Handling Layoffs

Important Factors to Consider When Handling Layoffs During the Pandemic

Murray | LobbPandemic

At present, businesses throughout Texas are having to make difficult staffing decisions as the pandemic keeps spreading around the state. Since profits are down for many companies, it is getting harder to know when layoffs are necessary or required. To increase your chances of making wise decisions, you will need to confer with others, move slowly and remain fair.

Companies must move carefully when letting individual employees go since they may file different types of discrimination lawsuits. Whenever possible, it is often best to layoff specific units or departments of employees to minimize future legal problems. Given the many federal, state, and local laws that guarantee specific protections to workers, it it is important to confer with your Houston employment law attorney while navigating these tough decisions. There are some alternatives to layoffs that may better serve both management and lower-level employees.

Before exploring the types of decisions that you may need to make, here is a brief review of some pertinent terms and definitions.

Employee classifications often play a major role in how companies handle layoffs

For example, you cannot treat your exempt and nonexempt employees the same when deciding how to potentially change their duties, work hours, and pay. The Fair Labor Standards Act (FLSA) must be fully respected to avoid unnecessary lawsuits.

  • Nonexempt employees. These workers are often paid minimum wage and must be paid at an overtime pay rate whenever they exceed more than 40 hours of work a week. Most laws make it easier to rearrange the work given to these employees, assuming proper advance notice is given regarding changes — based on all the pertinent laws.
  • Exempt workers. These employees have often been hired under formal contracts which state their given salary and frequent high-level, professional duties. They are not eligible for overtime pay and usually make well over the minimum wage.
  • A work furlough. During this period that often covers a relatively short timeframe, employees may be required to take a leave of absence from work — or to put in reduced hours (or work fewer hours on different days). Even if not working at all, these individuals are still viewed as employees.
  • A layoff. When someone is laid off from a job, that person may or may not be asked to return if a suitable position matching her skills becomes available.

Recognizing the special rights normally accorded to exempt employees

Stated simply, employers must carefully review the contracts or job offer letters that were extended to all exempt employees to determine their exact legal obligations. Normally, these documents set forth the types of duties required of these workers — along with the salaries and benefits provided to secure their employment.

Given the highly unusual situation created by the pandemic, friendly negotiations will often be required between employers and these professional workers. Failure to win documented concessions from exempt workers can lead to breach of contract lawsuits. You may want to consider hiring a mediator to help you. (Any contractual changes made should always be put down in writing and signed by both parties).

Although nonexempt workers have far fewer rights compared to exempt ones, employers must still carefully abide by all federal, state and local laws that require you to give these workers proper notice — before changing their hours or types of assigned duties (especially when labor unions are involved).

Layoffs versus furloughs, shutdowns, workshare arrangements and job eliminations

Employee layoffs may not only prove very damaging to morale, they often motivate your best and brightest workers to relocate to more secure jobs or professions. Creative thinking about how to provide greater workplace stability with limited layoffs may prove crucial. Supervisory and management teams should carefully reevaluate which workers might be able to work in new or different departments while a company’s profits (or workflow) keep fluctuating.

Departmental shutdowns can provide one solution. However, if exempt employees work any hours at all during a given week, the FLSA usually requires they receive their full salary. Negotiations with these employees may make it possible to temporarily re-assign them tasks in other departments while their regular department is temporarily shut down. (For example, during the current pandemic, there are some state attorneys temporarily answering phone calls for their agencies instead of handling their usual legal caseloads).

Another alternative to making layoffs involves workshare arrangements. The Texas Workforce Commission (TWC) will often help employers provide these to their workers. Your Houston employment law attorney can more fully explain how you will need to draft a plan to try and qualify for this type of arrangement.

Stated in general terms, a workshare program allows an employer to create a plan so that a set group of employees can “share” what limited work is available, while still qualifying for partial unemployment benefits. (These benefits supplement the added wages for the work that is currently unavailable).

If you believe you need to eliminate certain jobs, you may want to do that while employees are on leave. You could then offer them generous severance packages, including health benefits, to leave their positions. These types of changes require very carefully drafted legal documents.

Key EEOC-related concerns to bear in mind if you must still resort to some layoffs

Fairness is always the most important principle to keep in mind while considering layoffs. When deciding which specific employees should be laid off, you must keep in mind such laws as the Age Discrimination in Employment Act (ADEA) which prohibits discriminating against workers who are age 40 or older. You cannot simply lay off older workers just because they might be at higher risk for COVID-19 (if they are age 65 or older).

Likewise, you cannot unfairly discriminate against female (or male) workers who you know are having COVID-19 related problems tied to finding adequate childcare during the pandemic. You must also interact very carefully with all employees covered by the ADA and other legislation offering uniquely protective worker rights.

Fortunately, the Equal Employment Opportunity Commission (EEOC) has recently issued new guidelines for all those having to make these types of difficult decisions.

Please feel free to contact one of our Murray Lobb attorneys for help with any of your employment law questions or concerns. We can also address your estate planning and general business and corporate law matters. Our attorneys always remain available to draft a wide range of contracts and other documents that are needed for your daily business transactions.