Employee Rights & Labor Relations, Making the Tough Employment Decisions

What Is Employment at Will and How Does It Impact Employee Rights, Discipline, and Job Termination Situations in Our Workplaces?

Employers must have the right to make objective decisions about employment without fear that the impacted employees will retaliate with wrongful termination lawsuits or the court fails to understand the scenario behind the employer’s decision. The employment-at-will doctrine governs when and how the employer and employee may terminate their contract whose term is indefinite. In the United States, employers can fire employees who have no written employment contract for any reason or no reason at all, with a few exceptions intended to prevent wrongful termination (Ruud & Becker, 2012). In the United States, employers can change employment terms such as the wage, terminate benefits, and even reduce expenditure on outings for employees. Such employees are significantly vulnerable to sudden dismissal and unannounced cuts in compensation and benefits. The doctrine has caused labor organizations and states to focus on expanding the employment-at-will doctrine’s exceptions because of its impact on employee rights and significant rise in ethical and legal issues surrounding termination situations.

The Employment-at-will doctrine is a threat to employee’s rights in numerous instances. Except for the public policy exception, the contract presents several opportunities for employers to violate employee’s rights. However, the public policy exception prohibits terminating employees for whistle-blowing, refusing to engage in illegal acts, exercising their legal rights, or fulfilling statutory duties (Ruud & Becker, 2012). The National Labor Relations Act and Title VII of Civil Rights of 1964 are among the statutes that seek to offer further protection against violation of employees’ rights. No organization can survive without instilling discipline in the workplace. The human resource department regulates human capital and ensures the workforce is a competitive advantage to the company. The employment-at-will gives the human resource department more control over employee discipline because employees that are unwilling to observe workplace policies and rules can get punished by termination. In its entirety, employment-at-doctrine has transformed termination situations in the workplace. In the modern workplace, employers often use the doctrine to justify terminations (Marson, 2013). For this reason, an employee may be a victim of wrongful termination and still be unable to prevail with such a suit in court. In such a circumstance, an employer may play down accusations of biased or unfair termination using the doctrine, specifically where the employee fails to justify their case using clear evidence. The employment-at-will doctrine has also increased job insecurity because employers can terminate their contract for any reason or no reason at all, even without prior notice Gertz, 2017). Although the implied-contract exception addresses this issue, there is no such thing as absolute protection for employees. Labor unions and organizations have continuously developed regulations to limit instances of wrongful termination in the workplace.

Factors to Guide the Layoff Criteria for the Sales Department

  • Age discrimination. Provided information indicates the number of years an employee has served at the company. It is important to consider the impact of laying off employees that have served for more years than others as this might potentially be labelled as age discrimination.
  • Gender discrimination. The criteria must not favor either gender in the layoff process, Doing so can cause the company to lose vital employees, including the most productive ones that otherwise could not be candidates for the layoff.
  • Consider whether the employees falls under the protected class. It is unlawful for an employer to discriminate someone based on their age, religion, age, citizenship, sex, sexual orientation, marital status or disability. This does not mean the employees in the named classes are insulated against layoffs. Rather, the company must have a legitimate reason for the layoff affecting such employee.
  • Consider possible retaliation allegations. The management must be aware that there might be an additional burden to justify the decisions against a retaliation claim.

The Layoff Criteria

Merit Based Selection

Using the data provided (see Appendix A), the company can consider the performance evaluation rating or the employee’s ability to achieve sales target.

  1. Performance based criteria. The focus is to let go of employees that aren’t pulling their weight. In this way, the company doesn’t have to lose its most valuable workers. The level of subjectivity must be minimized in this criteria. It is possible to defend the layoff decision in court, if the performance management system has all information pertaining to the employees’ job knowledge and skills, quality of work, quantity of work, work habits and attitude. The company’s data indicating employee performance rating from 1 to 5 (5 being the highest) can be used. In this case, it would be advisable to retain top performing employees. The employees’ ratings could be arranged in order, and focus on the least performing ones. If need be, this criteria can serve as the basis of the next criteria, the ability to meet sales goals.
  2. Employee’s ability to achieve sales target. With a looming decline in profitability, the company must focus on raising its sales targets for the next period with fewer employees than before. To achieve this, the management must identify those that have the potential to surpass sales target for the financial year. The table (appendix A) gives information on employees’ sales performance compared to the expected standards. Ultimately, it does not make sense to retain an employee who cannot keep up with the rest in meeting the target. As evident in the data, there are employees that surpass the target by as much as 15%, while another fails to meet this target by almost a similar percentage. Such underperformance can drag the team backwards and cause the company to record losses. Remaining with top performers in this case, especially those whose sales were above the target is crucial. All employees should be arranged in order from those with highest sales performance to poorest. This can also serve as the foundation of the next and last criteria based on seniority.

