2010 Spring Webinar Series

Transcription

1 2010 Christian Brothers Services, Romeoville, IL. All Rights Reserved Spring Webinar Series No part of this presentation may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of Christian Brothers Services. Christian Brothers Risk Management Services The Legal Aspects of Workforce Reduction April 15th, SPRING WEBINAR SERIES Opening Prayer Creator God, through your world and people that surround us, we pray that we may grow more aware this day of your life giving presence. Open our minds and hearts to apply the knowledge from today s webinar for the good of all. We ask these things in Jesus Name. Amen

2 Christian Brothers Risk Management Services The Legal Aspects of Workforce Reduction Rachel E. Yarch Kopon Airdo, LLC 233 South Wacker Drive Suite 4450 Chicago, IL SPRING WEBINAR SERIES REDUCTIONS IN FORCE Reductions in force (RIFs) are commonly implemented as a cost saving strategy for employers to stay competitive and viable Establish Reasons Objective, business related reasons Typical reasons: economic necessity, loss or downturn of business, decreased revenues, poor financial forecasts Documentation is key

3 Discrimination and RIFs Challenge to selection process Challenges to the need for a RIF Again, documentation is key RIF ALTERNATIVES Before deciding to conduct a RIF, employers should always first consider the alternatives Consider Alternatives RIFs are often difficult, costly, and involve risks RIF alternatives have various benefits Voluntary separation programs

4 Early Retirement Plans One method to avoid an involuntary RIF Option often accompanied by incentives Designed to provide incentive to longer service workers to retire Factors for Early Retirement Plans Must be voluntary Must be offered and applied consistently Must comply with Age Discrimination in Employment Act ( ADEA ) and the Older Workers Benefit Protection Act ( OWBPA ) Should contain definite expiration date for acceptance OWBPA and Early Retirement Plans Must be in writing and be understandable; Must specifically refer to ADEA rights or claims; Must not waive future rights or claims; Must be in exchange for valuable consideration; Must advise the individual to consult an attorney; and Must provide 21 days to consider and 7 day to revoke

5 Voluntary Separation Plans Need for RIF clearly communicated to employees Employees are given opportunity to voluntary resign before RIF Severance typically offered If applicable, must comply with ADEA and OWBPA Furloughs Placing employees on temporary leaves without pay or associated duties for a designated period of time Good for urgent cost reduction needs Fair Labor Standards Act ( FLSA ) implications Other Alternatives Pay freezes or reductions Shorter work weeks or workdays Reductions in authorized overtime Work sharing arrangements

6 Other Alternatives Voluntary leaves of absence Temporary shutdown Reduction in the number of temporary personnel Attrition without replacement (hiring freezes) CONDUCTING A RIF It is critical that RIFs are carefully planned and implemented, in order to avoid litigation and general disruption of business Step 1: Develop a Plan Formality of the process Training management Overseeing of implementation of the plan

7 Step 2: Develop a Selection Process Non discriminatory factors No disparate impact of facially neutral factors Consistency in decisions Documentation of the process Step 3: Select Positions, Not People Identify positions that must be retained in order to continue functioning after the RIF Focus on positions and job functions, not on specific people Tie the positions to the reasons for the RIF Step 4: Examine Existing Contracts Examine the contracts associated with those positions selected for termination Examine relevant employee handbooks Examine relevant policies and procedures

8 Step 5: Develop Selection Criteria Seniority Performance Forced Ranking RIF Specific Evaluations Step 6: Who Will Conduct the RIF Identify who will participate in the selection process Training of those identified Multiple, independent evaluators Documentation Step 7: Analyze The Proposed RIF Disparate impact analysis Individual Claims of bias Pattern and practice claims Context is key

9 Disparate Impact Analysis No discriminatory motive needed Adverse impact on a particular group Job related, business necessity Compare statistical makeup of workforce before the RIF and after proposed RIF Individual Claims of Bias Discrimination or retaliation claims by a particular employee who may fall within a protected class Consider whether employees selected for RIF have recently taken FMLA, suffered an injury at work, requested an accommodation, or complained of retaliation Step 8: Notice Requirements Federal and state statutes require employers to provide advance notice in the event employees are terminated due to the closing of a facility or due to a significant reduction in the workforce The Worker Adjustment and Retraining Notification Act ( WARN ) State Notice Requirements

10 WARN Notice requirements Applies to employers of 100 or more employees 60 days advance notice State Notice Requirements Many states, including Illinois, have laws affecting whether and what type of notice is required in connection with various employment actions Illinois Notice Requirement Law applies to employers with 75 or more employees Step 9: Communicate the Decisions Reasons for the reduction Effective date of reduction Number of other employees affected Information about benefits Brief explanation of unemployment compensation Treat with dignity and respect

11 Step 10: Releases Always try to obtain Never give something for nothing Comply with the requisite laws Consider accompanying with letter of reference OTHER CONSIDERATIONS In addition to the steps discussed above, employers must be cognizant of other factors when conducting a RIF Wages and Vacation Pay When must the last paycheck be paid What must be included in the paycheck Generally governed by state law

12 Pension Benefits Relevant plan must be examined Plan administrators should be contacted Health Benefits Consolidated Omnibus Budget Reconciliation Act ( COBRA ) generally entitles employees up to 18 months of coverage State laws may have different requirements than COBRA (particularly relevant for smaller employers) COBRA Applies to employers with 20 or more employees Employees must be covered by the group plan the day before the qualifying event (e.g., termination, reduction in hours, etc.) Maximum 18 months of coverage, subject to certain extensions Coverage must be the same as that provided to current employees Coverage need not be offered to employees terminated for gross misconduct

13 Illinois Continuation Laws Applies to all employers regardless of the number of employees Employees must be covered by the group plan at least three months before the qualifying event Maximum nine months of coverage, subject to certain extensions for spouses and dependents Coverage need not include non core benefits such as dental, vision, or prescription drugs for employee Coverage need not be offered to employees who are convicted of or confess to employment related felony or theft Unemployment Benefits Consider providing information regarding layoffs to local unemployment office Provides evidence of employer s good motive Fraudulent Workers Compensation Claims Disgruntled employee more likely to make fraudulent claim Employees may file workers compensation claim if they catch wind of an upcoming reduction Awareness of the tell tale signs of workers compensation claim fraud can help to weed out some of the dishonest employees and save money

14 QUESTIONS? For questions regarding workforce reduction issues Contact: Elton Sherrill at x 3078 For more information on Christian Brothers Risk Management Services or for a link to handouts for today s webinar Laura Hart at laura.hart@cbservices.org x 3054

15 2010 Christian Brothers Services, Romeoville, IL. All Rights Reserved. No part of this presentation may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of Christian Brothers Services.