THE FIVE Ps of WORK FORCE REDUCTION: PRIOR-PLANNING-PREVENTS-POOR-PERFORMANCE

1. THE FIVE Ps ofWORK FORCE REDUCTION: PRIOR-PLANNING-PREVENTS-POOR-PERFORMANCE 30th Annual Statewide Manager Interchange, February 27, 2009 Thompson & Bowie, LLP Labor and Employment Attorneys Mark Franco, Esq. and Victoria Morales, Esq. mfranco@thompsonbowie.com vmorales@thompsonbowie.com

2. 2 Presentation Overview I. Potential legal actions as a result of layoffs II. Planning for and implementing layoffs to avoid legal action (or at least laying the foundation for a solid defense) III. Innovative alternatives to layoffs

3. 3 I. Potential legal actions as a result of layoffs

4. 4 I. Potential legal actions as a result of layoffs Discrimination and Statutory claims: Employment actions motivated by an employee’s race, national origin, religion, gender, age, disability, membership in another legally protected category are prohibited. Age discrimination: Age Discrimination in Employment Act (ADEA), prohibits involuntary retirement for persons over 40. Older Workers Benefit Protection Act, (OWBPA), protects older workers from coercive early retirement plans and prohibits employers from obtaining releases of age discrimination claims for sweetened early retirement benefits

5. 5 Legal actions continued…. Americans with Disabilities Act (ADA), prohibits employers from discriminating against qualified individuals with disabilities Family Medical Leave Act (FMLA), prohibits discrimination based on an employee being on leave. FMLA leave provides leave from work if the employee has a serious health condition or an immediate family member of the employee has a serious health condition and the employee is the caregiver. (see handout)

6. 6 Legal actions continued…. Discrimination based on leave taken under the Uniformed Services Employment and Reemployment Rights Act or the workers’ compensation statutes is also prohibited. Family Responsibility Discrimination (FRD) is an evolving theory of discrimination against employees with family responsibilities.

7. 7 Legal actions continued…. Employee Retirement Income Security Act of 1974 (ERISA), warns against laying off certain employees when doing so interferes with their vesting in an ERISA qualified plan. (see employee benefits plan requirements of ERISA). Retaliation: most federal and state antidiscrimination statutes forbid retaliation for making a claim of discrimination. (whistle blower protection). Complaint to Maine Human Rights Commission

8. 8 Legal actions continued…. Contract actions: Breach of contract/personnel policies Breach of collective bargaining agreements – failure to follow specific provisions for layoffs Breach of implied covenant of fair dealing Worker’s Compensation Claims. Tort Actions: Wrongful and/or fraudulent discharge Tortious interference with contractual relations Intentional infliction of emotional distress Defamation Sexual harassment

9. 9 Risks of legal action $ $ $ $ $ $ $ $ $ $ $ $ Violations of federal and state antidiscrimination statutes typically include back pay, compensatory damages, punitive and/or liquidated damages, costs, and attorney’s fees for the employee. Deterrent to civil rights litigation: attorney’s fees can exceed liabilities associated with employment litigation. Litigation could take 3-5 years until all appeals are exhausted.

10. 10 Other considerations: Employers must deliver final paycheck on next pay day or two weeks from request, which ever comes first. Written statement of reason for termination required if requested by employee in writing – fines up to $500 and/or injunction for violation. COBRA notices (14 days after termination of employment for reasons other than gross misconduct ). Benefit plan documents (retirement plans, pension plans, retiree health benefits, etc.) Life insurance policies

11. 11 II. Planning for and implementing layoffs

12. 12 II(a) Planning for layoffs 1. Use a team approach to decision-making 2. Make sure personnel policies are well crafted and in place before the layoff process begins 3. Be attentive to potential problem cases where legal risks are foreseeably high

13. 13 Planning Phase - Team approach Team members include City and Town Managers, human resource professionals, department heads, and supervisors lawyers. All in involved must be mindful that the layoff process will be skeptically scrutinized and challenged in a grievance proceeding or in a courtroom.

