Reduction in force is the difficult way to reduce staff expense but doing so, can cause employees to file discrimination claims based on characteristics such as race, age, gender, or disability. To avoid such issues, employers need create a plan and follow specific guidelines prior to inducing a reduction in force.
First, consider these alternatives to help work around the issue:
- Hiring freeze
- Temporary shut down
- Exit incentive programs
- Reduce work hours and pay reductions
Decide which alternatives are best for your business. This may include involving an outsourced HR consultant or by asking their most trusted employees.
After considering these alternatives, the next step is to understand the legal framework for reduction in force. The law governing force reduction is governed by various federal, state, and local laws. Some important laws to abide by are the WARN Act (Worker Adjustment and Retraining Notification Act), FLSA (Fair Labor Standards Act), and ERISA (Employee Retirement Income Security Act). Employers need to understand these laws so they can work with the issues and reduce the legal risk.
The next important guideline to follow is identifying the business need for the reduction. Identifying the business reason for the reduction can also help employers select the appropriate layoff criteria.
The last step is to plan the delivery of the message. It is very important the employer communicates to the management, affected employees, and to others.
Effective downsizing management, prior to a force reduction, can be very beneficial to companies who want to avoid making costly mistakes.
Employers also need to always remember that their employees are their company’s key asset; businesses need to look at all different alternatives before making any big decisions. But if a reduction in force is required by the plans of the company, be sure to carfully take into consideration these guidelines.