Category: Discrimination

Workforce Downsizing Selection Procedures

Workforce Downsizing Selection Procedures

Even if it will only affect a small part of the business, many companies face workforce downsizing at some point. The “why” is usually obvious. But it’s often more difficult to decide how to make these cuts. Here, I’ll suggest a general approach to selecting who will stay and who will go in consideration of possible legal constraints.

For more on this topic, check out my free webinar: Conducting Your Next Reduction in Force.

What’s the Motivation?

Money makes the world go ’round, and it’s usually what prompts companies to downsize their workforces. But finances aren’t the only reason organizations reduce their headcount.

Here are a few other reasons why a business may downsize:

  • Transition to New Operating Method
  • Automation of Functions
  • Elimination of Redundancies
  • Reallocation of Talent

Whatever the reason, make sure everyone involved in organizing the reduction in force understands it before they choose individual positions and employees. The company should document the rationale up-front. Then move on to evaluating how best to achieve the desired business outcome.

Don’t Identify People First

To best prevent and defend against claims by affected employees, companies should leave the identification of specific employees to the end of the selection process. The earlier specific employees are identified, the more likely they are to perceive the decision as being personal. Thus, the more likely they may believe the decision was discriminatory or in violation of their personal rights.

Sure, if the whole purpose is to outsource all engineering functions, and your company has two engineers, it will be obvious early on who will lose their jobs. But at least make sure there is a valid, documented reason for eliminating the internal engineering function. (Think about the scenario where your two engineers are in their 60s and are longtime employees. Be prepared to prove that their age isn’t the reason for the company’s decision!)

Especially where the goal is to reduce overall labor costs, most companies should start from the premise that all facets of the workforce are in play. Some will quickly narrow in on particular departments or job functions. But again, the rationale for those decisions should be documented as you move down the path toward the selection of individual employees.

Determine the Workforce Goal

Through the reduction analysis, the company should ultimately determine what it wants its workforce to look like after the downsizing is complete. This still doesn’t mean who the specific employees are. Instead, the focus is on functions, tasks, skills, etc.

For example, a company that initially has 125 employees may decide that it would operate best with about 100 employees. It then determines that all “front office” functions are still necessary–say, 25 employees. Of the other 75 post-reduction positions, 50 may be in production and 25 in sales/customer service. If there are currently 65 production employees and 35 sales/customer service employees, then the company must eliminate 15 production positions and 10 sales/customer service roles.

Next, the company must decide how to choose the 15 production and 10 sales/customer service employees to let go.

The company has options to get to the desired workforce size. It could gradually downsize by attrition when people leave. Or it could offer an incentive for employees to voluntarily resign. But here we’ll assume the company wants to reduce the workforce all at once through involuntary terminations–what many would call a layoff.

Picking the People

This component of workforce downsizing often becomes the most personal. It also creates the greatest risks of claims by affected employees. So, it’s important for the company to make these decisions without considering protected individual characteristics.

As discussed, ideally managers shouldn’t sit around the room and just throw out names of whom they want to see leave. Instead, the company should determine a structured selection process and apply it consistently.

Selection procedures may end up being objective or relatively subjective.

One straightforward objective selection criteria is length of service. If the company in the above example wanted to, it could just retain the 50 production and 25 sales/customer service employees who have been with the company the longest. The biggest downside to seniority-based workforce downsizing is that it doesn’t account for employees’ relative job performance and skillsets.

Subjective selection criteria, such as most performance evaluations, increase the risk of manager bias, if unintentional. Supervisors may naturally recognize people like them (based on age, race, sex, etc.) as being higher performers. Thus, it may be better to have multiple managers evaluate each individual and arrive at some quantifiable measure. Then the company would rank all the employees and keep the top ones.

No selection method is perfect. But it is important to establish the selection procedure before applying it to particular employees. Applying one method and then starting over after it doesn’t result in the “right” people being chosen adds risks to the equation. A company should specifically document why it changed course, assuming it has a legitimate non-discriminatory business reason to do so.

Additional Factors and Hurdles to Workforce Downsizing

The above analysis assumes employers have full discretion to determine which employees to let go in a workforce downsizing program. However, that might not always be the case.

If there is a union involved, the collective bargaining agreement may dictate how a reduction in force will occur. For example, unions often bargain for layoff based on inverse seniority. The union contract might also provide for severance pay that could affect the size of the reduction that the company pursues. Or it could even result in the company avoiding reductions in the unionized workforce altogether.

Some companies also have contracts with individual employees. These might either guarantee employment for a certain amount of time or, again, require severance pay.

Finally, even a carefully prepared employee selection process could produce arguably discriminatory results. If a disproportionate number of the employees losing their job share the same protected characteristic (e.g, race, sex), then the employees might have a claim for disparate impact employment discrimination. That type of claim can be viable even if the company had no intent to discriminate. When workforce downsizing involves a large enough pool of employees, employers can conduct statistical analyses to evaluate latent bias in their selection process. Skewed results may be one good reason to rework the selection procedure and start again.

