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Plant Closings, Layoffs and Workers’ Compensation Forwardby Doug McCoy Workers’ Compensation is not the sole cause of concern when a company decides to close a plant or conduct layoffs. We live in a time when rightsizing, downsizing, staff reductions, worker dislocation, staff adjustments, plant closures, layoffs, etc., are common place. This paper is written to give an outline of actions to take to help mitigate the potential monetary exposure arising out of workers’ compensation claims, following the announcement of a plant closure or layoff. In the more than two decades that I have been involved in Workers’ Compensation Claim Management, I have seen just about every form of workers compensation claim. I have seen plants close and what happens afterwards. I have seen companies do it the wrong way, and pay the consequences. I have also seen companies do it the way I consider right, and come out much better financially. Things have changed considerably over the past twenty years though. Today there are many issues that are not directly related to workers’ compensation claims post layoff, but they certainly are indirectly related. Today we have the Worker Adjustment and Retraining Notification Act, the Americans with Disabilities Act, the Older Workers’ Benefit Protection Act, the Job Training Partnership Act, just to name a few federal statutes, not to mention the state laws governing employment practices as they relate to downsizing. Our national economy is shifting from manufacturing to technology. People that were skilled in a particular trade find themselves out of work. Twenty years ago those people thought they would work for the same company until retirement, and live the good life, the American dream. Now they find themselves unemployed. As a result their communities are affected. Schools close, churches close, support businesses close, the entire family becomes affected and normal routines are disrupted. A common result is anger that leads to violence in the workplace. These "Best Practices" are an outline to apply to individual situations. They are a roadmap to develop the best case scenario to insure that legitimate claims continue to be paid fairly and promptly while claims that may arise due to the social, emotional and psychological influences surrounding losing one’s job are successfully controverted. Even though the following pages mention a myriad of issues other than workers’ compensation, each one affects the ultimate cost of worker dislocation related to workers’ compensation. Workers Compensation Claim Management Best Practices for Plant Closings or LayoffsPlant closings and layoffs became such a problem in the United States during the 1970’s that the United States Department of Labor sponsored a conference on plant closings in Washington D.C. in January of 1981 to discuss the issue and establish reference points that would be useful in dealing with economic dislocation in the years to come. It became clear early in the 1980’s that the pace and extent of plant closings would continue undiminished and unabated for the foreseeable future. The General Accounting Office estimates that 2.3 million workers were dislocated annually due to plant closings or layoffs. All indications are that the annual number continues to increase. As we approach the end of the decade of the 90’s it is apparent that the process of economic restructuring has rolled on with intensity and may go on indefinitely. Our country has entered an era when change takes place without influence of government or the intervention of local community groups. The responsibility of cushioning the impact of worker displacement is focused much more directly on the employer. Job insecurity has been called "the number one workplace issue in the 1990’s (WORKING WOMAN magazine, August 1992). Losing a job, or even the threat of a layoff, forces a person to make rapid, unwanted changes in their way of life. In early 1996 a study was conducted by the University of Guelph in Guelph, Ontario, Canada, on plant closures in rural communities. They found that the plant closures had a devastating economic and emotional impact on people’s lives. The study did not attempt to quantify the effect on workers compensation claims, but the results found indications that would also lead to increased claims for benefits. Although most of the laid-off workers in Canada found re-employment, it was often on a part-time basis or outside the community, requiring them to commute. Salaries changed dramatically, usually decreasing. Sixty-one per cent of workers who found new jobs had to spend at least one year unemployed. Layoffs affected men and women differently. Women were more reluctant than men to commute because of family obligations. The re-employment salaries of women on average dropped $11,000 compared to men who reported drops of $6,000. The economic impact was widely felt in the communities. Store closings and layoffs in businesses in the area followed plant closures. Even churches and schools must downsize or even close in response to diminished attendance and funds, further weakening the bonds of community. Emotionally, the impact causes difficulties in family life and the greater community. Considering the findings of this study you can anticipate an increase in claims for workers compensation following a plant closure or large lay off. That is not to say the claims have merit, but they will occur and they must be taken seriously in order to limit the economic exposure to the company. A survey conducted by Cigna Group Insurance Managed Disability and American Management Association found that downsizing and corporate restructuring may have trimmed the payroll, but where disability claims are concerned, the reverse is true. During 1996 the two corporations collaborated on a survey of nearly 300 large and mid-sized