Legal Analysis of Reduction in Force Under U.S. Employment Law

Introduction to Reduction in Force and HR Legal Obligations

A Reduction in Force ("RIF") is legal in the United States when justified by legitimate business necessity. Employers undertaking a RIF are expected to consider applicable federal laws, contractual terms, and advance notice obligations in order to avoid any claims of discrimination from employees (Connolly Jr., Connolly, & Feinstein, 2018). Human Resource (HR) professionals are tasked with the responsibility of managing employees within an organization, and the HR manager is expected to refer to the laws that govern employees' rights and obligations while performing their duties.

There are serious consequences for an organization that violates employees' rights, including lawsuits, financial losses, and reputational damage. The HR manager should be familiar with legislation such as Equal Employment Opportunity (EEO) laws that protect against discrimination based on age, national origin, religion, disability, sex, or pregnancy. Wage and hour laws are also significant to the HR manager, as they dictate the wages and working hours permissible for an individual. Several other labor regulations — including employee benefits laws, immigration laws, and workplace safety laws — are also relevant. The HR manager must consider all of these laws before making any decision that concerns employees, in order to avoid liability (Mathis et al., 2017).

Ali Sanders: Immigration Status and Citizenship Discrimination

Ali Sanders, being a naturalized American citizen, may perceive his termination as discrimination based on his citizenship or immigration status. The Immigration Reform and Control Act (IRCA) is a federal law that offers protection to individuals from employment discrimination based on immigration or citizenship status. Discrimination, harassment, or retaliation against an employee based on race, sex, or religion is also a violation of the law. Specifically, it is illegal to discriminate based on national origin or citizenship status in terminating an employee (Rassas, 2020). Title VII of the Civil Rights Act of 1964 is an additional federal law that offers protection for individuals discriminated against based on national origin, sex, age, or religion (Meiners, Ringleb, & Edwards, 2014). Therefore, before terminating Ali Sanders' employment contract, the company must ensure that it has not acted in any way that could be construed as discrimination based on immigration status.

Ali is a highly skilled individual employed on a contract basis; it is therefore appropriate to review the "just cause termination" clause in his contract to confirm whether the grounds for termination are permissible. Under U.S. law, a notice period is not strictly required when terminating an individual employment relationship. However, the company will need to demonstrate that there is no form of discrimination and that the company is making legitimate organizational changes, including reducing the number of employees.

Sally: Age Discrimination, Severance, and COBRA Rights

Employers are prohibited under U.S. law from selecting employees for termination based on age. The employer is expected to show legitimate and non-discriminatory reasons for any termination. The Age Discrimination in Employment Act (ADEA) is a federal law that protects workers aged 40 years and above against employment discrimination (Notestine, 2000). Sally is a 64-year-old and is therefore protected by this law. She may file a claim for unfair discrimination based on age unless she has signed a valid waiver of the federal age discrimination claim. According to the Older Workers Benefit Protection Act (OWBPA), any such waiver must have been fully understood and voluntarily signed by Sally, with direction from an attorney.

Sally is an administrative assistant responsible for the online store. Given that the online store has failed, there may no longer be a need for an administrative assistant in that role. Even though Sally performs her duties well, she has missed 14 days in the last two months, making her attendance record a reliability concern. Her employment termination may be justifiable on the basis of organizational necessity. However, it would be prudent to consider offering a severance package, given her length of service and personal circumstances. A severance agreement is an arrangement between the employer and the employee in which the employer provides a severance package in exchange for the employee's assurance not to sue the employer. It may include a lump sum of money, health insurance continuation, continued payments for a set period, and access to an outplacement program.

A severance payment is not a mandatory requirement under the Fair Labor Standards Act (FLSA), but may be required if there is a written contract providing for it, if the employee handbook documents such a policy, if the employer has a history of offering severance pay, or if the employer has made an oral promise of severance payment. Sally will also have a right to health insurance coverage after her termination. According to the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986, a terminated employee has the right to continued healthcare coverage for a specific period. The law requires any employer with more than 20 employees to offer a health insurance plan to its employees (Pynes & Lombardi, 2011).