Legal Issues in Reduction of Workforce

Legal Issues in Reduction of Workforce

Regulation and Conflict Management in the Workplace

Introduction

Team A conducted research on FastServe Inc. regarding legal issues in reduction of the company's workforce. This paper will address the important issues in understanding and avoiding the risks of discrimination claims against the FastServe Corporation by: 1) discussing what role length of service plays in making decisions for a reduction- in -force, 2) reviewing the extent to which management should consider gender, race, age and other protected class designations when making reduction- in - force decisions, 3) explaining the role ethics play in decision making and 4) recommending employment policies for FastServe Inc. Under Title VII of the Civil Rights Act of 1964 employment practices must comply with federal and state anti-discrimination legislation (Harshman & Rudin, 2000).

Legal Issues in Reduction of Workforce

Upon receiving notice to layoff and redesign job descriptions of employees, specific areas were reviewed in order to make a decision that would provide the best outcome for the company. These areas included job performance, productivity, special achievements, job responsibility, educational qualifications, absenteeism and status.

Length of service should play a role in making decisions for a reduction-in-force in a non-union organization but it should be taken into consideration along with skill level. An employee should not keep his or her job simply because they have been with the organization for several years. Each employee would need to be reviewed not only on how long they have been with the organization, but on his or her performance as well.

At many organizations, the employees who have been there the longest are the organizations best assets because they already know how to do their jobs versus a new hire that requires a lot of training. There will be times when a new hire may have more education and experience than employees who have been with the organization, which will need to be taken into consideration. Some of the employees that have been with the organization for a long time may be looking to retire or would be interested in a severance package:

Years of service generally are the basis for determining severance payment for all but the most senior employees. One week's salary per year of service is the most common tenure, based severance benefit for exempt and non-exempt employees, while two weeks is the median for officers and other executives (May & Brandenburger, 2003, 20).

It is also possible for an employee who has been with the organization for some time to become comfortable in their position and do less work than a new hire that is trying to prove that he or she is an asset to the company. Employees that have been with the organization for a long period of time may have their job function phased out and no longer have value to the organization. Often times, the employee may not be able to fit into any of the other positions in the organization.

When dealing with reduction in the workforce, management should always consider how heavily regulated the human resources field is today. When managers are making the decision to reduce the workforce, the manager must take into consideration the possible threat of litigation due to gender, race and other protected class designations. The decision to reduce three out of five employees from FastServe Inc. gave a perfect example of what type of discrimination complaints could possibly happen. The first associate, Sarah Boyd, a fifty three year old with fifteen years experience may have led to age discrimination. The manager, however, considered the way the communication should happen with Ms Boyd. The method of open communication, reassuring that she fully understood the reason for the reduction and seeing that she was fairly compensated for her time made the difference in the employees' reaction to her reduction from the workforce. The second associate, Brain Carter, a programmer may have led to disability discrimination. The manager, once again, through communication showed Mr. Carter there was a genuine reason for his reduction. Mr. Carter was made aware of his lack of performance and also the new direction the company was taking which did not include the online service that was his particular skill set. The reduction of the third associate, Carl Haimes, was bit more risky. It was proven that Mr. Haimes was enduring harassment from another employee. His reduction may have certainly led to a discrimination suit against the company. The manager considered all options and factors involved and determined the best option was to give an alternative for rehire at a later date and to counsel the employee guilty of harassment.

The decisions made by management were carefully implemented with the assistance of the organizations legal team and human resources department to ensure there would be no claims filed by the discharged employees. Management will always have to consider the possibility of being sued because of discrimination when discharging an employee.

"Whatever the reason for the layoffs and however we categorize it, workforce cuts create important legal issues for employers-class wide discrimination complaints; workplace violence; harassment of older workers whose colleagues pressure them to retire to save the job of a younger coworker; severance pay issues; challenges to the validity of release agreements; increased stress leading to increased workers' compensation claims; morale problems; loss of employee loyalty; and so on."(Nobile, 1997, p.20)

Like Fastservice Inc, many business enterprises are forced to reduce their workforce because of a situation that is not profitable for the business. Those enterprises usually have to layoff many employees in which their economic life completely depend on their job. For the business to survive, those employees will need to be dismissed.

What role should ethics and values play in those kinds of decisions? Ethics is understood as the study of moral principles or values that determine whether actions are right or wrong and outcomes are good or bad (Steve L. McShane, 2004). Over the years, the employers' wrong actions have been a big concern for the society. In a recent survey, more than 70 percent say that business executives have a