Companies lose staff but can save assets

09.05.08

As more companies struggle to stay afloat in a weakened economy, reduction-in-force issues are increasingly taking center stage.

In a September 5, 2008 Orlando Sentinel op-ed, Rumberger, Kirk & Caldwell Partner Suzanne Barto Hill describes some key factors employers should be aware of when considering reducing their workforces.

Layoffs. Downsizing. Restructuring.

They are ugly words in business. When mentioned in conjunction with a particular company or industry, these words are sure to provoke fear and angst among employers and employees alike. As more companies struggle to stay afloat in a weakened economy, reduction-in-force issues are increasingly taking center stage.

Take, for instance, Orlando-based AirTran Airways' recent announcement of the furlough of 169 pilots. As is the case for many air carriers, AirTran is taking drastic cost-cutting measures to counter economic pressures such as increased fuel prices.

The same can be said for Starbucks, the once-invincible coffee giant, which is closing about 600 stores nationwide, including 59 in Florida.

 

Inevitably, some of the complications associated with these widespread changes will carry over from the boardroom to the courtroom. It is therefore essential that every company facing reduction-in-force issues understand and prepare for related legal challenges.

What can companies forced to make the difficult decision of cutting staff do to protect their remaining assets? Implementing a reduction in force in accordance with state and federal guidelines should become a top priority. Those guidelines include the following:

*The WARN Act. Passed by Congress in 1998, the Worker Adjustment and Retraining Notification Act helps ensure that workers have sufficient time to prepare for the transition between jobs. It requires businesses with 100 or more full-time employees to provide covered employees 60-days' advance notice of plant closings and mass layoffs.

*Discrimination issues. State and federal laws, such as the Florida Civil Rights Act, Title VII, and the Age Discrimination in Employment Act, prohibit discrimination in the workplace on the basis of various factors, including sex, gender, age, national origin and religion. When a reduction in force has a disproportionate impact on one of these protected classes, it can lead to claims of discrimination.

*Older Workers Benefit Protection Act. This act ensures that older workers are not compelled or pressured into waiving their rights under the Age Discrimination in Employment Act. If the requirements of the OWBPA are met, workers may legally waive their rights to sue for age discrimination under the ADEA.

*Employee Retirement Income Security Act. Some severance and voluntary incentive-pay plans may be covered by ERISA.

*Union contracts. Employees represented by a union may have rights under the collective-bargaining agreement. Employers should take a moment to review such agreements to determine employee rights and/or the need to renegotiate certain aspects of the agreement.

No matter the company, no matter the circumstances, it is ultimately up to the employer to ensure that any reduction in force is implemented in accordance with state and federal guidelines.

Suzanne Hill is a partner in Rumberger, Kirk & Caldwell, a commercial litigation firm in Orlando. 

 
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