14. 14 Careful Planning with Team Discuss goals: reduce salary or head count? Have all other alternatives to layoffs been explored and ruled out? What selection criteria will be used for layoffs? What process will be followed? Assess legal exposure What benefits or severance packages will be provided? How should the decision be communicated to the employees, media, the public?

15. 15 Careful Planning….. How many employees will be terminated? Consider terminating positions, rather than employees All at once or in stages? Weed out foreseeable discrimination claims based on protected characteristics or activity?

16. 16 COMMUNICATION IS KEY!!!! Train department heads and supervisors to make sure everyone is on board with the plan. Inform them not to discuss publicly the process for layoff, or any particular employee. Inform them not to make promises they have no authority to keep. No email use for any discussions regarding layoffs.

17. 17 Objective criteria for layoff With team, articulate for each candidate, a legitimate non-discriminatory (objective) reason for the layoff. Restructuring, economic climate, financial considerations Performance reviews Job functions Seniority Education/certificates Attendance records/disciplinary records Past merit bonuses Need for particular skills/abilities

18. 18 Subjective criteria for layoff Discuss potential discriminatory reasons for each layoff (foreseeable lawsuits) Discuss subjective criteria: Performance potential (in current job) Leadership Communication skills Decision makers should be able to articulate the selection criteria Objective criteria should form the basis for the decision, although employers are generally permitted to use subjective criteria.

19. 19 Selection process Preliminary selection decisions made by direct supervisors. Review of preliminary decisions by second level of decision makers: make sure all facts about each employee are known. Review of support documentation, personnel files, supporting the decision. Overall review by management and legal counsel.

20. 20 Preserve confidentiality It is often wise to have legal counsel present for the entire layoff process to maintain the attorney-client confidentiality of the process. Otherwise, all discussion, reports, documentation will have to be disclosed upon request if litigation is commenced. DO NOT USE EMAIL TO DISCUSS LAYOFFS!!!!!! Have meetings instead.

21. 21 II(b) Implementing layoffs Literature suggests that transparency in the process leads to less lawsuits Make public aware of the current economic problems the City or Town is facing. Make available the decrease in revenues and state and federal support, budget shortfall. Encourage public input on solutions

22. 22 Once selections are made develop a communication strategy. Full communication with affected employees and the public regarding the rationale for layoffs (buy in). Decide who is best to deliver the message to each employee, personal rather than public is best. Primary contact person for employees must be a skilled communicator, understands the goals of the team.

23. 23 Severance packages and services Decide what if any severance packages each employee will receive. Notice period before date of layoff, severance pay, continued eligibility for selected fringe benefits, preference in applying for other internal positions. Consideration of releases – mindful of OWBPA Determine what services, if any, you can provide: counseling, job training, priority for new positions in the future, preretirement counseling for personnel who will take early retirement, use of computers for resumes and job searches, etc. These cost efficient services are valuable to employees and are likely to reduce future claims.

24. 24 Appeal Process Provide an equitable but efficient process for extending to affected staff members the right to an administrative appeal – grievance. Allows employer a chance to articulate its reasons Allows affected employees a chance to speak out. Respect and Dignity in the process.

25. 25 Attention to the remaining work force Layoffs cause intra-office tension, low morale, loss of efficiency and harmony Shouldering more work with less employees Consider pay raises for taking over extra work Retraining in new areas Retreat day to voice concerns and brain storm ways everyone can work together to meet the needs of the public

26. 26 III. Alternatives to Layoffs

27. 27 III. Alternatives to layoffs Hiring freezes Ask for volunteers, senior citizens Temporary shut down – furlough days Reduction in Hours – (4 day week) Wages Benefits Programs Sabbaticals Flex time (job sharing)

28. 28 Brain-storm ideas _______________________ _______________________ _______________________ _______________________ _______________________ _______________________

29. 29 As you go forward………. Managers must be focused on controlling attrition as a way to improve productivity. Do not allow department heads to recruit and hire on their own. Constantly evaluate the need for services and staff. Change is on the horizon. Now is the time to be innovative with how services are provided.