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What Should I Consider Before Doing a Reduction in Force?

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HR Question:

I may need to restructure my workforce as a result of the downturn in business activity. What should I consider from a fairness and legal standpoint?

HR Answer:

Determining the need for a Reduction in Force (RIF) is a challenging decision to make, but it is sometimes necessary to keep the business running in a positive way. According to the Society for Human Resource Management (SHRM), the definition of a RIF “occurs when changing priorities, budgetary constraints, or other business conditions require a company to abolish positions.”

Before moving forward with a RIF, we recommend that you thoroughly consider all of your options. Some states offer assistance to employers that may help them avert layoffs or receive early intervention to help the workforce impacted by a RIF. For example, Ohio Job and Family Services’ Office of Workforce Development offers a Rapid Response (RR) program that is funded by the U.S. Department of Labor. Services may include customized workshops, training, up-skilling, retooling, certifications or skill matching.

If you determine that your organization needs to move forward with a reduction in force, you should use a carefully planned approach. You will need to be aware of and adhere to state and federal regulations to ensure compliance throughout your process. This will help to protect your organization against employment litigation. It is also important to train your management staff on what they can and cannot do in the RIF process. This is a time to go back to the basics when it comes to managing your human resources and protecting your business.

8 Recommended Steps to Follow When Considering a Reduction in Force

1. Select the Employees for the Layoff

It’s important to determine an objective criteria process for your selection process. Consider factors such as criticality of the position to the business, seniority, performance review scores and any corrective action documents that may have been issued. This is the time that accurate and timely employee documentation throughout the year is important as it will play a big part in your selection process.

You will need to remind managers of the importance of using objective criteria in the selection process and not to make decisions based on who they like or dislike. You may also consider having a “no backfill for one year” rule to ensure the RIF is truly necessary and not a way for managers to “clean house.”

Once you have an initial list of employees to be laid off, you should apply steps 2 – 5 below to ensure that you are in compliance with state and federal regulations.

2. Avoid Adverse / Disparate Impact

According to SHRM, adverse or disparate impact refers to “employment practices that appear neutral but have a discriminatory effect on a protected group. Adverse impact may occur in hiring, promotion, training and development, transfer, layoff, and even performance appraisals.” For help in understanding and navigating this, check out SHRM’s toolkit to avoid adverse impact in employment practices.

3. Review Federal and State WARN Regulations

If an organization is contemplating a RIF or a layoff, there are several factors to take into consideration such as reviewing state and federal statutes, including the Worker Adjustment and Retraining Notification Act (WARN). WARN offers protection to workers and even communities by requiring employers to provide a 60-day notice in advance of a plant closing or what they deem as a mass layoff.  This Act is only applicable to employers with 100 or more employees.

4. Review ADEA and OWBPA Regulations

You will need to comply with two federal regulations that offer protections based on age: ADEA and OWBPA.

The Age Discrimination in Employment Act (ADEA), protects employees 40 years of age and older from discrimination on the basis of age in hiring, promotion, discharge, compensation, or terms, conditions or privileges of employment.

The Older Workers Benefit Protection Act (OWBPA) is an Act that amends the ADEA to clarify the protections given to older individuals in regard to employee benefit plans, and for other purposes.

5. Determine Severance Packages, Benefits Coverage, and Additional Services (if any)

As you develop severance packages, benefits coverage, and any other services that you will offer, you should review the Employee Retirement Income Security Act (ERISA) to ensure compliance. ERISA is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

6. Train Supervisors and Managers

These individuals are your first-line of defense (and many times your biggest legal threat) when it comes to employees’ perception of company policies, procedures, and decisions. Although human resources would always like to be the ones to address employee concerns, your front-line managers and supervisors are doing it on a daily basis whether they want to be or not. They should be properly trained on how to handle employee concerns.

