In my prior post, I wondered aloud whether there were some rough waters ahead for employers.  Apple recently announced that it would not meet it’s earnings estimates in the first quarter of 2019, in part because of soft demand from China. Other companies are expected to announce some similar issues.

Honestly, I’ve had enough conversations in the last few years with HR professionals who just haven’t lived through a major downturn.

Think about this way: For anyone who joined the workforce since 2010 or so, the era of massive layoffs in the financial and automobile sectors had just passed.

But fortunately, there are still a few of us around who remember.

So here are four things to think about:

  • Performance Reviews.   Why? Because when a downturn hits, your company will need to start a selection process as to who stays and who goes.  Inevitably, you will start looking at performance reviews to see about ranking employees.  You know what you might find? They all start looking alike. Everyone is slightly above average.   While I’m not suggesting everyone convert to a forced ranking system, your performance reviews should be honest indicators of how an employee is doing. Take a look at the ones you are doing this quarter.
  • WARN.  The Workers Adjustment and Retraining Notification Act  is one of those federal laws that you might not have even heard about. But if your company has 100 or more employees, you should. It requires that 60 days notice be given in instances of a mass layoff or plant closing. Before you go down the road of layoffs, you may have obligations to notify your workers and the government of the potential for layoffs. Be sure to comply.  Here’s a brief recap.  
  • Consider a Statistical Analysis.  I know — you didn’t like math in high school. But trust me: There is an entire profession of statistical experts available to help you figure out if the proposed layoff may have a disparate impact on a protected class of workers.  How is this done? You look at the class of workers that may be impacted by the proposed reduction in force and have an analysis done to see whether your neutral criteria may not be so neutral after all. Sometimes there are explanations for the disparate impact; but sometimes, the analysis can force employers to take a second look. Regardless, this can be an important step.  Just make sure to use an attorney to help give guidance here.
  • Understand the OWBPA.  It stands for the Older Workers Benefit Protection Act and it’s part of the federal law on age discrimination.  And if you want your employees to sign separation agreements (as I think you should) when you do your layoffs, your agreements better comply with this act.  I did a recap in 2008 that still holds up today.  

Before you have a crisis on your hands, talk internally about what the reasonable expectations for 2019 are going to be. If a possible cutback to personnel is even being discussed, now is the time to get ahead of things.

You do a blog long enough and everything comes full circle.  Back in January 2008, I took out my crystal ball and suggested that reductions in force (RIFs) and lawsuits would soon follow.

We all know what happened next. The economy crashed and discrimination claims at the EEOC peaked at their highest levels in more than 20 years.  

So here we are 11 years later.  A whole generation of HR professionals have never experienced a significant downturn.  Are we headed there again in 2019?

I’ll leave that to the economists and politicians.  Two weeks ago, the stock market was topsy-turvy. Now, we seem pre-occupied with the partial government shutdown.  And at least in Connecticut, new Governor Ned Lamont has a plan for growth, growth, growth.

But it’s worth considering whether your company is even prepared for a downturn, even if it still is many months away.

Again, we can first look to history. As I said back in 2008:

What is a reduction in force? Really, just a lawyerly way of saying “layoff”. Back in the early to mid 1990s, lots of companies went through them.  And the number of lawsuits arising from those reductions went through a major peak in 1995 or so.

But these types of lawsuits rise and fall with the economy.  When the economy is good, lawsuits go down. When it’s not so good, they go up. One reason is that when people can find another job quickly (i.e. the unemployment rate is low), then tend not to sue as much.

And even back in 2008, I noted that things might be different for employers and indeed they were.  The rise of the internet-fueled lawsuits have been a reality. Here was my prediction back then:

One more factor suggests to me that more lawsuits are on the horizon — it’s much easier for a few employees to band together than in the past. Previously, people would have to use their existing networks to find laid off employees to hear their stories (indeed, outplacement firms were a good source for employees looking to talk with other laid off workers). But now, with the rise of social networking sites, it seems only a matter of time before a group of employees will form a Facebook or MySpace page to compare experiences.  Employees from around the country can share information instantly, making it much easier to figure out if there are trends associated with the layoff that may give rise to a lawsuit.

Just as Uber or the employers in Connecticut facing class action lawsuits that one firm puts on their website have found out.

