The National Association of Business Economics (NABE) claims things are looking up. More people are working and spending. The survey of 72 business economists and policymakers was conducted March 16-31, 2011. The gross domestic product is expected to grow more than two percent this year. Employment prospects are increasing. The NABE respondents are forecasting more employee increases than decreases.


Despite the rosy forecast, some companies are struggling to survive. Other companies have strategically used the downturn to effectively reduce their payroll expense. Still others are beginning to feel the negative effects of across the board wage reductions and furloughs. Most employees know which employees are dead weight and resent having to support them.


A strategic reduction-in-force starts by determining what the business should be doing and identifying business needs. Next, align those needs with performance needs. At that point, employee capability and performance should be evaluated by more than personnel files.


The last thing a fragile business should do is damage a star performer. Identify people who contribute directly to the company’s well-being and shield them from harm. Consider reducing executive pay to provide pay increases for star performers. Investing in employee development while you are reducing the workforce will also demonstrate strength and foresight to your top performers.


Terminating employees under any circumstance is disturbing to everyone involved. Honestly communicating the purpose, the process and the departing employees’ benefits and conditions is imperative.


Timing is of utmost importance. Keeping the plan confidential until it is deployed is equally important. When employees fear a downsizing, productivity decreases; gossip, absenteeism and accidents increase; as do allegations of unfair employment practices.


After the plan is ready and approved, execute the layoffs within one workday if possible. At the end of the workday, schedule a face-to-face (and/or televised) meeting to communicate with as many employees as possible. Communicate the business need. Communicate the process. Communicate what positions were affected. Communicate what changes in positions are anticipated. Communicate the rosy future and hard work ahead.

RIF Checklist

Legislative Update

Bring Your Secret Gun To Work


Governor Daniels signed a new law that takes effect July 1, 2011 prohibiting employers from asking applicants or employees whether they have guns or ammunition in their cars. The law prohibits separate parking areas for employees who carry guns. Many employers adopted special parking procedures in reaction to the initial legislation. Employers need to review and revise their related policies.


Salaried Non-Exempt


There are a few ways to calculate Salaried Non-Exempt overtime. Often the fluctuating workweek method is used. The employee is paid a salary for each week worked and paid an overtime premium for hours worked over 40 in a work week. The overtime premium is calculated by dividing the fixed salary by the number of hours worked to yield a rate of pay and then adding the overtime premium. This means the more hours over 40, the employee works, the lower the rate and premium. In April the Department of Labor updated their interpretation of fluctuating workweek. Their new interpretation prohibits non- overtime bonuses and incentives.


Investigate All Complaints


The Supreme Court determined that oral complaints are sufficient under the Fair Labor Standards Act’s anti- retaliation provision. Justices Scalia and Thomas dissented based on their understanding that the provision applies to filing a legal complaint. In the case reviewed, Kasten v. Saint-Gobain Performance Plastics Corp.; Kasten orally complained about the location of the timeclocks to company officials. The company stated he was terminated for not recording his work time after repeated warnings.

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May 11 – eSource – Rosy Forecast