employer who underwent organizational staff changes between 1990 and 1995. The results show that job elimination during the period contributed to a rise in claims for both occupational and non-occupational disabilities, particularly in areas related to stress. The study showed that claims not only rose among employees that lost their jobs but also among the survivors. The increase in claims "is one of the unintended consequences of elimination, it’s critical for managers to recognize this because where disability claims are increasing so are costs," according the Eric Rolf Greenberg, director-management studies at American Management Association. Highlights of the study include: o 32% of those cutting jobs reported increases in disabilities related to mental/psychiatric/substance abuse. o 15% reported increases in cardiovascular/hypertension-related disabilities as compared to companies that did not cut jobs. o 33% saw an increase in occupational claims and 24% saw an increase in non-occupational claims. o At job cutting companies 13% reported an increase in occupational disability claims at the supervisory level and 7% increase in claims from managers. There are steps a company can take to minimize the damage and keep workers compensation costs to a minimum. Although there are no definitive studies on the effect of workers compensation claim increases related to plant closings and layoffs, we know that claims do increase. There may be particular increases in claims for occupational disease, hearing loss and cumulative trauma. Cumulative trauma or repetitive stress injuries often do not become an issue until someone is removed from the workplace. Some insurance company executives claim that approximately 40% to 50% of laid-off workers will file workers compensation claims against their employer within six months of termination. You may find that the trigger for claims to be filed six months post notification coincides with the termination of unemployment benefits. You should also anticipate your second flurry of workers compensation activity to occur in twelve months, when SDI (Supplemental Disability Income benefits) runs out. Although there are no guarantees that following these procedures will eliminate claims from rising due to plant closings or layoffs, they have proven to limit the claims and give the opportunity to manage the process for minimizing the costs. Even companies that take every precaution in the book often find themselves the target of lawsuits after a layoff. These are potentially dangerous because they can lead to class-action lawsuits, suits alleging discrimination and increased workers compensation claims being filed. In a tight job market, when it takes unemployed individuals longer to find a position, the risk of litigation increases. Those companies that have best prepared themselves for all the contingencies are best situated to withstand the challenge. The Transition Team The risk manager will be better able to limit the company’s liability if he or she is part of the decision team of senior management, who are aware, in advance, of any notification of plant closure. The risk manager’s first step is to schedule a strategy meeting at least 90 days prior to announcing the plant closure. The meeting should include, plant management, human resource representative, workers compensation claim personnel from the insurance carrier or third party administrator, loss prevention consultants from both the employer and insurance carrier, and a workers compensation defense attorney. This group will form the Transition Team to develop the appropriate strategy to follow in closing the plant or conducting layoffs. The Transition Team will also be able to give the risk manager input as to their opinion of the economic exposure anticipated for workers compensation claims. The Transition Team should discuss the timing of the announcement and other persons or entities that may be included in the Transition Team. Deciding who else should be on the Transition Team should not be limited to traditional thinking. Employers have a key role to play in controlling the consequences of plant closings. There are however, other groups in a position to make important contributions. Even unions, when given the opportunity have proven to play a roll in these situations. While some labor-management committees have helped to plan and implement readjustment programs for displaced workers, it would appear that this resource has not been tapped sufficiently. The union, after all, knows as much or more about the needs and capabilities of the workers as any other agency. Certainly, if the union is involved, the program will have more acceptability and credibility with the workers affected. During the meeting of the Transition Team, every option must be discussed to prepare for the various workers compensations claims that may be filed. The Transition Team should consider the business environment of the community the plant is located in. In smaller communities the plant may be the largest employer in the area. If this is the case, the opportunities for re-employment are minimized. The Transition Team should find out what the history of the community has been. Have other plants closed prior to this plant? Are there employment opportunities available in surrounding communities? Several questions must be answered as the Transition Team prepares a strategy specifically for the plant in question. No two circumstances will be alike, although similar patterns may be evident. There is no way to do a painless layoff. Someone must break the trust. Someone must decide who stays and who goes. Someone must deliver the message. Plans must be made and held in strictest confidence until the moment the announcement must be made. The anticipation of a layoff can be extremely detrimental to production. Working to make a plant closing or layoff happen is something