What You Need To Know About Reductions in Force & Furloughs

Legal considerations when planning a RIF or Reduction in Force, Furlough or Layoff include but are not limited to:

•   ADEA

According to the U.S. Equal Employment Opportunity Commission, “The ADEA prohibits employment discrimination against persons 40 years of age or older.”

• COBRA

Continuation of Health Coverage is the goal of COBRA (Consolidated Omnibus Budget Reconciliation Act) ensures that after an employee’s employment is terminated, they have the opportunity to continue health coverage.

According to the U.S. Department of Labor, it “gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, a transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan.”

• EEOC

U.S. Equal Employment Opportunity Commission protects employees from discrimination, according to the EEOC, “Laws, regulations and policy guidance, and also fact sheets, Q&As, best practices, and other information organized by the basis of discrimination.

•       Age
•       Disability
•       Equal Pay/Compensation
•       Genetic Information
•       Harassment
•       National Origin
•       Pregnancy
•       Race/Color
•       Religion
•       Retaliation
•       Sex
•       Sexual Harassment”

• FMLA

According to the U.S. Department of Labor, “The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.”

•   The WARN Act

According to LexisNexis, “In general, this statute is designed to require employers to provide employees with 6o days notice of layoffs due to plant closings, sale of business or financial hardship.  It is a complicated statute, filled with nuances and exceptions, so click here to read a more complete analysis on the Act issued by the United States Department of Labor.

Here is a general synopsis of the Act, and a few important tips to remember:

1. a) WARN only applies to employers that have 100 or more full-time workers;
2. b) WARN applies to all private and public-trade companies, whether they are for-profit or not for profit;
3. c) WARN notice must be provided to all affected employees, whether hourly or salary, management or line personnel;
4. d) WARN notice must be given if there is a plant closing or “mass layoff” employers;

The WARN Act … limits employees’ damages to their loss of wages and benefits over the last 60 days of their employment. Thus, an employer who fails to give notice under the Act is essentially immune from any liability as long as they pay all compensation due to their employees through their last day of work. Companies figure, ‘Why give the notice, and risk a mass exodus of workers when a violation of the Act will not result in any penalty?’

•   USERRA

The Uniformed Services Employment and Reemployment Rights Act (USERRA), “is intended to minimize the disadvantages to an individual that occur when that person needs to be absent from his or her civilian employment to serve in this country’s uniformed services. USERRA makes major improvements in protecting service member rights and benefits by clarifying the law and improving enforcement mechanisms. It also provides employees with the Department of Labor assistance in processing claims,” according to the United States Department of Labor and elaws – USERRA Advisor.

•   Worker’s Compensation

When a worker is hurt at work, according to ______ work’s compensation “covers:

•         Wage replacement benefits
•         Medical Treatment
•         Vocational rehabilitation
•         And, other benefits”

If an employee is currently receiving worker’s compensation when they are laid off, they, “may be entitled to continue your benefits until released to work, even though you as the former employer won’t be able to rehire you when that happens,” according to NOLO. And, if it is determined that the “layoff” is because the employee is on leave for a worker’s compensation claim there could be potential for a lawsuit against the employer.