Employees on Chopping BlockM-Live, by Heather Jordan, reported that Dow Corning Corp. has formally notified the state of its plans to lay off 348 Michigan employees. This layoff follows the June 1, 2016, announcement of the successful completion of restructuring the ownership of Dow Corning joint venture with Midland-based Dow Chemical. Under that restructuring, Dow Chemical Company assumed full control of Dow Corning Corporation.

Having worked with numerous business owners, it is an agonizing decision when the company finds itself in a layoff or reduction in force (RIF) situation. Conversely, employees who find themselves on the chopping block often feel betrayed, blindsided and motivated to sue for discrimination. Accordingly, such conditions make for the potential for an explosive situation.

Here are a few legal issues companies must carefully evaluate when laying off its employees:

  1. Notices: Employers must determine whether they are subject to the Worker Adjustment and Retraining Notification (WARN) Act.  Employers must comply with WARN notice requirements if they have 100 or more full-time employees or 100 or more full- and part-time employees who work a combined total of at least 4,000 hours per week (excluding overtime). In general, WARN’s notice requirements apply to plant closings involving 50 or more employees and layoffs involving 50 or more employees and at least 33 percent of employees during any 30-day period (the 33 percent requirement does not apply to layoffs involving 500 or more employees).
  2. Layoff Policies and Employment Agreements: If your company determines layoffs/RIF are necessary, then it is important to review all policies, agreements, or collective bargaining agreements with employees before beginning the process.
  3. Determining the Order of Layoff: Layoffs or large-scale RIFs are generally the results of economic necessity. But employers cannot rely exclusively on this explanation. This is because companies must still be prepared to explain why particular employees were selected for economic layoffs; an employer cannot decide which employees to lay off on the basis of considerations that are prohibited by law, such as age or other unlawful discrimination. Accordingly, companies must decide the order of layoffs based on non-discriminatory factors, such as skills, knowledge, and abilities that are necessary for the company to operate. Further, these factors must be documented. In our experience, the criteria and decision-making process for determining layoffs can be the employers greatest defense against subsequent employment discrimination claims or an equally great hindrance to that defense.

These are only a few issues that need to be considered when a workforce is downsized through layoffs or RIFs. Above all, it is essential that at all times in determining the order of layoffs or criteria for any RIF that your business adheres to its commitment to provide equal employment opportunity for all employees.

For more information about this article or legal issues involving downsizing workforces through employee layoffs or RIFs, contact Michigan employment attorney Jason Shinn.