Seniority based criteria

The intention of this criteria is to remain with employees that have worked for the company the longest period. The table provided in Appendix A, gives information on the number of years each employee has been at the company. The advantage with this criteria is that the company could avoid age discrimination claims because old employees are not targeted. Employees that have been at the company for a short period probably haven’t settled properly yet or made much impact.

Multiple criteria ranking

If necessary, the management might use all other criteria by listing each against an employee and awarding points. For instance, the management might award points for every year spent with the company, meeting sales target, every 5% sales performance above the target, and performance evaluation ranking. Those with the lowest number of points are ones to be laid off in that order.

Final steps after Criteria

  1. List the employees identified for the layoff based on the criteria.
  2. Determine if there is a certain group of employees affected more than other groups.
  3. If there is a group affected more than others, determine the possibility of adjusting the criteria to limit the impact while still maintaining business objectives.

The Layoff Communications Plans

After following federal and state employment laws pertaining to discrimination, the company should create a clear business case for the purpose of the layoff. It can be done by ensuring adequate communication during separation meetings that focus on the business case rather than their performance. Finally, the company must ensure that managers given the responsibility of delivering the news are thoroughly trained to conduct separation meetings.

Strategies to Consider

  • Recognize it will be painful.
  • Remain as objective as possible by being mindful of words used when giving the information.
  • Build consensus among the managers to avoid casting blames.
  • Treat employees with respect and offer as much support as possible.
  • Recruit the remaining staff by affirming company’s commitment.

Communication Plan for the Exiting Employees

  1. Explain the business rationale for the layoff. Exiting employees should have a clear understanding of the company’s position and why the decision had to be taken. Although it might be hard for all to take it positively, the idea is to describe the situation and how the company was at a tough position of selecting few out of its workforce filled with experienced and committed employees.
  2. Give clear notification message, including effective date for the layoff. Explain to the employees when the layoff is expected to take effect for them to prepare in advance or seek opportunities elsewhere.
  3. Explain benefits/severance package details if any. In case the company intends to offer benefits or compensation to the exiting employees, it is vital to explain at this stage.

Communication Plan for the Company

  1. Prepare managers and supervisors. The rationale of the layoff criteria should be explained and information about packages provided in writing. All managers must understand and be willing to work together.
  2. Communicate early and often. Honest and candid discussions with employees and supervisors can help prepare them for the layoff. All stakeholders should be provided with an honest appraisal of how the company is committed to change the current status for the future.
  3. Employees and stakeholders should hear if first from the company itself. If stakeholders hear such news from the media, it can cause significant effects. Competitors can also use such opportunity to comment badly about the company’s situation.
  4. The communication should be relayed personally and face-to-face if possible. Using the company’s satellite or local broadcast if employees are unreachable simultaneously is also crucial.
  5. Keep the lines of communication open. Both the remaining and exiting staff should know who to call if they have questions.

Motivating the Remaining Employees

The layoff must be accompanied by work redesign to change processes and ensure the remaining employees no not get overloaded with work. The company must create an environment where the survivors feel they are part of its future. If effectively performed, the process should transform the remaining employees into ‘core’ employees and enjoy much greater job security. To help employees avoid the survivor guilt, managers should discuss with them about the reasons for the downsizing decisions and explain alternatives that were there for the company. Doing so helps employees realize that the company had to do what it did for its survival and is committed to prevent similar happenings in future. Communication to the remaining employees should remain consistent and transparent. Another strategy is to reorient the remaining employees toward individual and group purpose as people find meaning when they see a clear connection between what they do and what they value.

