REDUCTIONS IN FORCE (RIF) LEGAL REQUIREMENTS, ILLEGITIMATE RIFS AND KNOWING WHAT TO DO
A time may come when your position gets eliminated, and a Reduction in Force (RIF) impacts you. This is obviously an extremely disconcerting turn of events that can alter the trajectory of your life. If this happens, you should know your rights if an employer wrongfully subjects you to a RIF, mass layoff, or facility/branch closing
When RIFs Are Used
Employers may implement a Reduction in Force – RIF through voluntary employment terminations such as offering early retirement incentives or may simply seek to force terminations (involuntary RIF). Sometimes employers will do both incentive and involuntary RIF plans simultaneously. First and foremost, the law requires that a RIF be designed and implemented in a nondiscriminatory and non-retaliatory manner. If that is not the case, and the RIF is applied in a discriminatory manner, the RIF will be deemed pretextual and illegal. In other words, a RIF cannot be used as an excuse for discriminatory or other wrongful behavior in the elimination of a position.
Know Your Rights
Regardless of whether your employer calls your layoff legitimate as part of a RIF, if you were subjected to disparate treatment based on a protected characteristic or complaint about discrimination you made prior to the RIF, you may be able to show your termination is illegal. Disparate treatment occurs when you are treated differently from similarly situated coworkers because of your race, color, religion, sex, national origin, age, disability, and other protected characteristics. Have your attorney review your entire employment history and the circumstances leading up to the notice of your termination – there may be indications of a discriminatory or retaliatory motive or intent.
Generally, a RIF must be predicated on a valid business reason to reduce the workforce. By definition, a RIF occurs when a relatively large number of employees are terminated from employment with no possibility of returning. In this way a RIF is different from a furlough or mass furlough.
Recently, I authored an article published in the New York Law Journal regarding a decision issued by the Federal Department of Labor that prohibited employers from requiring confidentiality as a condition of a proposed severance agreement in RIF/layoff situations. You should always have an attorney review a proposed severance agreement to ascertain whether all the provisions are legally enforceable. See McLaren Macomb, 372 NLRB No. 58 (2023) and Examining Confidentiality And Non-Disparagement Provisions In Employment Severance And Settlement Agreements.
RIF v. Mass Layoff
Pursuant to federal laws, a “mass layoff” occurs when a minimum of 50 employees are laid off within a 30-day period. A mass layoff is akin to a RIF because it results in a large loss of employees. While a mass layoff allows for the option of rehiring the employees let go, a RIF does not. Though some employers use the two terms loosely and interchangeably, it’s important to understand the difference. Your attorney should explain the varying rights that apply in each situation – your rights are different under a mass layoff as compared to a RIF.
A Facility, Plant or Branch Closing
On some occasions, an employer may decide to close a particular facility or branch of the company. To constitute a branch closing, there must be at least 50 jobs lost within a 30-day period. Note that those employees being let go do not necessarily have to be located within the same physical office. Under the federal law, a branch closing might affect numerous physical sites in each geographical area.
Understanding Your Options and Rights
Voluntary Separation Offers: Employers might offer severance packages, early retirement, or reduced work options to encourage voluntary departures. If you choose not to accept these offers, you may still face an involuntary layoff if the employer proceeds with the RIF. It’s crucial to have your attorney review any offer carefully, considering its impact on your financial and professional future. Have your attorneys carefully examine the company’s policies, procedures, and the history of preceding Reductions in Force. It is imperative that any release of claims is scrutinized by your lawyers before you waive those rights in exchange for offered benefits.
Your attorney can review the circumstances to determine if you would be giving up viable claims for disparate treatment. A good attorney will ascertain whether there were any discriminatory comments made while you were working; any sudden and unexpected negative performance reviews; whether you only recently transferred to a position that is now being eliminated as part of a RIF; if there is a pattern of more favorable treatment of similarly situated employees that were not in your protected group; whether less-qualified employees not in the pool of the your protected group not being subjected to the RIF; whether your employer is replacing you with an employee not in your protected group.
