Reduction in Force

A reduction in force (“RIF”) occurs when an employer decides to eliminate a portion of its workforce permanently.  An RIF might remove one position from the company or could remove entire departments. 

RIF and their counterpart, lay-offs, create legal risks and can cause stress within the company.  Minimizing legal risk and developing ways to reduce the stress on the company’s workforce are important parts of planning an RIF or layoff.

Difference Between a RIF and a Layoff

Reduction in force and layoff are often used interchangeably by employees and by employers.  They are not actually the same thing. An RIF is a reduction in employment that is intended to be a permanent change to the company. Reductions in force occur for many reasons, sometimes they are caused by financial struggles, and other times, they can result from restructuring for a more effective workplace even when a company is doing well financially. 

Layoffs on the other hand are when employees or groups of employees are terminated from their jobs with the possibility of a return if circumstances change. Layoffs are usually related to financial difficulties or downturns in business.

Legal Issues With Layoffs and RIFs

Layoffs and RIFs are legal, but failure to properly carry them out can result in legal expenses and lawsuits. Anytime employers  terminate employees there is risk of legal action. To minimize legal risks, it is important for the employer to carefully plan and prepare for layoffs and RIFS to protect themselves from legal risk.  Failure to do so can cause you to incur significant legal costs. 

Employers should consider the following legal restrictions and risks when planning their layoffs and RIFs. It is unlawful to single out employees for termination based on protected characteristics like race, color, religion, sex, national origin, age, or disability. Terminating employees based on these types of characteristics is considered unlawful discrimination under a variety of laws prohibiting employment discrimination.

The Family Medical Leave Act may prevent you from terminating employees that are on leave under the act when the RIF or layoffs occur. Similarly, the Uniformed Services Employment and Reemployment Rights Act (USERRA) prevents you from terminating the position of a military member while they are serving unless you can show certain circumstances existed. 

In addition to restricting who can be let go, the law, specifically, the federal COBRA Health Insurance Coverage Continuation Law mandates that an employer continue to offer group coverage to laid off employees and their dependents for a certain period of time. However, the employer does not have to continue to subsidize that plan; the let go employee takes on payment responsibility. 

Certain types of employers have additional legal requirements specific to their industry.  For example, the Workers Adjustment Retraining Notification (WARN) Act, requires employers with 100 or more employees to give a 60-day notice before terminating employees when conducting large layoffs or RIFs.

You can avoid opening yourself up to liability by consulting with experts like attorneys when developing the layoff or RIF plan to ensure that applicable laws and regulations are complied with. You can also reduce risk by keeping detailed documentation of the plan and the carrying out of the plan.

Unemployment Benefits of Layoffs and RIFs

Unemployment compensation benefits are designed help employees make ends meet until they find a new job. They are available to employees who lose their jobs through no fault of their own.

Minimizing the Organization Impact of Layoffs and RIFs

Layoffs and RIFs, particularly if they are large in scale, often have a negative impact on the employees who remain with the company.  Those who were not let go may still feel a sense of abandonment from the company or may fear that they will lose their job in the next round of cuts. These negative feelings can result in decreased job satisfaction and productivity.

Fortunately, there are actions you can take to reduce this negative impact on your remaining workforce. The most important thing during layoffs and RIFs is to communicate effectively with both employees who are leaving and those who are staying.  It is the uncertainty and confusion that causes much of the workplace unrest. The company can also help reassure remaining employees by discussing what is being done to help prevent future layoffs and RIFs.  Communication during the transition period should be more frequent than normal. It is beneficial to provide employees a way to communicate back and share their questions and concerns. 

If your company is considering layoffs or a reduction in force, you can get advice and assistance from a licensed attorney in your area, you can post your legal need on UpCounsel’s platform which helps connect people like you with experienced, professional attorneys that can help them.