How You Conduct a RIF Can Reduce Your Risk of Being Sued


With the economic crisis taking a toll on employers, businesses are slashing payroll and laying off employees. An involuntary reduction in force (RIF) can be an effective tool for reducing workforce and cost but can also lead to significant liability.

The primary exposure to liability associated with an RIF is a claim of discrimination or retaliation. Employers are best able to defend against such claims when they can show that the RIF was carried out according to valid selection criteria and was designed to keep the most qualified employees. To successfully use this defense, or to avoid a lawsuit in the first place, you must carefully plan the involuntary RIF. Any employer considering an RIF should do the following:

- Write a list of business reasons: Identify in writing the financial reasons for the RIF.

- Identify the goals of the RIF: examples include labor costs to be eliminated and number of employees to be terminated.

- Consider alternatives: Consider less drastic alternatives such as shorter work days, voluntary leaves of absence or salary freezes.

- Draft selection criteria: Generate a written internal statement of well-defined selection criteria for termination.

- Develop a selection procedure: ID the decision-making sequence and persons responsible.

- Ensure RIF policies are followed: Make sure all written RIF policies are known and followed.

- Abide by employment contracts: Be aware of any employment contracts and terminate in accordance with the terms.

- Consider severance packages coupled with written releases.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Nick Birkenhauer | Attorney Advertising

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