What’s an employer to do? I’ll tackle that in my next post.

In the last few months, I’ve had some inquiries from employers asking about resources for layoffs.

Yawn.

Everyone remembers the layoffs of the recession, right?

Actually no, as it turns out.

In the ten years since the last great round of layoffs, there is a big group of new managers, directors, human resource personnel, lawyers etc that have joined the workforce.  And, as it turns out, they really DON’T remember the layoffs.  Unemployment is low. “Why would I need to worry about a Reduction in Force?

The stock market’s drop yesterday should remind all of us that good times aren’t always going to last.

What’s ironic about this is that back in 2008 — when the unemployment rate was skyrocketing — programs about reductions in force were just taking off and I noted the same concerns about whether employers were sufficiently aware of the issues.

History may repeat itself. Back then, I highlighted a few items that employers had to think about:

  • The WARN Act – If you’re doing a mass layoff, you need to notice affected workers in advance and provide notices to local and state officials.
  • Separation Agreements – If you want employees to sign a separation agreement (and you probably should), you need to give employees who are terminated in a layoff 45 days to consider an agreement and provide additional background information about the layoff itself.
  • Disparate Impact Analysis – With computers, checking your layoff data to ensure that it doesn’t have a disproportionate impact on protected groups (or, if it does, a legitimate business reason why it might) remains important.

Much of this remains valuable advice today.  And for employers who don’t remember this, now would be a good time to start your refresher courses.

Layoffs may not be right around the corner. But employers that are looking ahead in their business plans for 2019, would be wise to ensure that their staff are aware of the obligations that attach if the economy turns cold.

Before I even begin this post, let me advance the disclaimer right off the bat: Despite the title of this post, there is no sure-fire way to fire an employee without getting sued.

Indeed, the title is a bit of a misnomer.  It’s often been paraphrased that anyone can sue anyone else for anything at any time in any court. While that’s not quite true, it’s not that far off the mark either.

There ARE, however, ways to fire an employee that can reduce or, in some ways, eliminate the likelihood of being sued.

In fact, I had been working on a draft of this post for sometime thinking of how I could help others make the process of firing a bit more humane.  I’ve had many discussions with clients over the years about how firing an employee is one of the toughest things that they’ve had to do as a “boss”. fire

Yes, firing is part of the job, but I’ve yet to meet an employer that has enjoyed it. Inevitably, there is a sigh of relief when the termination meeting is over.

(And to be sure, the impact on the employee is almost always worse.  There are few things worse in life than being fired, even if it ends up leading to good things later.)

Of course, before I could finish my draft post, Jon Hyman alerted me to an excellent post by the Harvard Business Review entitled “A Step-by-Step Guide to Firing Someone.”

It’s really well done and I encourage you to read that first before finishing this post up.

Among the overall tips:

  • Start by creating a transition plan
  • Take the termination meeting itself step-by-step
  • Avoid misdirected compassion

The discussion in the article about the termination meeting itself is particularly insightful.

Here are three more things to think about too:

  1. Ask yourself: “Is the Termination Decision Fair?”  Sometimes, I rephrase this question into the following: “If you were telling your neighbor about the firing, what would he or she think about it?”  But it all comes done to the same point: Would a third person (or a jury) think the process you used to fire an employee was a fair and just decision?

    For performance-related terminations, you may look to whether the employee had been put on notice that his or her performance was faulty and given an opportunity to improve.

    For reorganizations or reductions-in-force, ask whether the process you are using to select employees (whether it’s seniority, overall performance, or other legitimate factors) is explainable and non-discriminatory.

  2. Consider A Separation Agreement: When I first started practicing law, separation agreements were the exception. Now they are the rule.

    If you’re firing someone and you want to avoid being sued, consider a separation agreement where you offer some severance in exchange for a release.  Of course, I’ve been talking about this since way back in 2008 – so this isn’t something new. But do yourself a favor: Use an agreement that complies with the law.

  3. Know the Difference Between “It’s Legal” and “It’s a Good Idea”: Over the years, I’ve had more clients ask me whether a proposed firing was “legal”.  But as I’ve said in the past, just because something is “legal” doesn’t mean it is a good idea.  For example, it may be “legal” to fire an employee by e-mail, but it may result in hurt feelings and the idea by the employee that the employer doesn’t value the employee as a human being.