of a selfless act because the primary goal is to protect the company’s interest. This means two things: (1) maintain complete secrecy until the last possible moment to prevent a premature disruption of work and, (2) protect the company from possible sabotage by the newly discharged employee. The little things can come back to haunt you in a layoff situation. Those empowered to carry out the layoff, the Transition Team, must do so with utmost care, even-handedness and concern about the details that affect employees’ morale and self-esteem. Steps taken by the Transition Team from the onset will go a long way to prepare for the layoff. Questions to ask and issues to consider when evaluating employees are: o Is there justification for each and every selection choice in the affected group? o Are protected groups (women, minorities, older workers) over-represented? o Have any of the employees to be let go recently complained of improper conduct, harassment, discrimination or other problems? o Have any of the employees to be let go recently been relocated from some distance? o Have all local and state laws that govern workers compensation leave, pregnancy leave and disability leave been checked with local counsel to determine how to proceed with individuals in those categories. In addition, the following steps should be followed. 1. Review personnel policies. Many personnel policies were drafted without the potential for layoffs in mind. However they may be relevant in a layoff, particularly policies discussing benefits, termination, equal employment opportunities, discipline, and grievance procedures. The Transition Team should ask, has the company established procedures that they would not want to follow in the event of a layoff? Has the company made promises it cannot keep in the event of a layoff? 2. Evaluate manager training to ensure it is adequate. Many post-layoff legal actions, whether for breach of contract, retaliation or discrimination relate to managers’ conduct which occurred long before anyone knew that the potential for layoff existed. Employees sometimes allege that managers made remarks about job security, discriminatory comments and the like, that either created an implied contract or suggested an improper motive. Properly trained managers to comply with the company’s policies and practices is the best preventative medicine which can be prescribed. 3. Document the need for layoff. It is helpful to review memoranda, announcements, minutes of meetings and other documentation that address the problems leading up to the layoff. Usually these documents are created by directors, executives and managers who may not be considering that they could eventually wind up as evidence in a lawsuit or claim. Therefore, all documents that include reasons for layoff, or a decision to have one, should be reviewed keeping in mind potential litigation. Involve a Representative of Employee Assistance in the Process The Transition Team should also consider whether or not to include a member that deals with crisis intervention. Violence in the workplace is on the increase. A key cause for the increase of violence in the workplace is loss of employment. Understanding this from the beginning and taking steps to prevent such a conflict may be beneficial in minimizing workers compensation claims. If you have an Employee Assistance Program counseling services may be available. This is a highly specialized field and may require that you consider adding an additional member to the team in the planning stage to prepare for crisis intervention. Offer as much outplacement assistance as you can afford. Emphasis should be on getting the displaced workers active in the readjustment process as soon as possible following the announcement. It is not easy for people who have spent their entire working lives at one point, which tends to be the pattern for people affected by plant shutdowns, to develop the self-confidence necessary for finding another job. Counseling and motivation sessions will help. Plant closings and layoffs are similar in many respects but, the strategy to deal with them may be different. If your intent is to have a layoff which leaves may of the laid off employees’ co-workers in your plant you must also consider the emotions of those remaining. Just because they are still employed does not mean that they are not struggling with the same emotional issues of their co-workers. Employee Assistance and Crisis Intervention should also be considered as a part of the Transition Team for layoffs too. Involve State and City Agencies in the Process Cities and states have a financial interest in the closure or layoff. Contact the federal, state and local authorities to find out what assistance they have available for employed workers. In California, for example, the State Job Training Coordination Council produced an "Employees’ Survival Kit" that offers helpful information. As we learned from the University of Guelph study, the economic affect of such actions are broader than the immediate employee population. Since the late 1980’s, economic restructuring has resulted in massive plant shutdowns and layoffs. City and state governments in many instances have created departments to assist in such situations. You should determine if the location involved has a city or state Employment Security Commission. Through such governmental agencies, the needs of employers and job-seeking individuals are facilitated by matching qualified workers with an employer’s specific employment needs. Many times it is a state agency that holds the responsibility of administering the Job Training Partnership Act (JTPA) of 1982. JTPA is a federally funded program designed to provide employment and training services to individuals who, for various reasons, have been unable to obtain meaningful employment. The program also provides opportunities to economically disadvantaged