Some suggestions for supervisor/manager training include:

  • Basic Discrimination Laws: Be sure supervisors and managers are aware of basic discrimination laws. Assist them with increased communication and employee relation skills so they are able to respectfully support company decisions and communicate with employees regarding their concerns or issues.
  • Staying Compliant and Consistent: Ensure managers and supervisors are clearly aware of what they can and cannot do from a legal perspective. Those involved in the employment process should know and document the process used when restructuring or selecting employees for layoff, and then use it – consistently. A clear legally defendable (non-discriminatory) reason when selecting those who will be let go is the most important aspect of restructuring. In addition, managers and supervisors should be guided by human resources to ensure an appropriate message is being delivered when HR isn’t delivering it.
  • How to Maintain Good Documentation:We all know that documentation is essential for a good legal defense, but also remember it can hurt as well. Train your staff on what good documentation looks like and what to avoid. Remind them that everything is subject to review in a lawsuit – employee warnings, performance evaluations, and even those simple notes we write down on a sticky note and throw in their file. Be aware of what you are putting down into writing and make sure it is objective and defendable.

7. Prepare for Reduction in Force Meetings

As you prepare for your layoff meetings, have a clear plan of what is going to be communicated, who is responsible for communicating the message, and how the message will be delivered both to those who are being directly impacted and those who will remain. It can be helpful to think through your anticipated frequently asked questions and prepare answers prior to your meetings.

8. Inform Your Workforce of the Layoffs

As you deliver the news of your reduction in force, remember that the golden rule still stands in employment – treat your employees the way you would like to be treated. Think about how you would prefer to be treated during these tough times when decisions are so difficult. Treat your employees with dignity and respect at all times. Provide notice of the layoff if it is reasonable, and provide some type of outplacement if you are able.

Be sure to listen to your employees as well. Employees are more likely to file a claim against employers when they feel like they are ignored or that their concerns are not addressed. Although your message may not always be what they want to hear – allow them to be heard and feel a part of the process.

Remember also, the RIF not only effects the person being released from his/her job, but also the remaining employees. There can be an emotional toll on those who remain, in addition to the impact it may have on their job duties as well. Be prepared to provide the resources and tools necessary to help your staff to stay engaged and do well through this difficult time of transition.

How to Handle Changes  to Job Responsibilities

Moving forward, your next consideration is to have a plan about who will absorb each exited person’s job tasks. You should determine if this situation requires a long term solution or if you foresee returning to the prior structure again when the budget allows. Job descriptions for those positions affected by the lay-off will need to be reviewed to reflect changes to the responsibilities and functions of the position. Sometimes you may find the change has actually improved the position making it more efficient.

You may also want to consider a salary review for the positions affected. Since some individuals are now performing the functions of multiple positions, is a pay increase warranted and feasible?

Remember, the job description is based upon the position itself, not the individual performing the job. Make sure to get input from all relevant parties – supervisor and employee – when determining the final role of an impacted position.

In addition, we recommend that you consider cross-training employees on job tasks to be ready for these unforeseen times and to have coverage in the absence of employees when they are out of the office for personal reasons.

To ensure your compliance with all federal and state laws and regulations in the process of a reduction in force, we encourage you to consult with your attorney to review your plans before implementation. Be prepared with a plan and look at the strengths and weaknesses of your team so you are not caught off guard!

 

If your business is considering a reduction in force, the team at Strategic HR is available to help coach you through the process and decisions that will need to be made.  We are here to help you through the tough times – just contact us.

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How Can We Address Pay Compression?

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HR Question:

To remain competitive in the marketplace, our company’s upper management decided to raise our minimum rate of pay. Unfortunately, HR was not included in this decision that has now led to salary compression and angry seasoned workers. How do you recommend for our human resources team to handle this?

HR Answer:

This is a challenging situation that you find yourself in, and you’re not alone in this struggle. In the tight labor market that we’re experiencing, many companies are struggling to find qualified workers to fill their open positions. As a result, many organizations have had to reevaluate their employer value proposition in order to attract and retain the best employees. Evaluating salary competitiveness is an important component in this process to ensure that you’re meeting candidates’ expectations. However, in doing so, it’s important to also consider the pay rates of your current workforce and how changes might impact them. Otherwise, an organization could risk dealing with salary compression issues just as you are.

What is pay compression?

