How to conduct layoff’s in a valid and effective manner – By Dr. Jim Higgins, Ed.D.

To me, it is increasingly evident that if the country is not falling back into recession, we are at least heading into more difficult times. Employers ranging from defense to construction, government to the private sector appear to be starting another round of layoffs. Any time an employee is let go, it represents a difficult decision which is fraught with potential legal exposure.

However, there are steps that an employer can take to both protect themselves from legal exposure as well as maximize the likelihood of maintaining the most effective, innovative, productive, and diverse workforce. For this article, we will assume that an employer—after careful deliberation—has decided that they must shrink the size of their workforce for a given division. How should the employer proceed?

Step 1 – Identify those jobs that represent redundancies or which can endure layoffs without affecting the employer’s ability to conduct its fundamental business. This decision must be made with care. Otherwise, the employer may save money “now” at the cost of its long-term survival.

Step 2 – Once step 1 has been completed, conduct a proactive Adverse Impact Analysis (also called a “what if?” Adverse Impact Analysis) to determine whether specific groups of employees are being negatively impacted based on their gender, ethnicity, etc. If Adverse Impact exists, attempt to determine why critical jobs appear to have a different makeup than those considered less critical. Are there barriers to recruitment? Is the difference due to external factors such as differences in the qualified workforce? Are there steps that the organization can take to increase under-represented employee groups’ qualifications for the more critical jobs? If so, create plans to provide these development opportunities or explain the differences.

Step 3 – Within each job that will undergo layoffs, identify the key factors that distinguish between high and low performing employees. Where possible and appropriate, the employer should rely on a job analysis that identifies the knowledge, skills and abilities as well as the level of mastery a qualified employee should have.

Step 4 – Using the key factors identified in step 3, decide which employees will be retained and which will be let go. If two employees are exactly equal in terms of their possession of the key factors, try to make the layoff decision in a random fashion. If the difference in group representation turns out to be large (e.g., far more males than females), consider if there are situations where it appears that a male and female are “identical” in terms of their possession of the key factors. If so, dig deeper and try to determine whether they really are identical. If the retained employee is superior, retain him. If the laid off employee is superior, change the decision to retain her. If males are represented at a higher rate than females and females comprise a larger proportion of the relevant labor force, contact your legal counsel for assistance.

Step 5 – If the sample size is large enough for a job title, consider using the statistical tool known as Binary Logistic Regression to verify that your retain/not-retain decisions are valid. This statistical tool, like multiple regression in compensation analysis, allows the employer to determine whether, after controlling for legitimate job related factors, retention decisions were impacted by the employees gender or ethnicity.

This article was intended to help employers understand a valid process for conducting layoffs. It is not intended to be considered legal advice and all employers are strongly encouraged to make any and all significant employment decisions that could expose the organization to a risk of litigation with the assistance of their legal team.

If you require further analytical assistance on this or any other EEO/AA topic, contact Affirmative Action Services at Info@AffirmativeActionServices.com or call Dr. Jim Higgins at (916) 204-1749.

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