The Washington Post earlier this month reported that the U.S. Equal Employment Opportunity commission was overwhelmed, due mainly to chronic understaffing. But if past recessions are any gauge, the EEOC will find its caseload increasing. EEOC complaints typically spike in a recession.
Therein lies the challenge for companies laying off workers. Whether the claims are justified or not, your management team will need to respond, which drains time and resources from your business. Layoffs must be smart, unbiased, carefully orchestrated, clearly communicated and undeniably defensible to ensure that the EEOC will find “no probable cause” for a claim against you.
But layoffs also require that those remaining with the company have a clear understanding of the strategy you are pursuing with the layoffs. The greatest challenges for companies and their managers are maintaining employee morale and regaining their trust, instead of them
interpreting a layoff, “You workers are not valued.”
To minimize your risk and increase the chances of a successful downsizing, you must be diligent. As builders say, “Measure twice, cut once.” First, it’s important you accurately measure the costs of layoffs. They include:
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Severance payments
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Possible litigation for aggrieved workers
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Loss of trust in management
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Lack of staff needed to grow when the economy rebounds
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Cynical behavior among layoff survivors
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Declining customer satisfaction resulting from low employee morale
Most important, the fewer layoffs, the better. By that we mean, do layoffs all at once, if possible. Piecemeal layoffs leave the remaining employees demoralized and waiting for the next shoe to drop
(as they’ve learned that you have more than two!).
There must also be a clear, multi-pronged communication strategy. First, management must tell a compelling story about why the layoffs are necessary and how it will impact the company’s strategy as well as the remaining workers. That overall narrative dictates the other communications you must conduct.
To the employee being laid off, they must know why. If it is related to sub-par performance, you will need documentation. It is not the same as firing an employee for cause or non-performance. But EEOC charges spike during recession because people make the case that their
performance was better than those who kept their jobs. You’ll need to prove otherwise, if the case goes to the EEOC.
In a large layoff, managers may be asked to identify the employees they want to layoff. Your job will be to see that they clearly justify and defend the layoffs and how they track with your overall corporate strategy moving forward. Managers must also justify who they are keeping and why, as that comparison will be the main issue for which EEOC investigators will demand an explanation.
Here is where the measure twice, cut once command is key. Review and review again all proposed cuts. Review the documented performance evaluations and the dispersion of those being laid off based on race, gender and age.
Those who remain must not be ignored. They are subject to “survivor syndrome.” They may be initially relieved but, absent a clear understanding of the company’s strategy moving forward, that relief can turn to fear and paralysis as uncertainly fills their imagination of what will come next.
Finally, severance packages must be fair, even generous if possible. Providing outplacement services for displaced workers is usually appreciated and can help avoid possibly some EEOC claims.
When laying off groups of people – a division, for example -- clearly reveals a new direction for the company, each individual in that division will be harder pressed to claim discrimination. However, if any of those employees are retained and transferred to new divisions, many of the same questions might give fodder for an EEOC claim.
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