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Workforce Development

Layoffs Without Lawsuits: Avoiding Litigation When Terminating Employees

Managers who approach their employees carefully in the wake of economic job eliminations may avoid legal problems later.

Phillip M. Perry (Apr/May 09)
(page 2 of 2)
Treat People Well
Treating people well during termination is the right thing to do from the human point of view. It's also smart legally. Fact is, people who are angry about how they were treated on the way out the door often sue their ex-employers.

"Discharged employees often go to lawyers because something in the circumstances of their termination made them angry or seemed unfair," says John J. Myers, chair of the labor and employment law department at Eckert Seamans Cherin & Mellott in Pittsburgh, Pennsylvania. "Treat the departing employees with dignity. I also counsel to give employees complete explanations as to why you are terminating, as opposed to staying vague and elusive. Hopefully they will then understand why you are doing what you have done, and that reduces the likelihood of going to court."

Indeed, attorneys suggest going the extra mile and taking a proactive stance in helping employees move on. Consider arranging for outplacement to get people focused on the future and getting on with their lives. People left unassisted are more likely to file a lawsuit as they brood on what happened.

Offer Severance Agreements
One way to help ensure you do not become the target of wrongful discharge lawsuits is to ask departing employees to sign documents that release your firm of any liability in exchange for a severance packages.

"Many times RIFs (reductions in force) are done without severance packages and corresponding releases," says Harkins. "This is usually a mistake because most people are not looking for huge packages. They just want some transition money to take care of their families until they come up with something in a few months. Provide some transition pay and you are less likely to be the target of litigation."

One approach is to offer "notice pay," a week or two until the next payroll date, with no need for the employee to report to work. "If an employer can afford it, and even for a small amount of money, it is usually worthwhile to obtain a general release of legal claims," says Harkins. "Legal consideration to support a valid release is anything of value that the employer is not otherwise required to provide. So even a day's pay can justify a release of any discrimination or other wrongful discharge claims."

After the Layoffs
If you're facing the necessity of downsizing your own work force, you're probably feeling a good deal of stress. No one wants to make a decision that will disrupt the lives of so many people, especially in today's environment where jobs are hard to come by.

Layoffs can also affect the morale of people left behind. "Employees retained in a layoff are apt to feel `survivor guilt,' especially if they don't know why they were retained when their colleagues were let go," says Jacobsen. "That's why it is so important to explain to them the reasons that they were kept, and what they will be doing in the new, `pruned' organization. In all probability, their jobs will change some to cover part of the work of the people who were let go. They need to understand that not all of the work that was done prior to the layoff will be done in the post-layoff business."

To manage survivor guilt, meet weekly with the retained employees for the first month or more to find out how things are going for them. What's working and what's not? By solving or helping them solve problems they are experiencing post-layoff, you will ease their stress and build your relationship and credibility with them.

"One way to reduce survivor guilt is to get the remaining employees involved in the mission of cost cutting, or thinking of more efficient ways to do things," says Harkins. "People often work off stress by feeling they are getting the business back in order."

Also, try to stay in touch with the group that has departed. "The knee-jerk reaction is to not have your employees stay in contact with laid off people," says Harkins. "That can be counterproductive because some of those people might reapply or they might be able to recommend someone when business picks up. You never want to burn a bridge in anything that deals with human resources."

Stay Safe
Recessions happen. They are a fact of business life. Fortunately, they don't last forever. You want to respond to the recession in a way that builds bridges to the future. That means conducting a layoff ethically and professionally. "Unless you plan to close your business, you want to maintain a reputation as a good place to work," says Jacobsen. "When you survive a recession and start hiring again you want to be able to recruit the best people. And the best people will remember how you conducted your layoff."



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