For those who may not be familiar with the term, pay or salary compression occurs when the pay of newer or lower-skilled workers approaches the pay of your more seasoned and/or experienced workers. Pay compression can lead to disharmony and lessen engagement in the workplace as the more tenured workers feel less valued for the contributions they have made and continue to make to the company.  We are seeing this happen more frequently as the competition for talent remains at a consistent and long-term high, many companies are finding it necessary to raise starting pay to attract the workers that they need. However, at the end of the day, pay and pay equity matters not just to those you are trying to recruit, but also those who are part of your existing workforce.

If you’re wondering how employees found out about the salary discrepancies, let’s face it – employees talk. Even though your company may frown upon it, this activity is protected under the rules of the National Labor Relations Board (NLRB) which enforces the National Labor Relations Act (NLRA). The NLRA protects employees’ rights to discuss conditions of employment, such as safety and pay, even if you’re a non-union employer. The NLRB considers these discussions “protected concerted activity” and defines them as when employees “take action for their mutual aid or protection regarding terms and conditions of employment.”

How can you repair the damage of salary compression?

It’s unfortunate that HR wasn’t brought into the decision-making process prior to implementing the new salary changes. On the surface, it probably seemed that raising the company’s minimum pay rate could only lead to positive results. It probably did make a positive impact on your talent acquisition efforts. However, it may lead to a serious retention issue for your experienced workers if it goes unaddressed.

Our best advice at this point is to be honest with your employees. Provide them with the explanation that probably should have come before the new starting salary changes were implemented.

Here are some things to consider and/or information to address with your workforce:

  • Be transparent. Help them to appreciate the reasoning behind the decisions that were made. Understanding the “why” goes a long way with accepting the outcome.
  • Help them to understand the reality of the labor market and how difficult it has been for you to fill open positions.
  • Share all of the other actions you have taken to attract new workers prior to (or in addition to) raising the starting salary.
  • Remind them that you realize the longer positions are open, the longer the burden of work is spread across fewer hands. It is in their best interest that the open positions are filled as well.
  • Let them know that you hear their concerns and share what you plan to do to address them.

If you are open about the decisions that have been made and why they were made, your employees will be able to see how you had to take action in order to attract the workforce that you need to keep your organization moving forward. Some may not like what they’re hearing, but it can help them to respect it.

To address the pay equity concerns that have been raised, you may want to do an analysis of your compensation structure and salary ranges to identify inconsistencies and to ensure you are in line with market trends, internal needs, and your company goals. For additional help, HR Daily Advisor has outlined steps you can take to address pay compression in your organization.

For organizations that are navigating through today’s difficult labor market and looking for ways to be more competitive, we urge you to involve human resources in your strategic planning. HR can help to assess the potential impact of decisions on your workforce and develop an appropriate communication plan to ensure a smooth implementation.

 

Strategic HR has the answers to all of your tough Benefits and Compensation related questions. Whether you need a job analysis of your positions or need to update (or write) job descriptions, Strategic HR can do the job. Please visit our Benefits & Compensation page for more information or Contact Us to discuss your needs.

 

 

What Should Ohio Employers Know About Marijuana in the Workplace?

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Question:
As an Ohio employer, can you help me understand how marijuana legalization fits into our employment policies?

Answer:
You are not alone in trying to navigate the everchanging state of marijuana legalization. A growing number of states have either passed laws, or are considering legislation, to ease restrictions on employees’ use of marijuana for medicinal or recreational reasons. So, employers that need or want to continue testing or disciplining for marijuana use must know the applicable state and federal laws, including the court decisions that interpret those rules.

Medical marijuana was legalized in Ohio in September 2016, and retail sales began on January 16, 2019, when the first four licensed dispensaries opened for business.  As of February 1, 2020, OHDispensaries.com reports 48 of the 57 licensed dispensaries are operating. So, it is important that you know your rights as an Ohio employer regarding medical marijuana.

Below, we will walk you through some commonly held perceptions and workplace scenarios to help your Ohio-based company evaluate how marijuana legalization impacts your employment policies.

True or False: Medical marijuana users have job protections in Ohio due to state disability discrimination laws.

