• A company that downsizes its workforce is still responsible for several worker benefits.

Downsizing places certain requirements upon the employer regarding continuing health coverage, vested retirement benefits, and unemployment insurance benefits. Most states do not require severance pay or other benefits to the employees who are let go. Employers will commonly agree to provide severance pay or other benefits to downsized employees as part of a negotiated separation agreement.

Employee records

As employees’ past performance may play a role in deciding who will be released, human resources (HR) needs to examine employee personnel files to ensure that the files are current and accurate. Review contents and make sure that employee evaluations and performance reviews are up to date.

Make sure that managers and supervisors use the evaluation system properly and perform proper recordkeeping.

Personnel records should be maintained in the custody of an employer representative to verify that the records are accurate and have not been altered. In the event of future claims against the company, all employee information must be available, orderly, and accurate.

Be consistent

After determining that downsizing must occur, HR should establish the criteria for releasing employees. Apply those criteria equally to all employees, making no exceptions. To do otherwise opens the organization up to charges of discrimination and other legal challenges.

Employers should monitor the age, sex, and race of the employees to be downsized. If any group appears to be affected disproportionately, the situation should be reviewed to ensure that the process was not discriminatory.

Remember that even if a practice was not intended to discriminate, actions which have an adverse impact on a protected class may be unlawful.