Unfortunately, reductions in force (RIF) have become a common occurrence in many sectors. The current economic conditions have triggered additional pressures on companies to cut costs, improve profitability and respond to increasing competition in the marketplace. Like many employment decisions, a successful RIF is easier said than done.

We advise all of our clients to conduct an analysis of their reorganization through the eyes of an employee who has been laid off. Those who challenge the RIF will raise a series of questions about the manner and implementation of the reduction, such as:

• Who decided the lay-off was necessary?
• What financial circumstances required the RIF?
• Did the employer attempt to reduce its workforce with a voluntary exit incentive program before laying-off workers? If not, why not?
• Did the selection process attempt to select the best employees or identify the necessary functions that should be retained?
• Who was responsible for deciding which employees would be laid off and who was involved in making recommendations that led to the decisions?
• What criteria were used by managers in selecting the persons who would be laid off?
• Were the lay-off criteria related to the employer’s business justification for the RIF?
• What role did performance evaluations play in the selection process?
• Were the lay-off decisions in fact, consistent with the established criteria and can the employer prove it?
• What records were made and kept to explain the selection decisions and who prepared those records?
• Did the employer train its managers or use any other precautions to ensure that no improper factors were considered by the managers making the lay-off decisions?
• Did the employer determine whether the lay-off adversely affected any protected categories of employees?
• What severance pay or outplacement was provided to employees?

• Evaluate personnel policies and prepare a lay-off plan;
• Review and/or establish a severance policy and general release;
• Create and document a lay-off plan;
• Train the RIF decision makers;
• Conduct an adverse impact analysis;
• After downsizing is completed, focus on remaining employees.

DO PLANT CLOSING LAWS APPLY?
Massachusetts has its own plant closing law, which covers all employers. Under the Massachusetts law, any employer that is closing a facility must promptly report to the Director of the Department of Labor and Workforce Development to allow that department to determine the affected employees’ re-employment assistance benefits. Under the state law, a plant closing occurs if the Commissioner determines that at least 90% of the employees of a facility have been or will be permanently separated. Employees are eligible for re-employment assistance benefits for any week of unemployment if the Commissioner finds that:

• The employee was terminated as a result of a plant closing;
• The employee is otherwise eligible for regular benefits;
• The employee is participating in the re-employment assistance program.

In addition to the state law, certain employers are subject to the federal law. Understand your obligations under the Workers Adjustment and Retraining Notification Act (WARN). WARN requires employers with 100 or more employees to give 60 days notice prior to a “plant closing” or to laying off or terminating 50 or more employees. There are penalties and fines for failing to comply with the Act’s requirements, including attorney’s fees. The sale of a business itself is not a WARN event and does not trigger the Act’s notice requirements.

FINAL THOUGHT
Although there is no escaping the emotional impact of a RIF, effective planning can help accomplish your business goals and avoid litigation.