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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