Winter layoffs

Steve Cesare

Most landscape companies traditionally undergo staff layoffs each October/November to adjust their payroll expenses as an administrative response necessitated by reduced seasonal workload. Layoffs of this size and predictability require that a company coordinate this process fairly to achieve its business goals without incurring undue problems.

It is important to note that a "layoff" is quite different from other employee transitions (e.g., termination, quit) in that it typically includes leaving the position vacant for six months, not back-filling the laid off worker with a replacement worker within that timeframe and not invoking a layoff as a form of employee discipline.
 

Performance appraisal. Rather than relying on simplistic methods like "last hired, first fired" or "pick number of guys to lay off," forward-thinking companies typically rely on their performance appraisal systems to determine which workers will be laid off. In these companies, all field employees receive a performance evaluation at the end of the "summer" season (i.e., late September) instead of on their anniversary date.

This performance appraisal process evaluates each employee on two criteria: current job performance and future job potential (i.e., likelihood of being promoted within 18 months).

As the diagram below summarizes, employees who are evaluated as being low on job performance and job potential (i.e., Group 1) must be laid off first. If additional layoffs are required, then employees evaluated as being low on job performance and high on job potential (i.e., Group 2) should be discharged. Preferably, employees in Groups 3 and 4 would not be laid off.

Reliance on this type of performance appraisal system to determine employee layoffs helps the company in several ways:

1) It provides the company with needed documentation if the layoff is ever challenged legally.

2) It helps the company keep top performers necessary for sustained and anticipated success.

3) It maintains behavioral accountability throughout the company's field operations.
 

Employee Categories

 

Legal implications. Beyond the use of the performance appraisal system, a company must definitively determine if its anticipated layoffs fall under the federal and/or state Worker Adjustment and Retraining Notification (WARN) Act that provides well-defined procedures for alerting appropriate federal, state and local government agencies of the imminent layoffs.

If a company falls within the federal or state WARN Act, it should comply fully with all legal requirements or otherwise risk possible financial penalties.

The company must also ensure that its layoff process does not violate any applicable civil rights laws. For example, if a company laid off its 15 oldest field employees, it would appear that potential age discrimination may have affected this business decision.

Similar claims of bias could also result if employees were laid off due to other systematic factors (e.g., national origin, race, disability, workers' compensation claims, retaliation).

With these critical points in mind, the landscape company should also take four prescriptive actions to minimize legal impact:

1) Include a definition of layoffs in the employee handbook.

2) Ensure that every employee has signed the employee handbook acknowledgment form.

3) Verify that each employee has signed a legally-defensible arbitration agreement.

4) Maintain appropriate employment practices liability insurance.
 

Workers' comp concerns. It is increasingly common for landscape companies to receive workers' compensation claims filed by employees who were recently laid off.

These workers' compensation claims can have significant impact on a company's safety costs as well as its ongoing experience modification rate.

While no set of interventions is flawless, astute organizations typically adopt the following four practices to minimize illegitimate workers' compensation claims:

1) Do not provide employees with advance notice of when the layoffs will occur thereby reducing the likelihood that an employee may get "injured" right before the scheduled layoff happens.

2) Have the necessary attestation on each employee's timesheet, i.e. "by signing this time sheet you are acknowledging that you were not injured while at work for the period covered. If you were injured while at work job during this period, do not sign this time sheet, and notify your supervisor immediately."

3) Have a strong accident investigation process.

4) Partner with an aggressive workers' compensation carrier that has an established reputation for examining questionable claims.

Steve Cesare is an industrial psychologist with the Harvest Group, a landscape consulting group. Send your HR questions to cesare@gie.net.