Mba 560 Legal Issues In Reduction Of Workforce

Legal Issues in Reduction of Workforce

University of Phoenix

Legal Issues in Reduction of Workforce

"Increased competition and rapidly developing technologies are leading companies to make innovations in how they operate, organize work, and manage people. As employers increasingly take advantage of new technology they are finding the need to restructure staff" (Lieberman, Moss, 2001). These changes present legal challenges and risks for human resources; however, with proper planning the potential for incurring charges of discrimination or other employment law issues can be anticipated and avoided. This paper identifies these issues, the alignment of self-interest and the interests of the organization, the balance of risk, and a recommended solution to the current situation.

Situation Analysis

FastServe Inc. is a strong company involved in the direct marketing of branded sports apparel. The company has decided to move out of online distribution because the amount of transactions no longer justify the online division. A few will be retained based on past performance and skill level, while others must be released. Cutting costs is the primary reason for FastServe's recent reduction of workforce decisions, and legal issues have come into play. "One way to make sure that former employees don't become plaintiffs is for managers to fully understand federal statutes that create implications for these decisions because what decision makers in this area don't know can hurt them" (Kuhn, Stout, 2004).

After two days of discussion, FastServe's COO made a list of five individuals being considered for layoffs. According to Paul Oyer and Scott Schafer in their article Layoffs and Litigation, "Although the costs of continuing to employ too many unproductive workers are potentially crippling, costs associated with displacing workers can be significant...and many observers argue that these costs of displacing workers, which can include legal expenses, severance payments, unemployment insurance taxes, and outplacement assistance, have escalated in recent years due to substantial increases in employment discrimination litigation" (p. 345, 2000). All five of the candidates present potential legal challenges that would affect the company's decision. The following is a discussion of extenuating regulatory circumstances, legal risk, and business risk associated with the layoff of each individual.

Carl Haimes

Carl is an above average exemplary employee; however, the skills he possesses will now be redundant considering the recent changes. Carl is also a gay man, who recently has been the brunt of very rude remarks by a colleague. These actions constitute as sexual harassment, and Carl has sought advice on this issue. Although "the courts have not interpreted Title VII of the Civil Rights Act of 1964 (on sexual harassment) to prohibit discrimination against employees based on their sexual orientation" a trend has developed in recent years among states, numerous cities and thousands of companies illustrating the decline of one type of gender-orientation discrimination concerning terms of employment (Legal Issues in Reduction of Workforce Simulation, 2007). "A quarter of the states and numerous cities do forbid discrimination based on sexual orientation, and Congress could amend Title VII to protect employees from such discrimination. Already, thousands of companies have begun offering domestic partner benefits to all employees without regard to sexual orientation" (Reed, Sheed, Morehead, Corley, 2004). In light of the development with his coworker, along with his exceptional performance and skill set I believe that Carl still can be used by FastServe in some capacity.

Brian Carter

Brian is a star programmer that has been diagnosed with carpel tunnel syndrome and as a result has currently missed a great deal of days at work. His skills are no longer needed with FastServe pulling out of the online media. Although his performance has been satisfactory, re-skilling Brian will be close to hiring a new employee. The Americans with Disabilities Act (ADA) defines disability as "any physical or mental impairment that substantially limits one or more of an individuals major life activities" (Legal Issues in Reduction of Workforce Simulation, 2007). Providing reasonable accommodation - "the process of adjusting a job or work environment to fit the needs of disabled employees" - could be a course that FastServe looks at in view of his injury (Legal Issues in Reduction of Workforce Simulation, 2007). Nevertheless, Brian is a reasonable recommendation because FastServe is pulling out of the online media business and his skills are no longer needed, his performance has been mediocre, and his work did not meet FastServe's business objective. I believe that Brian can be laid off with outplacement support

Sarah Boyd

Sarah is a 53-year old clerk in dispatch. She has invested 15 years of her life in FastServe and with dispatch being automated soon her skills will be unnecessary. Since Sarah is older, the Age Discrimination in Employment Act (ADEA), which forbids discrimination based on age, may become an issue. FastServe understands that litigation could be a definite source of controversy, especially in light of the reports stating, "Since 1978 amendments to the act, age discrimination claims have grown rapidly, and in recent years, they have more than doubled in number" (Reed, Sheed, Morehead, Corley, 2004). However, Sarah's performance and productivity have been average, she is not an achiever, and although she knows the office procedures better than anyone at FastServe, her job in dispatch is now obsolete. In his article Preparing for Uncertainty: Guidelines for Laying Off Workers and Creating Equitable Severance Packages, Bill Hollett states, "While layoffs can be necessary at times, they can also negatively affect both an organization's productivity levels and its ability to attract and retain top talent in the future" (p.70, 2001). This insight should be taken into consideration in view of Sarah's past loyalty to FastServe. Sarah is a good candidate for termination, but FastServe has an obligation to work out an appropriate severance package and conduct open communication to reduce the risk of litigation.

Nora Manson

Nora is a 28-year old, African-American, who is one of the call center managers and a firebrand