Spike in Unemployment Shows Employers May Be Rushing into RIF Decisions

The surge of jobless claims by 70,000 reported by the Labor Department last week and much higher numbers expected this week indicate that employers are beginning to lay off employees on a massive scale amid the COVID-19 outbreak – and has lead us as employment counsel to question whether some of those decisions, if rushed and not properly executed, may lead to more harm than good. 

A decision to implement a reduction in force (RIF) must be thought through and planned carefully, as it can have serious ramifications.  On the legal front, if an employer is covered by the Worker Adjustment Retraining and Notification (WARN) Act or its state equivalent, which typically has a lower coverage threshold, the employer may be required to provide written notice of layoffs to its employees and local government.  While that notice typically must be provided at least 60 days in advance, WARN and many state statutes do provide for an "unforeseen circumstances" exception.  That exception typically does not mean, however, that no notice is OK.  Instead, notice typically needs to be provided as soon as practicable, with an explanation in it for why it was not provided sooner.

In addition, employers offering some severance to employees impacted by reduction decisions should not use off-the-shelf separation agreement templates.  For employees over the age of 40, for example, group separation agreements must contain heightened notice and revocation periods, state the reasoning for the decision, and include data regarding the ages of employees who were considered and selected for the reduction.  Failure to include appropriate information in group separation agreements puts them at risk of being invalidated and increases exposure for employment claims.

And, there may be working alternatives to RIFs.  With many clients, I am discussing the possibilities, of implementing pay reductions, mandatory time off work, smart practices to allow for effective remote arrangements, paid sick leave policies and the impact of the recently signed Families First Coronavirus Relief Act, and the paid time off it may offer to employees of smaller companies (of under 500 employees) to take care of kids who are out of school or for sick reasons related to COVID-19.

If you have any questions regarding reduction in force measures or other Labor and Employment issues, please do not hesitate to contact Sonya Rosenberg or your Neal Gerber Eisenberg attorney.