individuals and those dislocated due to business closings and layoffs. The Dislocated Worker Program, authorized by Title III of the Job Training Partnership Act, has an entirely different focus from the rest of the Act. While other titles of the Act provide for training resources for the economically disadvantaged, Title III is designed to assist experienced workers who have lost their jobs or are at risk of losing their jobs because of plant closings and layoffs due to technological change and world competition. The legislation requires that 70 percent of all Title III funds be devoted to training activities. Figures presented by the JTPA carry an implicit assumption that dislocated workers require significant retraining in order to become reemployed. Governors are allowed considerable latitude in defining dislocated workers eligible for the Title III program in their states. In addition to the federal requirement of notification prior to plant closings or layoff, (see section five on Notification), many state and local municipalities require notification of your intention to close a plant or conduct large layoffs. Make sure you check with the local governments for their requirements. WARN does not preempt any other jurisdictional requirement for notification. Notification Although the purpose of this paper is to outline strategies to prepare for increased workers compensation claims, there are other considerations for the Transition Team to consider that will effect their strategy. From the company’s viewpoint, early notice can be a problem if it adversely affects morale and productivity. In extreme cases, employees can file workers compensation stress claims following notification or their anger can be disruptive, perhaps even leading to violence or sabotage. The Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. 2101 et seq.; 20 CFR Part 639 requires covered employers to notify their workers of plant closures or mass layoffs 60 days in advance. In general this applies to employers that have 100 or more full time employees that have been employed for more than six months within the preceding twelve months. Generally, the WARN Act applies if:
The U. S. Department of Labor found in their review of plant closings, that the median notification time given by employers is six months. In some instances employers gave as much as eighteen month notice. Regardless of the legal requirements to notify your employees of a plant closure or layoff, there may be benefit in doing so earlier than required, from a human relations standpoint. The employer should involve their human resource department or employment attorney to determine if WARN applies to them. Assistance is available to employers through a pamphlet published by the Department of Labor entitled "A Guide to Advance Notice of Closings and Layoffs." This may be obtained by writing to: U. S. Department of Labor Employment and Training Administration Office of Work-Based Learning Room N-4469 200 Constitution Avenue, N.W. Washington, DC 20210 (202) 219-5577 WARN is in addition to, and does not preempt any other federal, state or local law, or any employer/employee agreement which requires other notification or benefit. As recent as May of 1996 a judge in Wisconsin found an employer violated the state’s plant closing law by not providing its employees with prior notice that the plant would be closed. The summary judgment could mean $1 million in back wages for 346 former employees. The total amount of wages owed was calculated to be $976,423 plus interest. The state is also asking a fine of $500 a day for the 60 days for not giving the local municipality and the state advance notice of the closing. Review collective bargaining and employment agreements. All union contracts and written employment agreements should be reviewed to ensure that the company is complying with all notice requirements and other layoff procedures. The timing of the announcement should consider the emotional impact as well as the legal requirements for notice. For instance, as much as possible, avoid holidays with particular significance and meaning for families, such as Christmas, Thanksgiving or Mother’s Day. If possible also give consideration to individual affected employees considering their birthdays, anniversaries, etc. Develop Strategy While all claims from a plant closure or layoff are not fraudulent, some of them are. This is why the risk manager should be involved in the decision making process early. The risk manager will be called on to give an assessment of the financial impact the company faces as a result of increased workers compensation exposure from the decision to layoff workers or close a plant. The company may be required to establish substantial reserves to pay anticipated workers compensation claims. The increased financial exposure is not solely for new claims that may arise post notification. All existing claims will be affected because the opportunity to return to work for the same employer has been eliminated. This exposure must be considered and increased reserves posted. Whether real or imagined, the healing process post announcement will take longer. The key topic of this paper is to discuss ways to avoid increased workers compensation claims and the litigation that will follow. In order to do this we have found the following items must be considered in developing the strategies to follow for workers compensation claim management. Below are suggested items to consider in preparation of your strategy. Employee Records Available Options Outplacement Services Loss Prevention Litigation Job Descriptions Other Claims Loss Runs 1. Employee Records Once a layoff is anticipated, personnel files may well take on added significance. What is in them? Has anyone checked lately? Does documentation exist to support the hard decision as to who will be let go and who retained? Most