United States: March Sadness: How Not To Drop The Ball When A RIF Is On Your Schedule

Last Updated: April 4 2017
Article by Michael S. Arnold and Brendan J. Lowd

No matter how long you've played the game, administering a Reduction-in-Force or RIF is never easy.  In fact, it is often painful not only because they are difficult to administer, but because of the toll it takes on the workplace generally and employees individually.  Terminating a whole team, or worse, an entire division of teams, is incredibly difficult for all those involved.  Game planning and proper execution are critical.  C-R-I-T-I-C-A-L.  Employers need to be prepared so they do not give away easy lay-ups to employees in the form of discrimination lawsuits.

Put Your Best Team on the Floor

There is no one-size-fits-all game plan when it comes to selecting employees for a RIF.  However, terminations should not simply be a "jump ball" situation with employers failing to utilize the right criteria for employee selection and providing the impacted employees with the necessary disclosures regarding their severance packages.

Proper game planning should lead employers to analyze the match-ups closely, selecting a starting RIF rotation that is based on reasonable, objective criteria rather than subjective criteria or "gut" feelings that could point to discrimination, whether age- or sex-based or otherwise.

Nowhere is this truer than when deciding between two or more similarly situated employees.  In this win-or-go-home scenario, factors such as an employee's status (e.g., full or part-time), job function, objective performance metrics and other practical, legitimate, non-discriminatory factors should be considered.  Once the factors are identified, however, employers need to keep their head up with their eyes on the entire floor to avoid permitting subjective factors to creep into the decisionmaking process.

And once that starting rotation is set, employers must get all their ducks in a row for game day, including drafting appropriately-tailored separation agreements, and of course, if the RIF program will be substantial, accounting for any necessary WARN notices.

Avoid Shot Clock Violations

One of the biggest "plays" on which employers need to execute correctly once the whistle blows involves the Older Workers Benefit Protection Act (OWBPA), which as the name suggests is aimed at protecting older workers.  Generally, under that law, in connection with a RIF, employers must provide employees 40 years or older with at least 45 days in which to consider and execute a severance agreement releasing age discrimination claims.  That 45-day period runs from the date of the employer's final offer.  After providing the agreement, if the employer agrees to make material changes to its terms, the 45-day period resets.  However, the parties may agree that any change, whether material or immaterial, does not reset the clock.

Despite these seemingly clear rules, employers often still struggle with when the 45-day clock begins and ends, just like even the best referees struggle with whether the ball grazed the rim such that the shot clock should have reset.

Notably, a federal judge just last year provided some helpful guidance to navigate what he called the OWBPA's "difficult statutory landscape."  In Behr v. AADG, Inc. (N.D. Iowa July 29, 2016), the court went to the replay studio to determine whether the shot went up in time.  The employees had argued that their age discrimination waiver was invalid because the employer sent the required decisional unit disclosure list to them a few days after it provided the severance agreement.  The court was not troubled by this, however.  Relying on the OWBPA's statutory language, it failed to find a shot clock violation saying instead that the delay simply reset the 45-day shot clock when the employees received the OWBPA list and that there was no requirement to provide the list simultaneously with the agreement.

Avoid the Dreaded Non-Compliance Touch Foul

At this point, most employers know that in offering a severance package to an employee over 40 years-old as part of a RIF, the OWBPA requires that employers make certain disclosures so that the employee can determine whether a potential age discrimination claim exists.  Meeting these disclosure requirements, however, is anything but a slam dunk for employers to figure out.

One of the most difficult in-game opponents that employers face in this regard relates to providing employees with additional age-based information.  More specifically, the OWBPA requires employers to provide the over-40 separated employees with "the ages of all individuals in the same job classifications or organizational unit who are not eligible or selected for the program."

With that definition in hand, let's turn back to the Behr case.  There, the employees also sought to invalidate the age discrimination waiver because the employer only provided them with information of the ages of employees "facility-wide" instead of listing the ages by job classification or organization unit .  The employer argued that they identified the age of everyone in the "decisional unit" that was not selected and were not required to identify the job classifications of those employees.

This time, the employees hit nothing but net.  The court stated that while the employer need not have provided specific job titles of each employee, it did have to include their job classification (e.g. Structural Engineers, Mechanical Engineers, Point Guard, Small Forward) for each of the non-terminated employees for comparative purposes so that the terminated employees could make an informed decision as to whether they had a potential age discrimination claim.  This, the court said, was a different requirement than the separate requirement to disclose the "decisional unit" to the employee.  That separate disclosure requirement requires the employer to identify the portion of the organizational structure from which the employer selected employees it would offer a severance package and those it would not (i.e. all salaried employees in the Durham, Providence and Ann Arbor plants; all players on teams in the Big 10, Pac 10 and ACC conferences).  Getting these distinctions and disclosures requirements correct is crucial or employers may risk seeing their entire restructuring strategy invalidated.

Come Away With a Convincing Victory

Finally, employers should also focus their efforts on preparing an appropriate communications plan to minimize the number of turnovers they commit on game day.  One thing employers often don't realize is that, even in connection with a difficult event like a RIF, it presents an employee engagement opportunity.  Yes, you heard that correctly.  An employee exited under difficult circumstances, but in the "right" way, is far less likely to cause the employer problems off the court, making it far easier for employers to focus on securing wins on the court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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