Considerations Employers Must Make Before Executing a Workforce Reduction
Following an unprecedented season of economic and political instability over the past few years which encompassed presidential elections, wars, and a global pandemic, many economists and analysts are cautioning investors and businessmen seemingly daily about the impending recession. There have been many mixed signals over the past several months that have supported claims for and against the alleged forthcoming economic recession. Interest and inflation rates have both been increasing at historical paces; however, other economic indicators have been much less threatening. Nonetheless, some businesses and employers have begun workforce reductions while many others have begun contingently preparing plans to do so in case the ever-predicted recession does in fact come to fruition. It is imperative that employers keep in mind relevant laws and regulations when planning to execute any workforce reduction actions.
Two of the most prominent Acts that employers and businesses should be aware of are the Older Workers Benefits Protection Act (OWBPA) and the Worker Adjustment and Retraining Notification Act (WARN Act). The former is a piece of legislation set forth that is designed to provide additional protection to workers over the age of 40 in the case of group terminations and correlates closely to the Age Discrimination in Employment Act (ADEA). The latter Act serves to ensure workers are provided the curtesy of sufficient notice of dismissal—as such, the WARN Act requires at least 60 days’ notice of impending termination unless special exceptions are applicable.
Employers also must ensure that any mass layoff process does not have any sort of disparate impact. Disparate impact occurs when a certain group or demographic is discriminated against by way of disproportionate dismissal whether intentional or not. Failure to comply with the rules and regulations set forth in the WARN and OWBPA Acts, or noted instances of disparate impact, can be extremely costly oversights by employers as the consequent fines, penalties, and lawsuits can be exorbitant. Is it crucial that any employer contemplating a workforce reduction first consult a legal expert to ensure comprehensive labor law compliance. *The information published by Catholic Benefit Plans & Catholic Benefits Law is available for informational purposes only and is not considered legal advice on any subject matter. By viewing blog and social media posts, the reader understands there is no attorney-client relationship between the reader and the blog publisher. This information should not be used as a substitute for legal advice from a licensed professional attorney, and readers are urged to consult their own legal counsel on any specific legal questions concerning a specific situation. The completeness or accuracy of a particular post may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular post is written.
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