How To Conduct a Compliant Business Reorganization or Reduction in Force
Business reorganizations and reductions in force are a normal part of the business lifecycle, particularly during an adverse economic period. This article discusses some of the more common legal risks associated with reorganization methods, as well as best practices to mitigate those risks.
November 03, 2023 at 10:00 AM
8 minute read
Employment Law
Business reorganizations and reductions in force (RIFs) are a normal part of the business lifecycle, particularly during an adverse economic period. These measures can help businesses find new ways to save on labor costs, eliminate redundancies, and increase workforce efficiency. If not implemented correctly, however, business reorganizations and RIFs can also result in potentially substantial liability for U.S. businesses.
In this article, we will discuss some of the more common legal risks and considerations associated with such measures, as well as best practices to mitigate those risks.
|Federal and State WARN Acts
Perhaps the most important consideration is whether the reorganization or RIF will trigger requirements under the federal Worker Adjustment and Retraining Notification (WARN) Act. At a high level, the WARN Act requires employers to provide affected workers with 60 days' advance written notice of certain worksite closures, mass layoffs and other covered reductions in work hours. Failure to provide such notice can result in steep penalties for the employer.
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