Part I: 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.
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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 employees’ 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.
Part II: Making the Tough Employment Decisions
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 crucial to ensure the process does not target long-serving employees as this could become 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 become the core of the company’s strategy.
- Consider whether the employees fall under the protected class. It is unlawful for an employer to discriminate against someone based on their age, religion, age, citizenship, sex, sexual orientation, marital status, or disability. The employees in the named classes do not have absolute insulation against layoffs. Instead, the company must have a legitimate reason if such a decision affects such employees.
- 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
Using the data provided (see Appendix A), the company can consider the performance evaluation rating or the employee’s ability to achieve the sales target.
- 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. It is critical to eliminate subjectivity in this criteria. It is possible to defend the layoff decision in court if the performance management system gives relevant data on 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, the focus is to retain top performing employees. The employees’ ratings could be arranged in order and focus on the least performing ones. If need be, these criteria can serve as the basis of the succeeding criteria; the ability to meet sales goals.
- 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. The management must identify those that have the potential to surpass the sales target for the financial year. The table (see Appendix A) gives information on employees’ sales performance compared to the expected standards. It does not make sense to retain an employee who cannot keep up with the rest in meeting the target. Some employees surpass the sales target by as high as 15%, while others fail to meet this target by almost a similar percentage. Such underperformance can drag the team backward and cause the company to record losses. All employees should be arranged in order from those with highest sales performance to poorest. It can also serve as the foundation of the seniority-based criteria.
Seniority Based Criteria
The focus of this criteria is to retain employees that have been at the company the longest. The table provided in Appendix A gives information on the number of years each employee has been at the company. The advantage of this criteria is that the company could avoid age discrimination claims. Arguably, employees that have been at the company for a short period probably haven’t settled 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 company may 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 may be the best candidates for the layoff in that order.
Final Steps after Criteria
- List the employees identified for the layoff based on the criteria.
- Determine if there is a specific group of employees affected more than other groups.
- 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 on discrimination, the company should create a clear business case for the layoff. It needs adequate communication during separation meetings that focus on the business case rather than their performance. Finally, the company must ensure responsible for delivering the news are trained to conduct separation meetings.
- 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 the company’s commitment.
Communication Plan for the Exiting Employees
- Explain the business rationale for the layoff. The laid-off employees should know the company’s position and why the decision was necessary. Although it might be hard for all employees to take such a decision positively, the idea is to describe the situation and how the company was in a difficult position of selecting a few out of its workforce.
- Give a clear notification message, including the effective date for the layoff. Explain to the employees when the decision will take effect. Doing so can help them prepare in advance or seek opportunities elsewhere.
- Explain benefits/severance package details, if there are any. If the company intends to offer benefits or compensation to the existing employees, it is vital to explain at this stage.
Communication Plan for the Company
- Prepare managers and supervisors. The rationale behind the criteria used should be clear to everyone affected. The managers need to understand the process and be willing to work together.
- Communicate early and often. Honest discussions with employees and supervisors can help prepare them for the layoff. Stakeholders should have an idea of how the company is committed to changing the status quo.
- 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 opportunities to comment badly about the company’s situation.
- It is necessary to pass the news personally and face-to-face if possible. Using the company’s satellite or local broadcast if employees are unreachable simultaneously is also crucial.
- 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
A work redesign is needed to ensure the remaining employees do not get overloaded. 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 greater job security. To combat survivor guilt among the remaining employees, managers should hold discussions regularly to break down the progress and positive impacts of the downsizing decisions. It can help employees realize that the company had to do what it did for survival and is committed to preventing similar happenings in the future. Communication to the remaining employees should remain consistent and transparent. Another strategy is to reorient the remaining employees toward individual and group purposes. They are likely to find meaning when they see a clear connection between their duties and the company’s mission.
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 insecurity that may cause a decline in productivity and loyalty among employees. Give the remaining employees room to ask questions on issues they feel are critical to their 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 if the company has an excellent communication plan, challenges may arise afterward. 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 some issues to maintain employee attitudes. They include empowerment, personal support, good management, benefits, job security, and effective communication (NGEMA, 2008). The remaining employees can 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. According to the Act, any employer with a hundred or more employees must give sixty days’ written advance notice before shutting down or making large-scale layoffs (McHugh, 1993). The employer should send it to the state government’s dislocated worker unit, the local government officials, and workers. WARN does not cover small employers. Large employers are exempt if they are actively seeking ways to avoid a total shutdown of the organization. Failure to follow these obligations may attract penalties, such as back pay and benefits for each displaced worker and 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 on 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 (p. 210).
The negative implications of a mass layoff are minimal if the employer provides 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 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 for 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 for the layoff process. It imposes liability upon employers for failure to adhere to these obligations, including civil penalties and benefits to laid-off employees.
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