Mr. Glincher

Hospitality Law

Advanced Planning Can Be Key to Managing Layoffs Properly

By Andrew Glincher, Office Managing Partner, Nixon Peabody LLP

Layoffs are always painful, but experienced managers have learned that they are sometimes necessary to protect the long-term viability of the business. Making these situations even more difficult is the possibility that laid off employees - who may be hurt and angry - will argue that they have been victims of discrimination.

Perhaps, for example, you come to the conclusion that what's most rationale from a business point of view is to reduce the number of housekeepers you employ. However, the housekeeping staff is overwhelmingly made up of women. Can a group of them be terminated, if it results in a disparate statistical impact on the number of women you employ? What if there are several housekeepers who have been at the hotel for years and are older than most of their coworkers - but they also happen to be the least effective, most problematic members of the staff? Can they be terminated while younger, less experienced employees keep their jobs?

How do you prevent this type of difficult situation from leading to litigation?

Of course, if the hotel is staffed by union employees, the method for implementing layoffs will be covered in the collective bargaining agreement. However, for others, management needs to have systems in place at the outset and on an ongoing basis that protect against unwarranted claims.

Setting up an evaluation process and maintaining personnel files is a critical first step. Employees should be evaluated regularly by supervisors based on a standard set of performance criteria. And supervisors should discuss these evaluations with the employees to ensure that there is no misunderstanding about any deficiencies.

If a housekeeper is terminated after being at the hotel for a long time, she might claim she has been a victim of age discrimination, especially if younger, less experienced workers were allowed to keep their jobs. Having properly documented employee performance issues as well as regular evaluations, showing that she had been one of the most poorly performing housekeepers at the hotel, would help defend against such a claim.

Also, before actually laying off any employees, do a thoughtful, written analysis that describes why the layoffs are necessary and considers a variety of options. This analysis should spell out the specific business rationale for laying off particular groups of employees. For example, you might consider whether the staff responsible for maintaining and landscaping the grounds -which is largely comprised of younger men - could be reduced and determine that, since those jobs need to be performed whether the hotel is full or empty, there is no possibility of layoffs there.

What about the restaurant? If the hotel employed restaurant workers and the restaurant is well below capacity, the restaurant probably requires less staff. But you might conclude that, since the restaurant doesn't employ a large number of full-time employees, a proportional reduction would only yield a small number of positions. A third party lease of the restaurant may be appropriate, if not already in place.

The front desk staff can be reduced, as can the bell staff, but again, the numbers are small.

After conducting this analysis, job category by job category, you may find that the only positions in which the head count can be reduced significantly are in housekeeping (or some other job classification). Your management decision can be justified if there is a logical, business-driven process that brought you to that conclusion.

Every situation will be different, but with this type of analysis, even if the bulk of the layoffs are housekeepers and most of the housekeepers are women, there will be a clear record of the process that led to that result. And it will be clear to anyone objective that there was no intent to discriminate against women, even though they happened to comprise the majority of the layoffs.

Also, the method of selecting the individuals to be terminated should be clear and well-documented. Ideally, you have previously implemented a performance evaluation system that will enable you to terminate the least effective employees based on a written set of standards. But whatever your methodology, make sure everyone on your team is clear about it, executes it with an even hand and avoids exceptions that can inflame an already emotional situation.

The people who do the terminations need to be well-trained and disciplined individuals. There should be a script or talking points that members of the management team use when giving employees the news. It may be tempting to compliment employees or make flattering comments to soothe the pain of the layoff, but those comments can often be used as evidence that the termination was based on something other than performance. Direct, clear and concise communication is most appropriate.

Finally, employers should consider providing an enhanced severance package to employees who agree to sign releases (though some may not be comfortable proposing that since releases may plant a seed that employees may have rights against their employer), acknowledging that they have no further claim against the company. If thought out, this can be a win-win tactic - if management has carefully followed the law in conducting the layoffs, they are simply buying some additional peace of mind. Employees, on the other hand, receive an additional sum of money at a time when they need it, in return for agreeing not to sue.

All of these issues are governed by State as well as Federal laws and regulations and employers need careful legal guidance regarding how each scenario applies to them. However, implementing systems in advance of any layoffs being contemplated and documenting your efforts to terminate employees in a manner that is fair and consistent, may place you in a position to avoid disputes and litigation down the road, as well as to manage the morale of employees who survive the layoff.

Andrew Glincher specializes in the negotiation and resolution of business and real estate disputes. Mr. Glincher has represented developers and owners of retail centers, hotels, movie theatres, office and industrial buildings and parks, utilities, restaurants, subdivisions, apartment complexes, assisted living housing complexes, long-term care facilities and condominium projects. Mr. Glincher is admitted to practice in Massachusetts, the U.S. Court of Appeals, Third Circuit, the U.S. District Court, District of Massachusetts and the U.S. Tax Court. Mr. Glincher can be contacted at 617-345-1222 or aglincher@nixonpeabody.com Extended Bio...

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