Most companies have been faced with tough employment decisions during the past year, from staff, pay and benefit reductions to other cost-cutting measures. Before making these tough choices, you need to look at how they will impact your business, including employee morale, long-term costs and future staffing issues.
“You have to evaluate your personnel and consider whether a reduction in staff will compromise the quality of services you provide,” says Ellen Kamon, senior attorney at Theodora Oringher Miller & Richman PC. “Look at restructuring and economizing in some creative ways, instead of just downsizing. Some options include hiring or salary freezes, raising employee contributions to health care premiums, salary reductions, restrictions on company travel policies or having employees play dual roles. That way you keep people on without having to compromise staffing.”
Smart Business learned more from Kamon about how to develop legal and consistent employment practices and make sure all employees are classified properly.
What risks do you face by not evaluating employment decisions properly or not having consistent employment practices in place?
Making the wrong employment decision can have a long-lasting economic impact on your business. It will cost you more money in the long run. You will not be able to compete in the market if you terminate people who are critical to your business and cannot keep up with demands as business picks up.
You could face lawsuits, audits and labor board investigations. Wage and hour disputes can very quickly turn into class-action lawsuits. For example, a terminated employee may go to the labor board to say he or she was not paid properly and did not say anything while employed. This person was actually improperly classified. Other employees might catch wind of this and get involved, as well, which can become quite costly. You need to work quickly to resolve any job classification problems internally before you have other employees making similar claims.