Key Takeaways | NAHRES22
Managing Your Workforce During Periods of Market Volatility

Employers across all industries have experienced various levels of uncertainty in 2022 and are looking ahead at what to expect in 2023. For many, this can lead to reductions in the workforce and other methods of managing it and the financial burden. Now, employers are bracing for economic uncertainty and navigating questions and concerns about how to manage their workforce with minimal disruption.

Communication

• Maintain a clear message and stick to it.
• Designate management representatives that employees can approach to express concerns or relay questions.
• If managing a unionized workforce, avoid “direct dealing” or dealing directly with an employee concerning their employment terms and conditions. Instead, connect with their collective bargaining representative.
• Ensure management is trained to identify signs of organizing and are thoughtful and deliberate in their communication with employees, particularly with a unionized workforce.

Contractual Considerations

• Review your employee agreements and determine if you have at-will employees or any with formal employment agreements containing various stipulations. Then, consult with an employment lawyer to help review state-specific guidance.
• Be wary of the “anxious” key employee who may view reductions or changes in the workforce as a sign to jump ship; what types of protections are in place to protect the company’s information and know-how (e., restrictive covenants).
• If your company is considering reductions in salary or compensation, never drop below minimum wage. This can become more involved when managing a remote workforce or in situations where there are offices in multiple jurisdictions where the minimum can differ from federal and where certain offered benefits can determine what minimum wage is.

Workforce Reductions

• The Worker Adjustment and Retraining Notification Act (WARN Act) imposes certain obligations upon companies in connection with employee terminations. Employers should always consider the WARN Act when making decisions but should also look into local obligations.
• The WARN Act is triggered when a covered employer terminates 50 or more employees during a 30-day period at a single site of employment.
• It’s important to understand the different obligations and expectations when conducting furloughs, layoffs or reductions in force. Also, be cognizant of the different wage and hour obligations when dealing with exempt and non-exempt employees.
• Be sure to provide 60 days’ notice to the necessary parties ahead of a WARN Act triggering event. This includes union representatives (if applicable), the affected employee, the state and the chief elected official of the union or local government where the closing or layoff will occur.

Labor Concerns

• Ongoing issues, like the tightening labor market, social justice issues, return to work campaigns and continued uncertainty over the pandemic, are all factors driving labor activity for both unionized and non-unionized workforces.
• We are experiencing a fervent National Labor Relations Board (NLRB) on the side of the employee. Much of their recent attention has been aimed at employment policies, elimination of the rights of employers (for example, the right of employers to discuss the pros and cons of unions to employees) and expanded exposure for employers.
• The NLRB is likely to issue a flurry of decisions at the end of the year related to news and events from throughout 2022.

FAQs

Q | What if you’ve issued a clear but vague message, and employees contact their manager and ask a direct question that you either don’t have an answer to or you know the employee won’t like the answer?

A | Employers aren’t obligated to give away all of their trade secrets when communicating with their employees after a transition announcement. Further, don’t feel like you need to defend your decision and message. Rather, take follow-up questions as an opportunity to explain your decision in reaffirming language.

Q | What if you have to temporarily reduce an employee’s salary but promise to repay the difference down the road (i.e., following the completion of a major funding round)? Would it still be considered a breach of their employment agreement if the reduction is a “good reason”?

A | This scenario would actually be considered deferred compensation, which has various tax implications. This is handled differently than more straightforward salary reductions or a salary reduction with a performance bonus or another form of incentive payment.

Q | How do you determine “a single site of employment” for remote workers?

A | The single site of employment refers to the office to which they are assigned as their home base, from which their work is assigned or to which they report. This raises policy and practicality issues, but under the WARN Act, companies are required to give notice to a state or local government official (partly to let them know that a large group of individuals is likely to start collecting unemployment.) There’s less implication if employees are located all over the country.

Q | What happens during the sale of a business?

A | The WARN Act still applies when all or even part of a business is sold. The seller or the buyer may be responsible for giving notice depending on when the event occurs.

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