    So, when you’re seeking legal advice on a termination, be sure you’re asking the right questions and getting the best advice from your counselor about the termination itself.

There are, of course, many more aspects to a firing than just this. But if you follow a few of these items, it can help reduce the risk of a lawsuit.

One of the better programs run by the Connecticut Department of Labor that gets almost zero publicity is the “Shared Work” program.  For employers, it’s a useful tool when you’re dealing with a temporary slowdown in work.

I talked about it five (!) years ago in the midst of the recession so I’m not going to rehash it here.

But here’s what’s new:

The CTDOL just released new regulations to make the program available to more employers and released a new brochure about the program as well. As the CTDOL stated in a press release this month:

As a result of recent changes to the state’s Shared Work Program, eligibility criteria for employers qualified to participate in this unemployment insurance program has expanded and now offers companies more opportunities to take part in the program and thus avoid laying off skilled workers.

The state’s Shared Work program, administered by the Connecticut Department of Labor, can provide partial unemployment benefits to employees when a company is experiencing a temporary economic downturn and wants to avoid layoffs. The goal is to retain skilled workers so companies can quickly return to full strength when the business climate has improved.

As of July 1, employers now qualify for the program when faced with the need to reduce the hours of its permanent full-time and/or part-time workforce by 10 to 60 percent. Prior to the change, companies could only qualify if work hours were reduced between 20 and 40 percent, and eligible employees were required to be full-time workers.

According to State Labor Commissioner Sharon M. Palmer, the program now allows a company to apply if it has at least two employees affected by the change in hours worked. Prior to the July 1 change, the minimum requirement for eligibility was four employees. In addition, the Labor Department will also be able to provide a dependency allowance to those employees taking part in the program that have qualifying dependents on their unemployment insurance claim.

In other words, if you were interested in the program before but didn’t think your business qualified, you may want to look at it again.

While not widespread, the program does have the involvement of over 100 employers in the state.  For more information about the program, contact your local counsel or contact the Connecticut Department of Labor.

Last month, I highlighted a federal case in Connecticut where the court threw out an age discrimination claim because the evidence presented by the employee was not strong enough to survive a summary judgment claim.

A new federal court case however has allowed an age discrimination claim to proceed even while noting that while the evidence was "somewhat tenuous". 

So what tipped the balance here? For one thing, it wasn’t a 50th birthday party thrown on behalf of the employee. But the court said that the statistics of a reduction in force and the allegedly shifting reasons by the employer were just enough.

Background

In Edwards v. Williams Raveis Real Estate, Inc. (Sept. 21, 2010, Hall, J.) (download here), the Plaintiff was hired in 2004 to work as a Purchasing Director; she was 46 years old at the time.  She was promoted to Vice President of Facilities and Purchasing in early 2006 and fired two years later at the age of 50.  

According to the court (and viewing the facts in a light most favorable to the employee — as required at this stage of the case), she received multiple pay raises and positive performance reviews.  

But in late 2007, the Vice President of HR decided to throw the plaintiff a birthday party and placed various "age-related gag decorations around the office." Other similar parties had been held that year for two other employees.  At the party, other employees allegedly referred to her as "very old", "really, really old" and "over the hill".

Within a month or so of the party, the plaintiff was allegedly instructed to train someone on ins and outs of the department she was running.  This other employee — four years younger than the plaintiff — allegedly took over the responsibilities when the plaintiff was terminated as part of a reduction in force in April 2008. 

Birthday Party Not Enough But…..

The court first rejected the idea that the birthday party itself can give rise to an inference of discrimination.  "While the court may question the wisdom of throwing birthday parties at offices
with age-related gag decorations, the throwing of such a party, on its own, does not
create an inference of discriminatory intent on the part of Raveis."  The court found that the comments made at the party do not supply the necessary inference given the context and the "relatively innocuous content."

