5 Things to Consider before Downsizing to Prevent Layoffs

Deciding to downsize is no easy task. There are several options available to you as an employer, that may delay or help prevent layoffs. Below is a checklist of your options with a detailed guide to follow for each option.

Downsizing Options Checklist

☐ CARES Act and How to use it to Prevent Layoffs

☐ Continue to Pay, and Pay-in-Full, your Employee Health Insurance Premiums

☐ Temporary Partial Pay Reductions

☐ Offer Ownership or Equity in the Company in Exchange for Pay

☐ Loan Your Workforce to Another Business

1.   CARES Act and How to use it to Prevent Layoff

2.   Continue to Pay, and Pay-in-Full, your Employee Health Insurance Premiums

3.   Temporary Partial Pay Reductions

 4.   Offer Ownership or Equity in the Company in Exchange for Pay

5.   Loan Your Workforce to Another Business

If loaning your staff isn’t a feasible option for your company, consider speaking with Wimbush & Associates, INC where the industry focus is in manufacturing, lighting, electrical, architecture, engineering and construction. Hire right the first time. Schedule a strategy or outplacement consultation call with Wimbush & Associates today. Call (714) 988-2230 or email us at [email protected].

This by no means lists everything that needs to be considered. It gives you a great foundation and start to make your final decision regarding your short- and long-term payroll cost reductions during these challenging times.

5 Things to Consider (to add the Human-side of HR) before Layoffs

How to Conduct a Layoff or Furlough Strategy Session

Layoffs and furloughs can be put into motion for good or bad reasons, done well or done horribly wrong. One example that is often referred to is Nokia and its layoffs. While the first in 2008 was for good reason – the company needed to cut costs during the recession, it was executed in a drastic way that left employees bitter and angry. There were protests, boycotts of the product and investigations which lead to paybacks of subsides. In the end, the layoffs would cost the company over 200 million dollars.

Lucky for Nokia, they learned from the lesson and when they needed to conduct layoffs again in 2011, employees felt supported and understanding of the inevitable decision. Your process is the key to a successful layoff or furlough. If after looking at all the alternative options to layoffs, you and your team decide a layoff or furlough is the right choice, what is your plan? Here are questions to consider during your strategy session which can help build your process.

What is your timeline?

1. How many people?

2. Do you think you can rehire them?

3. How do the new Federal FMLA rules apply to your situation?

4. Legal: do you have it covered?

5. How do you want to do it?

6. Contact info?

7. What is the message you want to send?

8. What services do you want to offer?

9. What is your budget?

Legal Considerations Guide to Furloughs and Layoffs

Disclaimer

These guides are an overview and by no means detailed, in-depth or an exact list of rules to programs and provisions. Always consult professionals and lawyers that understand the items and laws surrounding the subjects you are interested in learning more about.

While the effects of COVID-19 and the economic downturn are being felt drastically and globally, employers are rushing to confront hard decisions in relation to their workforce. Take your time, consult appropriate lawyers and make sure you understand all of your options thoroughly. Many programs and provisions are now available to soften the blow of these trying times. You don’t want a misstep that could result in liability, defeating the businesses cost saving objectives.

A Legal Checklist for Large Scale Layoffs

☐ Discrimination: When making the decision to layoff employees, you want to make sure you have objective criteria for determining who you are letting go. It can’t be based on race, age, gender or sexual orientation, etc.

☐ WARN Act: One of the first things to research is whether the employee falls under the WARN ect. If they do, you will need to give 60 days’ notice.

☐ Review Employment Contract: You’ll want to make sure the company lives up to its side of the agreement. If hiring promises were made – written or oral, you’ll want to follow-through this those promises. A review of the employee handbook is also essential.

☐ Overtime Pay: A review of overtime practices and determining if the company has followed the rule of overtime and if a legal claim for unpaid overtime is a possibility.

☐ Final Paycheck: Company policies will determine if unused vacation or sick leave will be paid out at time of termination. State law will determine when that final paycheck is due to the employee.

☐ Severance: It’s important to follow through with any severance offered during the hiring process.

☐ Stock Option: According to findlaw, “Some companies offered lucrative stock options to attract talented employees. Not all companies followed through with formal stock-option plans Continued from Page 1 or written stock agreements. Consequently, promises of stock options may become fertile ground for litigation, especially if employees believe that the business prospects of the company or the value of stock options were overstated.”

☐ Non-Compete Clause: are to ensure your employees do not start poaching your clients and business after they have left your organization. This is important to have in place to prevent a mass exodus of clients after a significant layoff event.

☐ Release of Claims: To protect the company from potential litigation they may want to have the employee sign the release in exchange for something of value over what they would already receive.

1. Reductions in Force/Furloughs/etc

2. Employee Unemployment Benefits

3. Reduction of Discrimination Claims

4. Non-Compete Clauses 

5. Preparation of severance packages

6. FMLA/Paid Sick Leave

7. Preparation of Confidentiality Agreements

8. Wage/hour claims

9. HIPAA/privacy laws

10. Preparation of Commission Payment Agreements

11. IRC Section 409A Compliance

12. COBRA Benefits

13. Union Employer Issues

14. Preparation of Employment Agreements once company is ready to hire again

15. Review / revision of Employee Handbooks

16. How to identify potential risks for litigation