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Base cuts on objective criteria to avoid bias suits
As layoffs become more frequent in corporate America, employee should prepare for the risks that accompany downsizing.
In recent weeks, several major corporations-including Lucent Technologies Inc., DaimlerChrysler, Amazon.com Inc., Hewlett-Packard Co., Xerox Corp., AOL Time Warner Inc. and Sears, Roebuck & Co., to name a few-have announced workforce reductions.
According to Challenger, Gray & Christmas, a Chicago-based executive recruiter, the total number of job cuts announced by U.S. businesses in December and January alone totals 275,921 (see chart).
In the midst of an economic slowdown-which some feel could be the start of a recession-more worker cutbacks are expected. Employers generally try to avoid layoffs, though, and instead achieve workforce reductions through a combination of attrition, early retirements and voluntary departures made in exchange for extra severance pay.
In an apparent alternative to layoffs, for example, stockbroker Charles Schwab Corp. recently announced a plan that would have forced employees to take time off-either using vacation days or as unpaid leave-but Schwab quickly backed off of that approach when questions were raised about its legality.
Although some employers will seek alternatives to terminating jobs, for other companies layoffs may be inevitable. With them come employer worries about disgruntled employees who seek to offset their seduced income by turning to the courts, especially with suits alleging sex, racial or age discrimination.
There are several steps employers can take, experts say, to minimize their potential liability exposure.
Paramount among these is to have objective, valid business reasons for terminating the selected employees, and to conduct frequent analyses of the disparate impact any terminations may have on protected groups, such as minorities, females and employees who are over age 40.
Other steps include planning ahead; leaving a paper trail; designating more than one person to make termination decisions; complying with relevant federal and state laws; offering generous severance benefits and outplacement services; and treating departing employees with dignity and respect (see story, page 19).
Employers should heed warning signs that layoffs may become necessary and be prepared, one attorney says.
"It is always better to make those decisions when you aren't in a crisis," said Patricia Gillette, an employer attorney with Heller Ehrman White & McAuliffe in San Francisco....