For more on workforce downsizing, check out my free webinar on Conducting Your Next Reduction in Force.

Telecommuting Employees

10 Telecommuting Topics for Employers

Does your company allow employees to work from home? Telecommuting can be a great fit for many workers (and their employers). But organizations should consider various implications before going in this direction.

Here, I’ll share 10 potential legal issues related to telecommuting. This isn’t meant to deter any business from using this model. It’s just designed to help you make an informed decision and take appropriate precautions.

1. Timekeeping

Most employers are required under the FLSA or state laws to keep accurate time records of their employees. This is especially true for non-exempt employees who may be eligible for overtime pay when they work over 40 hours per week (or another applicable threshold). Employers must be able to trust their employees working at home to report their time accurately and provide a mechanism for doing so.

2. Meal Periods

Some state laws, such as New York’s, impose mandatory meal period breaks during the workday. These may apply to employees working from home as well as those on the employer’s premises. If so, employers must ensure that their telecommuting employees take the required time off during the day.

3. Overtime

Many companies restrict the amount of overtime their employees work–usually as a cost-containment measure. This may be more difficult to control for telecommuting employees who are out of sight. Nonetheless, if non-exempt employees working from home exceed the applicable threshold, the employer must pay the overtime compensation.

4. Time Off

It can be a challenge to monitor and handle time off for on-site workers. This can sometimes become even more difficult when the employees don’t physically report to work. First, supervisors may not know whether an employee is actually working, so some employees may not use leave time even though they are not doing work when they normally should be. And the opposite can also raise issues. A telecommuter who takes a day off may feel compelled to perform some work while they’re supposed to be on vacation or sick leave. This may raise complications in tracking benefit time and hours worked.

5. Confidentiality

Telecommuting employees often have remote access to company information that on-site workers may not need. Or, at least, they usually have less direct supervision in their use of company data and property. Employers should consider measures to prevent employees from intentionally or accidentally taking or transferring their proprietary information to unauthorized third parties.

6. Security

Even if your employees don’t misuse company information, other nefarious third-parties may seek to do so. Remote data transfer between telecommuting employees and the company’s electronic systems may not be as secure as on-site access. This could be especially true when employees may access company information from outside their homes, such as through public Wi-Fi connections.

7. Discrimination

As with most workplace issues, consistency is important in permitting employees to telecommute. Inconsistent treatment, even if inadvertent, can give the appearance of unfair treatment. This may even give rise to discrimination claims. For example, although well-intended, a company that only allows women with young children to work from home, might be discriminating against male employees. Likewise, an organization that discourages older workers from working from home, but permits younger employees to do so (on the theory that they’re more “tech savvy”) could be engaging in age discrimination.

8. Disability Accommodations

The Americans with Disabilities Act and similar state laws require employers to make reasonable accommodations to qualified employees with disabilities. This could extend to the home workplace. Thus, under some circumstances, employers may need to modify employees’ homes to enable them to work there. At present, however, most employers would probably not be required to allow employees to work from home to accommodate a disability if they do not normally allow telecommuting. This could mean that allowing telecommuting in the first place opens employers to greater disability accommodation responsibilities.

9. Safety

Under OSHA, employers must keep their employees’ workplace reasonably safe. In addition, companies may become responsible, through their workers’ compensation insurance, for telecommuting employees’ injuries occurring in their own homes. As a result, it may be prudent (though not always practical or desirable) for an employer to inspect employees’ home workspaces.

10. Unions

Employees who work from home can still be in represented bargaining units. And unions vary in their approach to whether this is a good idea. Some unions would object to an employer allowing some employees to telecommute. Others may push for the option.

Telecommuting on the Rise

Like unions, employers have different ideas about how effective telecommuting can be. Some embrace it completely, and others reject it altogether. Others are in-between. But, whatever your take, telecommuting is increasingly popular.

A 2017 State of Telecommuting in the U.S. Employee Workforce Report indicates that 3.9 million U.S. employees work from home for at least half of their work time. This is 2.9% of the overall U.S workforce and a 115% increase since 2005.

In this digital era, many employees place tremendous value in having the flexibility to work remotely. Companies that want to attract those workers may need to modify their past approach to telecommuting. But, there remain many industries, such as manufacturing, hospitality, and construction, where much of the workforce must be physically present. Remember that the above issues also apply to traditional work arrangements as well!

New York Sexual Harassment Laws

State Budget Expands New York Sexual Harassment Laws

On April 12, 2018, New York Governor Andrew Cuomo signed State Budget legislation that includes several provisions aimed at workplace sexual harassment. Some of the items included will require additional clarification through agency guidance and regulations. But here’s an initial overview of how New York sexual harassment laws will change.

Some new aspects of New York sexual harassment law took effect immediately. Others will become effective later. Here they are in the order that they take effect.

Protection of Non-Employees

Before April 12, 2018, the New York Human Rights Law only protected employees from sexual harassment. Effective immediately, it is also unlawful for employers to permit sexual harassment of non-employees in their workplaces.

