From time to time, Connecticut employers face the need to reduce their workforce.
A reduction in force can occur for many reasons, including the need to:
- Eliminate unprofitable business segments
- Improve efficiencies
- Reduce costs in the face of an economic downturn
How Connecticut employers go about reductions in workforce size is critically important. Missteps can be costly.
So, what are best practices?
First – to the greatest extent possible, consider making sure your employees have a sense of the company’s overall financial health. Doing so reduces the likelihood of a painful surprise should layoffs occur.
In general, there are three frequently relied upon methods for selecting employees for layoffs.
The first involves selecting those last hired – colloquially known as “last in, first out.” With this approach, those most recently hired are laid off first.
The second method involves reliance on performance reviews. Employers using performance reviews need to take great care to ensure the performance standards used are as objective as possible. Performance reviews that rely solely on manager opinions are always fraught with legal peril for employers. Those that rely on objective measures of productivity and sales are often easier to defend in a courtroom should a layoff be challenged.
The final approach to workforce reduction employs a methodology called forced ranking (also known as a vitality curve). Forced ranking uses intense yearly evaluations to identify a company’s best and worst-performing employees, using person-to-person comparisons. It, too, is a system that can be attacked for using arbitrary and subjective criteria.
On balance, most employers prefer performance review-based layoffs – as it is a system that allows for the retention of the most valuable employees.
No employer likes to go through layoffs – but proper forethought can and generally does reduce the negative impact and legal challenges.
If you’re an employer and have questions about labor and employment law, including workforce reduction procedures, consider calling on the attorneys at Kainen, Escalera & McHale in Connecticut. We do one thing and one thing only – we are an employer defense law firm – in fact, we are one of the largest employer defense law firms in the region. What’s more, each of our attorneys has over 25 years of experience in employment and labor law matters and can provide your business with comprehensive legal counsel ranging from assistance with necessary preventive measures to trial advocacy. Please contact us if we can help you.
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