Reduction in Force Checklist for Small Businesses

Edgewater Holdings Ltd.

Reduction in Force Checklist for Small Businesses

Make sure all personnel files are up to date. Have annual reviews been done? Are attendance records, disciplinary documents and all other records current? Remember that the files of all workers may be subpoenaed. Beware of disparate treatment. Don't just update the employees you will lay off.
Document the business decision behind the RIF. If a corporation, present to the board and have it approved. If a proprietorship, write a document and have it notarized. Include verifiable objective criteria such as sales or financial data for the decision.
Document the employee selection process. Identify the criteria by which you will make a business decision. The criteria must be non-discriminatory. However, keep in mind that virtually everybody is in some protected class or another. Your responsibility is to retain the best employees for your company. Seniority can be a valid criterion but so can merit.
Be mindful of issues such as the race, gender, age of employees reduced/ retained within the departments affected by the RIF.
Document each individual's file addressing in particular how the decision regarding this worker was determined as part of the process outlined in step three.
Be consistent in the severance package, if any. Disparate treatment must not be on the basis of illegal discrimination.
If severance is offered, obtain a full release of claims. If an employee offered severance is 40 or over, include provisions regarding 21-day consideration period, 7 days to revoke and advise him/her to seek advice of an attorney. Otherwise, the release is unenforceable for that 40+ employee. You can download a generic release form from www.edgewater.net.
Read your employment manual. Be consistent with policy you may have set years ago.