Answer: False. Presently, there is nothing in Ohio’s medical marijuana law that prohibits or limits an employer’s right to drug test employees for marijuana, require a drug free workplace, or impose discipline or discharge an employee violating an employer’s policies The law protects the employer’s right to fire or discipline any employee found to be using medical marijuana. The statute also states that it will not interfere “with any federal restrictions on employment” related to the use of medical marijuana in the workplace. All marijuana use, whether for medical or recreational use, is still illegal under federal law. It is listed as a Schedule I drug under the Controlled Substances Act, which means that it is deemed to have no medical value and a high potential for abuse.

True or False: If an employee has a medical condition that requires the use of medical marijuana, I must accommodate the employee.

Answer: False. In outlining employers’ rights, Ohio’s Revised Code 3796.28 states that an employee has no specific protections. Under the law, you do not have to accommodate an employee’s need to use the substance. An employer has the right to not hire an employee based on medical marijuana use, possession, or distribution. The law does not allow a cause of action against an employer if an employee believes he or she was discriminated against due to medical marijuana use. An employer is allowed to have a zero-tolerance drug free policy in place, with or without special accommodations for those who use medical marijuana.

True or False: My company has its headquarters in Ohio but has locations in other states. Even if the laws in those states provide workplace protections for medical marijuana users, our employees in those states who use medical marijuana may be disciplined, fired, or not hired.

Answer: False. Thirty-three states and Washington, D.C., have legalized medical marijuana use, and 10 states have approved both medical and recreational use. Registered medicinal users—or “cardholders”—in some states other than Ohio may have job protections. For example, beginning in 2020, employers in Nevada and New York City cannot consider positive pre-employment marijuana screens. However, some exceptions apply, particularly for safety-sensitive positions. Consider research published last year by the National Institute on Drug Abuse where they found that employees who tested positive for cannabis had: 55 percent more industrial incidents, 85 percent more injuries and 75 percent greater absenteeism compared to those who tested negative.

State statutes with nondiscrimination provisions for medicinal use typically exclude jobs that require drug testing under federal law. For example, certain commercial motor vehicle operators would be excluded from job protections because the Department of Transportation requires them to pass drug and alcohol screens.

While Ohio law provides employers with employment rights on the topic of medical marijuana use, HR professionals must remain vigilant to ensure that your company does not act irresponsibly or apply policies in a discriminatory manner. Make sure that your drug-testing practices and drug-free workplace policy fall within the parameters of the laws in the states in which your company operates. You may find it helpful to consult your legal counsel to ensure that you understand and comply with the federal, state and local laws that may apply to your organization.

Strategic HR knows that keeping abreast of workplace compliance issues and deadlines can be daunting, especially when the laws keep changing. We can help you by offering resources to help you identify and mitigate compliance issues and by making sure you are informed of changes and reacting in a timely manner. Our HR Audit will help your organization identify trouble spots in your HR function. Visit our HR Audit page to learn more about this helpful service.

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Do I Need HR?

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HR Question:

As a business owner, how do I know when I should engage someone to help me with our human resources needs?

HR Answer:

The quick answer is the typical rule of thumb is to have one HR professional for every 100 employees. However, depending on the scope of the role and how proactive your organization is, this number may be more like 1.5 HR professionals per every 100 employees (Bloomberg Report).

But not all businesses have over 100 employees, and you can’t wait until you are at 100 employees to address human resources in your business. When you hire one new employee beyond yourself, your journey down the human resources lane begins.  It doesn’t necessarily mean you are ready to hire a full-time HR person; but rather, you need to do some basics to get your business in shape to have employees such as:

  • Setting up workers compensation
  • Obtaining a payroll solution
  • Posting mandated posters
  • Creating employee files
  • Developing a recruiting process
  • Creating an onboarding program and required forms
  • Setting up how an employee will be paid in compliance with various laws
  • Identifying benefits–not just health, but also holidays, PTO, and programs
  • Setting expectations for employees through policies in an employee handbook

Once you have your HR function set up, you may be comfortable handling your human resources function internally yourself, through your management team, or even an office manager. But, be sure you have a lifeline to an HR consultant and/or attorney to help you, should an issue arise.