The court also said that the age difference between the employee and the alleged replacement was also not enough.  "The difference in age…neither supports nor disables an inference of age discrimination".  The court though rejected the application of a same actor inference to benefit the employer since the plaintiff has "categorically aged since the time of her time (…now being ‘in her fifties’ instead of ‘in her forties’)"

But the statistics of the reduction in force were enough for the court to let the case survive summary judgment finding that the layoffs skewed towards the older population (despite the relatively small sample size) and the timing as well (shortly after her birthday party).  Having found an inference of discrimination, the court also looked at the overall explanation given by the employer and found inconsistencies in the reasons provided. There was virtually no documentation supplied and, in the court’s view, it seemed to go against the positive reviews the employee had received previously.

What’s the takeaway from this case?

First, beware the birthday parties. They may be good morale boosters but some people may find them distasteful.  In any event, keep the age-related jokes to a minimum. 

Second, be consistent in the reasons for the termination and make sure they are well-documented.  Any alleged inconsistencies will be construed against the employer. 

Another manic Monday. So it’s time to roll out another edition of quick hits where I highlight stories you might have missed over the last week or two.

 

The Connecticut Business and Industry Association takes a minute every day to share information that is relevant to businesses across the state. Of course, because that minute airs at 5:59 a.m. on WTIC-AM (1080), you may miss it from time to time.

Starting Monday, however, you’ll be able to listen to a series of interviews I did that have been taped for release this week on the CBIA’s "Business Minute".  They all discuss, in one way or another, how the economic stiuation affects employers. 

Among the topics that I discuss is severance agreements. Indeed, sometimes agreements seem to be somewhat foreign with legal requirements such as telling the employee of his or her right to consult with an attorney. (For a more detailed discussion of those requirements, see this blog post by D. Jill Pugh.) 

If 5:59 a.m. is still a bit early for you, the interviews will also be rebroadcast on several other Connecticut radio stations this week and available online here.

One of the latest fads in employment law has become a peculiar side effect of this recession — the increase in the usEmpty officee of mandatory furloughs.

What are they? Well, in simple terms, they are orders from an employer to an employee that they take a day (or multiple days) off without pay. In doing so, the employee is to refrain from working.

An excellent post up this morning on the HR Daily Advisory site, runs through the risks of using furloughs, particularly for exempt employees.  Indeed, the title is particularly apt – "Attractive, but Legally Tricky".

There are plenty of traps for employers to fall into. An employer, for example, may decide to reduce salaries by 20% and then reduce workweeks by one day a week.  The post suggests that in general, this approach may not work because of the Department of Labor’s pronouncement that "reducing exempt employees’ work schedules with a corresponding reduction in salary because of lack of work violates the salary basis test."

The post does suggest a ray of hope, though:

The DOL further clarified that an employer may make a "fixed" and "permanent" decision to reduce the hours and corresponding pay for exempt employees. For instance, an employer could reduce the work schedule for the year from 52 five-day workweeks to 47 five-day workweeks and 5 four-day workweeks, and also reduce the pay of exempt employees as a result of the shortened workweeks.

The linchpin of the distinction between this permitted approach and the impermissible hours reduction is the permanence of the schedule reduction as contrasted to a temporary reduction in the normal scheduled workweek to address a short-term work slowdown or temporary economic conditions.

So, for employers considering using mandatory furloughs as a way to keep their workforce intact through this recession, be careful and cautious.

Addressing the legal risks associated with a reduction in force (or "RIF") has long been a topic on this blog. In fact, looking in my crystal ball way back in January 2008, I suggested that it would the hot topic before years’ end

Flash forward to the present, and the headlines continue to be dominated by news of layoffs, plant closings, furloughs and bankruptcies. 

One of my friends and professional colleagues in the area, Lori Rittman Clark, has posted her thoughts on RIFs in the For the Defense blog

While there’s nothing particularly ground-breaking (quite simply because there aren’t a lot of new developments in the area), it is a concise and well-rounded summary for employers and HR professional looking to reduce legal risks associated with reductions in force.

What are the issues she suggests reviewing?

  • Potential Applicability of the WARN Act;
  • Disparate Impact Analysis.;
  • Disparate Treatment Analysis; and,
  • Releases.

All are sound subjects for review. The best suggestion should be the most obvious one: Seek legal guidance at the START of a process, rather than the end, to avoid the legal pitfalls that surround RIFs.

In the end, however, there is no magic bullet to eliminating legal risks associated with reductions in force. Each of the items Clark raises may help reduce the legal risks, but even implementing all of the above may not eliminate the risk entirely.