While both terms are used interchangeably, there is a difference. Furlough employees work for reduced hours or are placed on leave (sometimes paid) and additional unemployment benefits until the business bounces back. This is a great strategy for companies to cut costs while retaining great talents when needed in the business. However, this is temporary and no longer than several months. A layoff or RIF is a permanent termination of employment. When not certain that the expected downturn in business will last for several months, it can be a better decision to figure out how to lay off workers instead.

2 Select Basis For Employees Layoff

After a careful decision has been set in place, it is important to create criteria for who stays and leaves the company. The basis of the selection should summarize a clear reason for the layoff. For instance, if you are figuring out how to lay off employees it could be due to job elimination or skills. Other selection factors could include, performance, location, and old working age. Whichever case, a human resource representative should be present to ensure honesty and document the entire decision. Companies should prepare for a layoff with documentation showing the business’s justification for the RIF, the criteria for selected employees, and organization charts during the entire selection process.

3 Review Disparate Impact Or Treatment Laws

After the selection criteria are identified, companies should analyze selected employees to avoid claims of disparate impact or treatment (deliberate discrimination). To learn how to prepare for a layoff at this step, companies should review the discrimination laws and asses whether employers disproportionally selected employees in a protected class. Protected groups could include employees or a particular religion, race, color, age(40 or over), ethnicity, gender, nationality, or with disability. Additionally, some states may have other protected classes such as martial status or sexual orientation. Employers should consider running an analysis check for a disproportionately larger percentage of any protected class and evaluate steps to address the issue.

4 Ensure WARN Act Regulation Compliance

According to The federal Worker Adjustment and Retraining Notification (WARN) Act, employers working out how to lay off employees on a large scale are mandated to hand in a 60 days notice to selected employees. It is beneficial for companies to plan in advance in order to comply with these notices. The violation of the WARN may require employees to be responsible for up to 60 to 90 days of back pay and benefits per employee during the period of violating this law.

5 Resolve Severance Pay And Additional Benefits

Most employees provide severance pay to their laid-off employees as a way to reduce legal claims by former employees. However, there is no federal law that mandates employees to pay severance pay to laid-off employees. Though it is still recommended for employees to have a severance plan compliant with the Employee Retirement Income Security Act of 1974 when figuring out how to lay off workers. ERISA offers a great benefit to employers like the arrogation of unpleasant state laws and deference. While some states have particular criteria for severance, common severance packages include—salary continuation, employer-paid COBRA premiums, vacations pay, etc.

6 Communicate Layoff Implementation

• To Selected Employees: After figuring out how to prepare for layoff, it is important to notify each selected employee. Employers should be respectful, understanding, and sympathetic while explaining the reason for the layoff. It is also advisable to discuss severance agreements, and benefits, and answer any questions they might have.
• To The WorkForce: Employees should notify other employees of the layoff implementation to reduce assumptions around the workplace. Learning how to lay off workers includes maintaining other employees’ morale and communicating the financial situation of the company. Employers should be honest and answer any questions being asked.

Conclusion

When companies prepare for a layoff it may be tricky but adhering to and reviewing laws associated with displacing employees would always be a good start.

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