As your business grows, you will also see other triggers that may tell you it’s time to get more formalized help with your HR function such as:

  • Business growth
  • Employee turnover
  • The need for more formal policies and procedures
  • Gaining or maintaining a competitive edge
  • Change that is impacting your employees
  • Conflict with responsibilities
  • Compliance

Compliance with federal, state, and local laws is critical for you to stay on top of as your business grows, which again is why it’s important to at least have a lifeline to an HR consultant and/or attorney.  Check out this general list of the federal labor laws by the number of employees you have on your team. This list links to details on the actual law.  But, there are also many unique state and local laws that may apply to your business too.

Too often, we see businesses wait until a problem occurs: if it isn’t broken, why fix it?  When it comes to HR, you are better to be proactive than reactive to avoid losing key employees, receiving penalties for violating a law, or litigation.

Strategic HR can help you with any of your human resources needs, whether you are hiring your first employee or your 1,000th.  With our customized, a-la-carte approach, we can support exactly what you need. We can conduct an analysis of your HR function, establish your HR function, become your HR function, or help with key components of HR.  Want to learn more? Request a Free HR Consultation.

 

 

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Preventing A Hostile Environment

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Question:

We’re hearing a lot about hostile work environments and bullying. What can we do to prevent a hostile work environment and harassment claims?

Answer:

Recent court decisions illustrate the need for employers to elevate all types of harassment to the list of important workplace issues. It is virtually impossible for employers to monitor or control all communications or workplace conduct especially with the increase in popularity of social networking sites (like Facebook or Twitter) and activities (blogging, etc.). However, there are some practical suggestions for preventing hostile work environment claims.

  • Anti-Harassment Policy. Implement a policy that prohibits sexual harassment and harassment based on other protected classifications. It should specifically list the other protected classifications, including examples of the type of conduct that is prohibited by managers, supervisors, employees, customers, and third parties. Update your electronic communications policy to reflect new technological trends as well.
  • Complaint Procedure. The policy must include a complaint procedure that provides for more than one option for filing a complaint so that an employee does not have to complain to a supervisor or other person who may be involved in the harassment. The policy should also contain a strong “anti-retaliation” statement, so employees will not hesitate to file a complaint and will feel confident in using the procedure.
  • Distribution and Communication. Employers should distribute and communicate the policy to all employees, and the employees should be given an opportunity to ask questions. Each employee should be required to sign a verification acknowledging that the policy has been read and understood.
  • Education. In addition to providing the employees the policy during their orientation, it is also helpful to provide periodic refresher information.
  • Supervisor Training. Managers and supervisors are relied upon to be the “eyes and ears” of the company in case inappropriate conduct is taking place, so employers should carefully select individuals for these positions who will treat employees fairly and avoid inappropriate conduct. It is critical that supervisors receive additional training to educate them about their important role in preventing harassment in the workplace.  Consider prohibiting management from “friending” other employees.
  • Investigating a Complaint. Upon receipt of a complaint of harassment or when an employer has reason to believe that a potentially harassing situation has occurred, the employer must act promptly. The employer must investigate all complaints completely and objectively. Of course, the employee making a complaint should be notified as to the outcome of the investigation once a final decision has been made.
  • Taking Appropriate Action. If the investigation results in a finding that harassment occurred, action must be taken so that the harassment is eliminated and does not reoccur. This may consist of disciplinary action including discharge, or other corrective action such as training.

You can never be 100% certain that a hostile situation won’t ever occur, but by putting the proper policies in place you can be sure that you are doing everything possible to help prevent it.

Having easy to read and understand policies and procedures can help alleviate a lot of problems in the workplace. Not only do they set the stage for what is deemed inappropriate, they can also provide guidelines for what is considered acceptable, and even expected, behavior. Strategic HR receives numerous requests to review and rewrite employee handbooks on a regular basis, especially with the number of recent federal guideline changes. If you haven’t updated your handbook in the last few years, now may be a good time. For more information on how we can help you with Employee Relations and employee handbooks, please visit our Employee Relations page.