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Keeping it Legal:. Managing Reductions in Staff or Hours. Jeffrey E. Myers, Esquire One Logan Square 130 North 18 th Street Philadelphia, PA 19103-6998 215-569-5592. Creating a Plan For Your Reduction in Force. Identify the Goals/Needs Design New Structure to Meet Goals

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Keeping it legal

Keeping it Legal:

Managing Reductions in Staff or Hours

Jeffrey E. Myers, EsquireOne Logan Square130 North 18th Street

Philadelphia, PA 19103-6998


Creating a plan for your reduction in force
Creating a Plan For Your Reduction in Force

  • Identify the Goals/Needs

  • Design New Structure to Meet Goals

  • Identify Areas to be Affected

  • Consider Different Downsizing Methods

  • Adopt Objective Selection Criteria

  • Identify Employees to be Affected

  • Perform Disparate Impact Analysis

Rif alternatives
RIF Alternatives

  • Attrition

  • Reshaping

  • Early Retirement Incentives

  • Voluntary Layoff

  • Contracting In

  • Furloughs

  • ATB Pay Reduction

Legitimate incentives
Legitimate Incentives

  • Flat Dollar

  • Service Based

  • Incentives Based on a Percentage of Salary

  • Increases in Pension Benefits

Alternatives to reductions in force wage hour considerations
Alternatives To Reductions In Force:Wage & Hour Considerations

  • Potential Impact On Exempt Status of Salaried Workforce

  • Recent U.S. Department of Labor Opinion Letters

    • Permanent changes to salary and workweek permitted

    • Short-term changes may violate salary basis requirement

    • Mandatory Time Off okay if:

      • Week or longer and employee performs NO work

      • Employee receives PTO for shorter periods

    • Voluntary Time Off okay if:

      • Full day or longer

      • Truly voluntary


  • FLSA defines employment broadly (i.e., “to suffer or permit to work”)

  • Individuals who volunteer or donate their services for the following are generally not considered employees:

    • Public service

    • Religious or humanitarian objectives

  • Volunteers typically are part-time

  • Volunteers generally act without contemplation of pay

  • Employees may not volunteer services to for-profit private sector employers

Eeo concerns disparate treatment
EEO ConcernsDisparate Treatment

  • Prima facie case

    • Member of protected class

    • Qualified

    • Adverse action

    • Others outside protected class treated differently

  • Employer’s burden: adverse action taken for legitimate, non-discriminatory reasons

Eeo concerns disparate impact
EEO ConcernsDisparate Impact

  • Prima facie case

    • Neutral selection criteria, BUT

    • Disproportionate number of employees from protected class affected

  • Employer’s burden: selection criteria are job related and consistent with business necessity; no less burdensome option

Questions to ask
Questions To Ask

  • Is there a clear and legitimate business reason for the RIF?

  • Are there objective criteria for selecting employees?

  • Were the criteria applied consistently?

  • Are actions consistent with all applicable policies?

  • Were terminated employees soon replaced?

Questions to ask1
Questions To Ask

  • If performance is a factor, how objective are evaluations/forced rankings?

  • Are early retirement incentives legitimate?

  • Any statistical anomalies?

  • Were all contract provisions complied with?

  • How were employees on leave treated?

Determining when a rif triggers application of the warn act
Determining When a RIF Triggers Application of the WARN Act

  • Employers:

    • 100 or more employees

    • Excluding those who worked less than 6 of the past 12 months OR less than 20 hours/week on average

  • Employees:

    • Hourly & salaried

    • Managerial & Supervisory

    • NOT business partners

Warn act

  • Qualifying Events

    • “PERMANENT” Plant Closure (Site or Facility)

      • 50 or more employees affected in any 30 day period

    • Mass Layoff

      • 500 or 50 &1/3

    • Aggregated Layoffs

  • Employment Loss Defined

    • Termination

    • Layoff for more than 6 months

    • Reduction in Hours (6/50 rule)

Consideration of state and local office closing laws
Consideration of State and Local Office Closing Laws

  • More and more state and local governments are passing plant closing legislation that varies from federal WARN Act:

    • New York, New Jersey

    • Philadelphia Ordinance

  • Apply to smaller employers

  • Different notice periods

  • Increased Severance Pay obligations in lieu of notice

  • Different definitions of triggering events

  • Different damage provisions and penalties

Examples of states with their own warn






New Hampshire

New Jersey

New York



Examples of States With Their Own “WARN”

Designing a separation package
Designing a Separation Package

  • The package must include:

    • Earned Compensation

    • Vacation

    • Other Earned Benefits

  • The package may also include a separation agreement including severance pay and a release of claims

  • Outplacement/U.C. Assistance

Designing a separation package owbpa requirements
Designing a Separation Package OWBPA Requirements

  • Group terminations (more than one)

  • 45 day consideration period/7 day revocation period

  • Disclosure Statements with Separation Documents

    • Identify the decisional unit

    • Eligibility factors

    • Time limits

    • Job titles and ages of all employees in the unit

    • Identification of who was selected/not selected for termination

Other release pointers
Other Release Pointers

  • Plain language

  • Knowing/voluntary

  • Real consideration

  • Right to counsel

  • Care in integration

  • State affirmative obligations of employees

Communications strategy
Communications Strategy

  • The Displaced (Notice)

    • When

    • By Whom

    • Content

  • Public

  • Customers

  • The Survivors

Safety concerns
Safety Concerns

  • Take necessary security and safety measures before something happens

  • Warning Signs for potential workplace violence:

    • Inflexible-difficulty coping with change

    • Makes threats or intimidating comments

    • Displays hopelessness or paranoia

    • Takes criticism poorly

Steps employers should take to secure intellectual property
Steps Employers Should Take to Secure Intellectual Property

  • Ensure that computer passwords are changed prior to termination or layoff

  • Ensure internal security protocols actually are being pursued

  • On the eve of a layoff, make sure large amounts of documents are not being copied or downloaded

  • Actual security

  • Review the legal rights in states in which the employer is taking personnel actions

F o c u s


F air

O bjective

C onsistent

U nified

S ympathetic

Implementation contract review
ImplementationContract Review

  • Review Collective Bargaining Agreements

    • Layoff Clause

    • Bumping

    • Notice

    • Pension

Bargaining issues
Bargaining Issues

  • Decisional

    • Required only if motivated by labor costs such as wages and benefits

  • Effects

    • Timing

    • Payment of Severance

    • Continuation of Health Coverage

Warn act who is entitled to notice
WARN Act Who is Entitled to Notice?

  • Union

  • Individual Employees

  • Chief Elected Local Government Official

  • State Dislocated Worker Office

Warn act how much notice
WARN Act: How Much Notice?

  • Basic -- 60 Days


  • As Much as Practicable (Not Zero)

    • Natural Disaster

    • Unforeseen Business Circumstance

    • Faltering Company

Warn act form and content of notice
WARN Act Form and Content of Notice

  • Identify Site

  • Contact Person

  • Permanent/Temporary

  • Dates of Terminations

  • Affected Employees (Names, Classifications and Numbers)

  • Bumping Rights

  • Union Information

Warn act penalties
WARN Act Penalties

  • Sixty Days of Pay (Calendar v. Working)

  • Sixty Days of Benefits (Includes Gratuities)

  • Civil Penalty -- $500 Per Day