employment law attorney in Little Rock, Arkansas
Cox, Sterling & McClure      501-954-8073
by M. McClure on Aug 25, 2009 at 4:18 PM

cutting jobsWhile signs of economic recovery are beginning to appear, some employers continue to look for ways to cut costs. Most employers seeking to reduce costs at least consider a reduction in force. While a reduction in force can provide significant impact to the bottom line, this strategy is not without risk. 

Every employee who is impacted by a reduction will invariably ask "why me," and sometimes the answer that the employee settles upon is his or her age, gender, race, religion, disability, etc. While no reduction in force is risk free, there are best practices that can reduce an employer's legal risk. 

I'll be speaking on reductions in force at the Arkansas SHRM Employment Law and Legislative Affairs Conference on October 1, 2009, and as I prepare, I have been reviewing all the excellent commentary on the subject.  Here's a sample:   

Preparing for and Managing a Reduction in Force

Reducing Risks in a Reduction in Force - Is There a Perfect Solution

Reduction in Force Guidelines

Reducing the Legal Risks Associated with a Reduction in Force

Top 10 Layoff Tips

How to Lay People Off

Furloughs: An Alternative to Layoffs

RIF's: Beware the Hidden Costs

Reductions in Force: Top Considerations


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by M. McClure on Aug 20, 2009 at 4:09 PM
Filed in ADEA | Discrimination

Image of ticking clockHere's an employment lawyer's worst nightmare:  the CEO for your favorite client asks you to draft employment claim waivers for an upcoming reduction in force.  For some unexplained reason, you fail to include any reference to the Age Discrimination in Employment Act in the waiver.  The ADEA does not even cross your mind until the last signed waiver arrives on your desk.  AAAUGHH - you wake up in a cold sweat.

Fortunately, the courts and the EEOC have provided ample direction for attorneys drafting waivers of employment claims.  I will be speaking on reduction in force issues at the Arkansas SHRM Employment Law and Legislative Affairs Conference in October, and in preparation, I'm reviewing the DOL's recent guidelines for enforceable ADEA waivers.  Here are some highlights:

  • The waiver must be written in language that would be understood by the employee based on his or her education and business experience.
  • The waiver must refer to the Age Discrimination in Employment Act by name.
  • Employees must be advised in writing to consult with an attorney prior to signing the waiver.
  • For an individual layoff, an employee must be given 21 days to consider the waiver.
  • For a mass reduction, the employees must be given 45 days to consider the waiver.
  • All employees over 40 who sign a waiver can revoke their acceptance within 7 days of signing the agreement.
  • A waiver must be supported by consideration in addition to that which the employee is already entitled.
  • Here's the hard part:  where a group of employees is being released, the waiver must provide information to employees over 40 regarding the "decisional unit," which is the group of employees from which the employer chose the employees who would be discharged.  The employer must disclose the eligibility factors for the program, the time limits of the program, and the job titles and ages of all employees who are eligible and ineligible for the program. 
Remember that some rights can't be waived, including the right to file a charge with the EEOC, future claims, claims or benefits that arise under unemployment compensation, workers compensation, the Fair Labor Standards Act, health insurance claims under COBRA, and vested benefits under a retirement plan governed by ERISA. Nonetheless, an employer can significantly reduce legal risk by seeking waivers as part of a reduction in force.  And, waivers will help you sleep better. 

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