Employment Risk

In today's workforce, many companies are faced with layoffs to cut cost in order to run more effectively. Workforce reduction is commonly disguised in many terminologies such as, downsizing, rightsizing, eliminating redundancy, layoffs, cutting staff or reengineering. Any way workforce reduction is categorized, the objective is to create savings and increase revenue for the company. Many tend to blame workforce reduction on the poor condition of the economy but the overall reasons are profits. There are some circumstances where online distribution companies were forced to downsize due to increasing cost to upgrade technology and decrease in sales.

Fast Serve Inc. a $25 million online Distribution Company was faced with reducing its workforce to accommodate the high cost of technology. Fast Serve markets its products to the young consumer with branded sports apparel. Websites were created to attract the attention of the young consumer, one for boys and the other for girls. Fast Serve moved 10% of its workforce to the online distribution department to accommodate the possible increase of sale. After the website went live, technical problems prevented potential sales due to the website download were too cumbersome for the consumers. Fast Serve decided to discontinue the online division and needed to downsize.

In order for Fast Serve to consider downsizing the company, many employment laws and options must be explored. There is a great risk and potential liabilities involved when making the decision to reduce workforce. Policies and procedures of the company should be followed when deciding to downsize. Companies should always be truthful about the reasons for downsizing. Exit incentive programs can be implemented whenever possible. These programs should ensure a fair and consistent means of encouraging employees to accept the severance being offered by the employer instead of waiting for possible termination (Labete, 2006). Before Fast Serve can consider implementing such a program, issues concerning proper advanced notification to employees will need to be discussed.

Fast Serve employs some workers that have long tenure with the company. These workers fall in the "Baby Boomer" generation and have dedicated their lives to the company. Because these employees are over the age of 40 years old, the release of them must comply with the Federal Older Worker's Benefit Protection Act (OWBPA). The OWBPA was established in 1967 to protection older workers from discrimination in regards to employee benefit plans. Another service that protects the older work is a new law created by the Equal Employment Opportunity Commission (EEOC). The EEOC established age discrimination regulations that make companies powerless in stopping courtroom challenges and expense that go along with them. In order for the regulation to take effect, the older laid-off worker must be able to challenge in court the legality of any waiver of the right to sue without first having to give back any severance pay they've already received (http://www.allianceibm.org).

In considering layoffs in the company, Fast Serve must also seek guidance through the American with Disabilities Act (ADA). The ADA protects employees from discrimination involving any type of disability. It has been know that some employees may try to consider pregnancy as a disability. According to the ADA, pregnancy is not a total disability and can not force an employer to place an employee on light duty because of it. ADA will support an employee light duty status with an on-the-job injury (Compliance Experts, 2006). A pregnant employee can be considered temporary disabled and receive maternity leave. This leave is established by the employer in their policies and procedures. A pregnant employee can receive pay while on leave if the employers pay all temporary employees compensation while disabled.

Another aspect Fast Serve must consider are the contracts given to employees at the initial employment. If Fast Serve has an "at will" policy in affect, the state will permit employment to be ended at any time as long as it is a written contract. The relationship can be terminated by either party with no liability. Fast serve must also consider possible issues of Civil Rights Laws. In 1964, the Civil Rights Act was established to protect any employee who employment can not be terminated due to race, gender, skin color, religion or national origin (Title VII Civil Rights Act).

Employees that are unionized are entitled to protection through collective bargaining agreement. A collective bargaining agreement is a labor contract between employer and unions. Collective bargaining consists of negotiation between representative of a union and management of an employer. In the negotiation process, term and condition of employment, wages, hours of work, working conditions and grievance-procedures are discussed and established.

One service provided to employers facing a massive layoff is the Rapid Response services. Rapid Response is a pro-active, business-focused and flexible strategy