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Reductions in Force Toolkit
Practical Law Toolkit 1-506-7103 (Approx. 15 pages)
Reductions in Force Toolkit
by Practical Law Labor & Employment
| Maintained • USA (National/Federal) |
Resources to help employers comply with legal requirements when planning and implementing a reduction in force, including plant closings and mass layoffs.
A reduction in force (RIF) is a stressful event both for the employer and its employees. The decision to reduce the workforce is often arrived at after employers have attempted other cost-cutting measures. In addition to managing the effect on workplace morale and employee performance, employers must comply with various legal requirements to minimize their liability.
Key areas of exposure associated with reductions in force include:
- Federal law. Employers covered by the federal Worker Adjustment and Retraining Notification Act (WARN Act) must comply with its reporting and notice obligations. Most importantly, the WARN Act requires covered employers to provide at least 60 days' notice to employees and certain other parties before implementing a reduction in force, such as a mass layoff or plant closing.
- State law. In states that have their own version of the WARN Act (known as mini-WARN laws), employers must also comply with those requirements. For example, the federal WARN Act applies to employers with 100 or more employees. However, California's mini-WARN law covers employers with 75 or more full-time and part-time employees. For more information on state-specific mini-WARN requirements, see Mini-WARN Acts: State Q&A Tool.
- Potential wrongful discharge claims. When some individuals are laid off while other employees are retained, it can lead to claims of wrongful discharge based on legal theories, such as:
- disparate impact (for example, that the layoff disproportionately impacts older workers or women);
- disparate treatment (that the layoff intentionally discriminates against employees in one or more protected classes); or
- retaliation (for example, that certain employees were targeted for layoff in retaliation for taking leave, filing a complaint, or other protected activity).
- Severance considerations. Employers must determine whether they are legally required to provide severance payments or other benefits (for example, under a collective bargaining agreement or employment contract). If it is not required, employers must decide whether to provide severance and how much.
- Benefits continuation. When implementing a RIF, employers must also provide health plan continuation information to employees, as required by the Consolidated Omnibus Budget Reconciliation Act (COBRA).
The Reductions in Force Toolkit provides resources to help employers plan and implement a RIF in compliance with legal requirements and to minimize liability.