Six tips for employers in a troubled economy
By Byrona J. Maule | Phillips Murrah P.C. |
Paycom Report
[ MAY, 2009 - OKLAHOMA CITY, OK ] - Look no further than the field of employment law for a good reflection of what's going on in the economy. In my 23 years as a labor and employment attorney, I have noticed that when the economy is good, I am sought by clients to draft employment contracts, write policies and procedures and conduct training. Conversely, when the economy is bad, business owners and HR executives keep me busy advising on downsizing – whether a reduction in force or attrition (simply not replacing those employees who quit) – and, of all things, investigating embezzlement charges.
Given the economic crisis and its impact on the attitude and behavior of employees, those of us who own companies, manage employees, oversee HR Departments or handle related legal matters must be prepared for the assistance our organizations may need to make the hard decisions that many companies will face in the coming months.
1. Now more than ever, performance appraisals need to be current. They play a key part in decisions related to both reductions in force and attrition.
2. Job descriptions are extremely important, especially if the company is decreasing its size via attrition. These decisions can only be made correctly if the company knows the exact job duties, licenses, and experience of the employee giving notice. For instance, if the employee giving notice has a license that is required for the company, not replacing that employee would not be an option for the company.
3. Compliance with sick leave policies, absence policies and the FMLA is much more important in a down economy. As companies downsize, there are less people to provide cover when an employee is out. This means that compliance with these policies is vital if an employer does not want to grant leave beyond what is required by the applicable policy or statute. Conversely, employees who are let go for excessive absenteeism – people who would never have taken legal action in the past – are now suing, because the job market is so tight. In the past, terminated employees would just go find a new job, but, now, companies just aren't hiring.
4. Wage and hour compliance is also critical. Employees who quit or are fired are much more likely these days to file a wage claim for overtime or unpaid wages. Make sure that all employees are properly classified as exempt or non-exempt for overtime purposes.
5. Ensure that all policies regarding offsets or withholdings from an employee's pay check are in writing, signed by the employee and compliant with your state's laws. Pay special attention to policies related to employee advances and educational assistance, as these policies or agreements frequently do not address what happens if the employee is terminated in a reduction in force.
6. Diversity can become much harder to achieve and or maintain in a shrinking workforce. Be aware of the effects that reductions in force or attrition are having on the composition of your work force. It's very easy for a reduction in force to have an unintended disparate impact on minorities. Human Resources professionals may have to adjust the factors of a reduction in force and/or target advertising and hiring efforts to ensure that the workforce remains diverse.
Especially in uncertain economic times, HR professionals should take a tip from the Boy Scouts of America and "Be Prepared" for the impact that a rocky economy can have on your company.