Discriminatory Intent – Age Discrimination
Statistics might also indicate a discriminatory intent. Statistics sometimes reveal that your employer disproportionately terminated employees over 40 years old compared to the number of younger employees let go. If the statistical disparity or imbalance is big enough, a court may infer that the RIF or layoff was in fact discriminatory. Bear in mind that if your employer offers severance packages to employees 40 or older who were terminated as part of a RIF and the severance payment is made contingent upon waiving your right to sue for age discrimination, then the Older Workers Benefits Protection Act (“OWBPA”) requires that the employer provide you with a list of the job titles and ages of everyone subjected to the RIF and a list of the job titles and ages of all employees in the same job classification or organizational unit who were not eliminated in the RIF.
That statistical information may be useful when combined with other evidence, to help prove that your employer acted with a discriminatory intent. Obviously employers will never make it obvious when they are trying to get rid of older employees; you will never find a note in the personnel file indicating “too old, need to let her go” and they will rarely let on that they want someone younger for the position. Therefore, proving a discriminatory motive can be tricky and will require you to work carefully with your attorney to uncover the hidden bias candidly that he is too old for the job.”
Releases of Claims
If you’re signing a release of claims, you’re agreeing not to pursue legal action against your employer in exchange for the severance or retirement package. For these agreements to be valid, they must be entered into knowingly and voluntarily and provide something of value that you wouldn’t otherwise be entitled to. Special rules apply to claims under the Age Discrimination in Employment Act, including specific disclosures and waiting periods to ensure that older workers’ rights are protected.
Involuntary Layoffs
If you’re part of an involuntary RIF, know that employers must base their decisions on fair criteria such as job necessity, performance, or seniority, rather than on discriminatory factors. Understand your rights regarding severance pay, which may be outlined in company policies or a collective bargaining agreement if you’re unionized. Again, consult a competent attorney to examine the totality of circumstances and determine whether you have legal claims in opposition to the RIF.
Severance Pay and Benefits
Always review your company’s severance pay policies and any applicable collective bargaining agreements to understand your entitlements. Severance packages may include continuation of benefits, assistance with job searching, and other support services.
Legal Protections and Notices
Discrimination Laws: Federal laws like Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and the Americans With Disabilities Act protect employees from discrimination during RIFs. Ensure any layoffs don’t disproportionately affect employees based on age, race, gender, religion, or disability.
The WARN Act
The Worker Adjustment and Retraining Notification Act (WARN) requires employers to provide 60 days’ notice before significant layoffs or plant closures. Consult with an employment attorney to understand whether this applies to your situation and what rights you have if your employer fails to comply.
Steps to Take if You’re Affected by a RIF
1. Consult an Attorney
It will behoove you to retain an attorney sooner rather than later once you receive any information that a RIF is likely. Retain an attorney to review your Severance Offer: Make sure you understand the terms and ensure that the offer is legal and fair. Pay close attention to any non-compete or confidentiality clauses that might limit your future employment opportunities.
2. Check Your Benefits
Understand how a RIF affects your health insurance, retirement plans, and any stock options or equity compensation. Look into your rights under COBRA for continuing your health insurance coverage.
3. Document Everything
Keep detailed records of all communications with your employer regarding the RIF, including any offers, notices, and your responses.
Communicating with Your Employer
Clarify the Rationale
While not always required, some employers may choose to explain the reasons for the RIF and the criteria used for selecting employees for layoffs. Asking for this information can provide clarity and help you understand your position.
Final Pay and Benefits
Ensure that you receive all owed wages and understand the handling of your benefits post-termination.
Outplacement Services
Some companies offer support for finding new employment. Take advantage of these services if they’re available to you.
Conclusion
Facing a RIF can be a difficult and uncertain time, but knowing your rights and understanding the process can help you navigate this transition more effectively. Remember, planning your next career move with confidence involves not only understanding what you’re entitled to but also consulting a good employment attorney. This professional can fully explain your rights and ensure you are fully protected under all applicable laws.[1]
[1] Keep in mind, every situation is different. This article solely provides general information and does not intend to offer legal advice for your particular circumstance.