To ensure the remaining employees are motivated to continue selling and stay with the company after the layoff, it is necessary to hold regular meetings to keep them in the loop about the changes. Inadequate information can fuel anxiety and fear of losing jobs that may cause a decline in productivity and loyalty among employees. Give the remaining employees room to ask questions on issues they feel might affect them in meeting the new expectations. It may be necessary to update the performance management system to avoid exerting performance pressure. The management should clarify changes in duties because the company might need to reshuffle workloads. Even the company has excellent communication plan, challenges may arise afterwards. For instance, employee workloads may get heavier with time or too light. To address such issues, the managers may require training to speak and handle employees individually.

The company must address a number of issues to maintain employee attitudes. They include empowerment, personal support, good management, benefits, job security and effective communication (NGEMA, 2008). The remaining employees can easily become the foundation of future success for the company through motivation.

The WARN Act

In 1988, congress passed the Worker Adjustment and Retraining Notification Act. It mandated that any employer having a hundred or more employees must give a sixty days’ written advance notice before shutting down or making large-scale layoffs (McHugh, 1993). The notices is sent to the state government dislocated worker unit, the local government officials and workers. WARN does not cover small employers and large employers are exempted if they are actively seeking ways to avoid a total shutdown of the organization. There are penalties for failure to adhere to the Act which include back pay and benefits for each displaced worker and for each day of violation. The company might be required to pay a fine of up to n$500 per day for failing to notify the local government. These requirements have created significant impacts to mass layoffs.

Advance notice eases displaced workers’ shock and facilitates their search for alternative working places or training. The local and federal government can also mobilize their resources to help the displaced workers. It allows employers, workers, unions and local governments to work closely together to realize alternatives to mass layoffs (McHugh, 1993). For example, wage concessions by workers, tax concessions by the government or seeking new ownership. McHugh summarizes the impact of WARN on layoffs by arguing that,

“…written advance notice per se does not determine a worker’s success at finding reemployment after displacement but rather whether, based on the worker’s general perceptions of the likely future of the employer, the worker has made efforts to search for new employment. Written advance notice will matter only if it substantially provides new information to the worker on his or her future employment prospects and only if it is of sufficiently long length to give the worker time to conduct a serious job search before being displaced” (p. 210).

The negative effects of mass layoff can be mitigated by providing the notice as required and necessitated by legal and operational factors.

The Illinois WARN Act, though different from the federal WARN Act, would have minimal consequences to the layoff process in this case. The federal WARN Act triggers the requirement of advance notice for a layoff that involves 50 or more full-time employees, if the affected employees make up at least a third of the full-time workforce. In contrast, under the Illinois WARN Act, a layoff that involves 25 or more full-time employees triggers advance notice requirements if they constitute at least a third of the full-time employees at the company. While the federal WARN Act makes it mandatory for an advance notice of 60 days if the layoff involves 500 or more full-time employees at a site, the Illinois WARN Act requires the same to be done for layoff of 250 or more employees.

Consequently, more Illinois employers are required to give the notice than under the federal WARN Act. However, unless the company in this case increases the number of employees it intends to let go, the Illinois WARN Act would have no implications to the layoff process. It imposes liability upon employers for failure to adhere to these obligations, including civil penalties and payment of benefits to the laid-off employees.

References

Gertz, S. C. (2017). At-will employment: Origins, applications, exceptions, and expansions in public service. American Public Service, 47-74. https://doi.org/10.4324/9781315097336-4

Marson, J. (2013). Employment II: Termination – wrongful dismissal, unfair dismissal, and redundancy. Business Law Concentrate, 118-134. https://doi.org/10.1093/he/9780199609062.003.0008

McHugh, R. W. (1993). Fair Warning or Foul-An Analysis of the Worker Adjustment and Retraining Notification (WARN) Act in Practice. Berkeley J. Emp. & Lab. L.14, 1.

NGEMA, C. O. (2008). Strategies used by state corporations to manage problems experienced by the survivors of retrenchment: a survey of state corporations in Nairobi.

Ruud, J. K., & Becker, W. S. (2012). Employment-at-Will. The Encyclopedia of Human Resource Management, 180-185. https://doi.org/10.1002/9781118364741.ch32