Plant closings, mass layoffs and other reductions in force — North Carolina

Minimizing risk in reductions in force

Companies engaging in restructuring and reductions in force (RIF) are particularly vulnerable to claims of discrimination, especially age discrimination, under both disparate impact and disparate theory claims. The following tips may assist companies in avoiding or minimizing risk for such claims. Before undertaking the reorganization, identify business goals and evaluate options:

• At the outset, identify with specificity the goals to be accomplished and the business needs that drive them.

• Ultimately, the company should be able (and prepared) to demonstrate how each individual termination furthers the goals established at the outset.

• Identify and evaluate options short of involuntary terminations that may accomplish the goals, such as overhead reduction, attrition, voluntary separation programs.

• Be prepared to articulate and demonstrate why alternatives (other than involuntary terminations) would not have accomplished the goals.

Before undertaking involuntary terminations always consider voluntary separation programs.

The greatest advantage to these programs is that they minimize risk associated with involuntary terminations. The greatest disadvantages are: short-term expense associated with incentives and loss of control over which employees leave. Depending on the...

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