In the current economic downturn, when companies of all sizes are searching for different ways to cut costs, a layoff is often one of the first tactics considered. However, alternative methods of labor cost reduction can help businesses avoid a reduction in force. Considering alternative options also provides employer’s evidence that alternatives to layoffs were considered or tried. One thing to keep in mind when questioning the pros and cons of a layoff is the possibility of being short-staffed, the consequent need to rehire and train new staff when the economy recovers, and the cost of losing valuable institutional memory. Here are some lay of the alternatives:
OPTIONS TO AVOID LAYOFF
Shared Work Program
The Shared Work Program is unique to Texas employers and provides an alternative to layoffs during an economic downturn. The program allows companies to reduce normal weekly hours for a minimum of 10 percent of their targeted employees by at least 10-40 percent. Lost wages are supplemented with partial unemployment benefits. Shared Work program offers flexibility by allowing the company to:
- Implement multiple different plans for each department affected,
- Return workers to full-time status for short periods of time without affecting the plan,
- Layoff workers who were originally in the plan and still maintain the plan as long as the requirements are still met.
Workweek Alternatives
Utilize an alternative workweek such as 4-day/10 hour days or 3-day/12 hour days, with no overtime. The company has the option to propose alternate work schedules to different “work units” within the company. Alternative workweeks require notices before implementation.
Go Virtual
Implementing a virtual office that utilizes software packages allows managers to videoconference with employees or view their work progress, along with a sound policy dictating expectations and responsibilities of employees is a new trend to cut costs. The company should keep in mind the use of personal devices, reporting mechanisms, timekeeping procedures, length of the arrangement, compensation, and OSHA obligations when considering a virtual office.
Take a Break
Temporary shutdowns, forced vacation, and/or offering extra days of unpaid leave are all viable options, but before considering this, the company must review collective bargaining agreements and relevant policies. Exempt employees cannot work for the length of the temporary shutdown or else they are entitled to their full workweek pay. Also, exempt employees cannot be forced to use their vacation time unless they receive proper notice of the shutdown—90 days.
Freeze the Nonessentials
Utilize hiring freezes, wage reductions or freezes, cut bonuses, cut unnecessary travel, postpone non-vital equipment upgrades, and cancel office perks and company gatherings. When implementing such measures be sure to be fair and avoid any partiality. Always review policies before implementing new measures. You can also offer retirement packages to employees close to retirement.
Offer Retirement Packages
This provides employees who desire to retire the opportunity to do so now. It also serves the company as a voluntary layoff and eases the pressure to reduce personnel. One downside to offering retirement packages is that the company has no control over who will take advantage of the opportunity to retire and who will not.
Ask For Help
Request employee suggestions for reducing cost and increasing productivity—this will increase morale and ease insecurity. In addition, request new estimates from suppliers and their competitors to ensure you are not overspending on supplies. Your supplier may be able to assist you in cutting costs and saving money.
Bring an Intern
Replace part-time staff and contractors with retired employees who already know the company practices and/or interns. Work with local colleges/universities to establish a guideline to create for-credit internships, thus reducing company costs while pro-actively marketing your company image by turning out future talent trained by your company.
Insource Jobs
Bring in an employee from a department that is not busy to assist the department in need of assistance. This will boost employee loyalty and morale. Not to mention the positive impact it will have on your company’s image.
Swap the Coworker
Swap or lend employees to another company to learn new methods and strategies. The positive note is that the new organization will take on the employee’s salary and further training. Be sure to clearly outline expectations and the length of internment.
When cutting business costs fails to address the needs of the company, and a layoff is imminent, it is important to understand the many methods available to avoid litigation. The business justification for a workforce reduction should be well documented along with all preventative measures taken. You can read further about layoff implementation in our next post in this series.
FILIPPOV LAW GROUP, PLLC provides sophisticated legal services and business advice to individuals and businesses of all sizes, ranging from start-ups to Fortune 500 companies. Our attorneys are experienced in negotiating, drafting and reviewing employment contracts and other commercial agreements with an eye towards the client’s best interest. If you need to consider your legal options, call us at 832-900-2177 or email our managing member [email protected]. For questions concerning your businesses employee layoffs, contact a business attorney at Filippov Law Group, PLLC by calling 832-900-2177.
This blog is intended as an information source for existing and future clients of FILIPPOV LAW GROUP, PLLC and should not be construed as legal advice. Readers should not act upon information contained in this blog without professional counsel. The materials presented in our blog, “tweets” and legal articles may not reflect the most current legal developments, verdicts, or settlements. These materials may be changed, improved, or updated without notice. Filippov Law Group, PLLC is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.