With the end of the 2022 second quarter and inflation at a record high in more than four decades, some employers may be forced to take measures to reduce overall operational expenses. Reducing payroll costs is one of the cost-savings measures available to employers in these circumstances. Unfortunately, however, this often results in the loss of employment for employees by way of a reduction in force, or a "RIF." If a company must move forward with such a process, it must be carefully planned and executed in order to minimize the risk of employment law claims. Below is an overview of factors business owners and human resources professionals should consider when implementing reductions in staff, schedules or compensation.
Before deciding on a layoff or reduction in force, consider alternatives that may help manage the economic pressures facing the company yet keep employees earning wages. These alternatives include: hiring freezes; bonus reductions; postponement of wage increases; job sharing; voluntary early retirement; discontinuance of temporary or part-time employees; reduction in wages; reduction in benefits; or reduction in total hours. When implementing any of these changes, it is important to review for compliance under the applicable state and federal wage and hour laws, particularly those laws governing notice to employees of changes to pay and exempt employee minimum salary requirements. Employers should...
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