In addition to employees, the law now protects:

  • Contractors
  • Subcontractors
  • Vendors
  • Consultants
  • Other persons providing services under a contract in the workplace
  • Employees of the above

An employer may be liable for sexual harassment against these individuals if it knew or should have known that the individual was subjected to sexual harassment in its workplace and failed to take “immediate and appropriate corrective action.”

The law does add that: “In reviewing such cases involving non-employees, the extent of the employer’s control and any other legal responsibility which the employer may have with respect to the conduct of the harasser shall be considered.”

Public Officers

Effectively immediately, employees and officers of public entities (including the State, its agencies, local governments, and school districts) who are found personally liable for intentional wrongdoing related to sexual harassment must now reimburse their employer if it pays the judgment to a victim.

If the employee does not repay their public employer within 90 days, the employer may withhold compensation from the employee’s pay. If the person is no longer employed by the public entity, the employer may pursue collection through the courts.

Mandatory Arbitration Clauses

Beginning July 11, 2018, New York law will prohibit “any clause or provision in any contract which requires as a condition of the enforcement of the contract or obtaining remedies under the contract that the parties submit to mandatory arbitration to resolve any allegation or claim of an unlawful discriminatory practice of sexual harassment.”

This law defines a “mandatory arbitration clause” as “a term or provision contained in a written contract which requires the parties to such contract to submit any matter thereafter arising under such contract to arbitration prior to the commencement of any legal action to enforce the provisions of such contract and which also further provides language to the effect that the facts found or determination made by the arbitrator or panel of arbitrators in its application to a party alleging an unlawful discriminatory practice based on sexual harassment shall be final and not subject to independent court review.”

The law contains a telling exception. This prohibition applies “except where inconsistent with federal law”. That language is probably unnecessary, as the State law could not trump federal law anyway. But, it shows the Legislature’s recognition that federal law, including the Federal Arbitration Act, broadly favors arbitration. Thus, it remains to be seen whether this state restriction will be enforceable.

The law also allows that mandatory arbitration clauses contained in collective bargaining agreements are not prohibited.

Nondisclosure Agreements

Also as of July 11, 2018, employers may no longer include a provision in any settlement document resolving any claim involving sexual harassment that “would prevent the disclosure of the underlying facts and circumstances to the claim.”

The law provides an exception where “the condition of confidentiality is the plaintiff’s preference.” In that case, the plaintiff must have 21 days to consider the nondisclosure terms. Then, after 21 days, the parties can agree to the provision in a written agreement signed by all parties. But the plaintiff still must have at least 7 days to revoke the agreement after signing it.

New York Sexual Harassment Prevention

For the first time, New York will require all employers to maintain sexual harassment prevention policies and provide training for employees. These requirements take effect October 9, 2018.

Model Policy

A new provision of the New York State Labor Law requires the Department of Labor (DOL) to consult with the Division of Human Rights and publish a “model sexual harassment prevention guidance document and sexual harassment prevention policy.”

The model New York sexual harassment prevention policy must:

  • Prohibit sexual harassment and provide examples of prohibited conduct;
  • Include information about federal, state, and local sexual harassment laws;
  • Include a standard complaint form;
  • Identify a procedure for “timely and confidential investigation of complaints and ensure due process for all parties”;
  • Inform employees of their rights of redress and all available administrative and judicial forums for adjudicating sexual harassment complaints;
  • State that sexual harassment is a form of employee misconduct with sanctions for both individuals engaging in it and supervisors and managers who allow it to continue; and
  • Prohibit retaliation against individuals who complain of sexual harassment or testify or assist in any proceeding.

Once the model policy is available, all New York employers must adopt it or one that “equals or exceeds the minimum standards provided by such model”. Employers must provide their policy to all employees in writing.

Model Training Program

The DOL must also consult with the Division of Human Rights and produce a model sexual harassment training program.

The model New York sexual harassment prevention training program must be “interactive” and include:

  • An explanation of sexual harassment;
  • Examples of conduct that would constitute unlawful sexual harassment;
  • Information about federal and state sexual harassment laws and remedies;
  • Information about employees’ rights of redress and available forums; and
  • Additional responsibilities regarding supervisors.

Every New York employer will have to provide sexual harassment prevention training to all employees annually. Employers may use either the model training program or one that “equals or exceeds the minimum standards provided by such model training.”

State Contractors

Starting January 1, 2019, any entity seeking a contract with the State of New York through competitive bidding must certify that they have instituted a written policy on sexual harassment prevention. They must further certify that they provide annual sexual harassment training to all employees.

Stay Tuned for More on These New York Sexual Harassment Laws

Since most of these New York sexual harassment law changes don’t take effect immediately, employers have some time to prepare. For many, the biggest project will be complying with the new policy and training requirements. Even employers who already provide anti-harassment training to their employees will have to review the model policies and training programs to make sure they meet the minimum standards.

One thing you can do now is sign up for my email newsletter to make sure you get my updates on these important topics. This will include an announcement about a free webinar once the State issues the model New York sexual harassment materials.