With Covid-19 and uncertainty we got an uptick in questions about options for adjusting employee size and business structure. The great news is that there are options, and your business might be able to use a combination of tactics to meet changing business environment goals. Here’s a quick overview of the most common options, and some important considerations for each.
CONSIDER THE LONG-TERM IMPLICATIONS
Layoffs, or reductions in force (RIFs), are typically used when a business is undergoing a significant change in direction, such as eliminating a product, a function, or a department. Although there is such a thing as temporary layoffs, layoffs are more typically permanent.
If you’re considering a layoff, it’s critical to look ahead to the next 12 to 18 months, and to assess whether the department or function you are laying off is likely to be needed again in the near future.
- If your strategy and plans change down the road, the loss of productivity and expense of rehiring can be significant.
- It’s legally risky to lay off a full- or part-time regular position, and then rehire for the same role (full-time or part-time) a few months later.
- It’s legally risky if a laid-off employee could claim that their termination was for reasons other than strategic changes.
It’s important to weigh all the factors. Companies looking to cut short-term costs should consider alternatives like furloughs, standby, and shared work arrangements first.
Furloughs and Standby
KEEP YOUR TEAM INTACT FOR A FIXED PERIOD
In our experience, most people are familiar with layoffs, but furloughs and standby are great options that tend to be underutilized. These are basically temporary layoffs—you can keep your team together when business has slowed or stopped for a shorter period of time, and your employees can collect unemployment benefits without having to comply with the job search requirements. These two options are similar but have different mechanics for activation with Employment Security. Standby generally requires the employer to provide an expected return to work date, whereas a furlough may not require that.
Here are some cases when furloughs or standby might be appropriate:
- If the interruption is likely to be short-term, and you expect or hope to return the employee to regular status.
- For seasonal employees, or when there is an expected or unexpected shortage of work, but an expectation of return.
- When business has slowed or stopped and you want to keep the team together for the long term while you do business planning.
REDUCE HOURS WHILE MAINTAINING FLEXIBILITY
SharedWork is a voluntary business sustainability program offered by the Employment Security Department. It provides flexibility for employers to retain employees at reduced hours. Here’s how it works:
- Employers cut employee hours rather than employee jobs.
- Employees can collect partial unemployment benefits for the hours lost without the job search requirements. They’ll generally receive 50% of the unemployment benefits they qualify for, while also receiving a partial paycheck from you.