importantly, since employees’ past performance often plays a role in deciding whether they will stay or go, be certain that personnel files and performance reviews are up to date. Are employees’ performance being reviewed fairly, objectively and regularly? Have managers been trained to properly and effectively use the company’s performance review system? In order to contemplate future claim activity following the announcement of a plant closing or layoff you should insure that all employee information is available. The important thing to keep in mind here is to insure that any employee making a claim after the announcement is actually employed at the time of the alleged claim. In addition it is important to document the employment history of the individual employees. This information will be important to document prior conditions and to protect any claim that may be available for any second injury fund. The name of the individual employee’s supervisor and the department they are employed in will help to identify potential witnesses that would be able to address any claims made by the employee. It is also important to consider the demography of your staff including their sex, length of employment or any condition that may be considered a disability. All of this information will be important to know when planning the announcement and post announcement actions. Age is an important consideration in determining the problems and needs of displaced workers. Younger displaced workers, those under 40, can find other employment more readily and are good candidates for retraining programs. Older workers, those 55 and above, often can be accommodated through early retirement and other phase-out arrangements. In between is the group "at risk". Most employees in this middle group, have maintained their positions for a long period of time and were planning to retire with the company. Although they are qualified for other positions, they have great concerns about ‘starting over’ because they are older. They resent being let go or being offered a lesser job. Everyone responds differently to this kind of job stress, but single parents appear to have the most difficult time adjusting. They have a number of concerns to handle in their lives and have depended on the security of a good paying job with caring co-workers to keep them satisfied. The personnel records contain most of the information that has been outlined and will be imperative to have available particularly in the event the plant is closed. These records should be maintained in the same state as the facility was located in and there must be evidence that the records were maintained in the custody of an employer representative to verify they are accurate and have not been altered. 2. Available Options The Transition Team should know what options are available to employees that will be staff adjusted. Will there be any type of severance package? Will the company consider relocating employees to another location in the company? Many times severance, relocation programs or stay-put bonuses insure a smooth transition until closure or downsizing is complete with minimal disruption to company operations, and leaves the employees with a better attitude toward the company. Very few blue collar workers will move their residence unless there is some guarantee of employment. Transfer to another geographic area is not a viable option for very many displaced workers. Studies have shown that a break in their health insurance protection is the biggest concern of workers who lose their jobs. What benefits will be available to terminated employees? What expenses will the company incur at the time of a layoff? It is essential to assure continuation of health insurance benefits if you want to keep displaced employees cooperative. Benefit plans should be reviewed to determine whether, and to what extent, they allow for continuation of benefits or conversion privileges. 3. Outplacement Services When a plant is closed, management’s commitment to controlling workers compensation costs through the use of rehabilitation programs or transitional duty programs are eliminated. In addition to severance and relocation, many companies offer outplacement services to employees that are involuntarily terminated. This helps the employee seek other employment and gives them a sense that the company cares enough to assist them during this time of crisis. Many times the state and local government has agencies that assist in providing jobs for displaced workers. (See section four on Governmental Agencies.) Job Fairs that bring workers together with potential employers and other vocational rehabilitation efforts have proven to assist employees in finding new jobs and eliminating potential workers compensation claims. Other services that help during this time period are Employee Assistance Program personnel and consultants that work in crisis intervention. (See section three on Employee Assistance Program.) With the increase of violence in the workplace, this option should not be ignored. A little planning before the announcement with counselors available post announcement could minimize the potential for a very difficult period of time. Nationwide, it is estimated that 15% of compensation claims are stress related. These claims fall into three categories. Physical-mental, Mental-physical and Mental-mental. Mental-mental claims refer to mental stress which results in a mental disability. For example, a nervous breakdown brought on by job harassment or termination. Since the potential is present for mental-mental claims to be covered in certain jurisdictions and the fact that they can be produced by the stress of termination you should consider the potential of such claims when you announce the plant closure or layoff. 4. Loss Prevention It is important that the safety representative pay close attention to injuries reported in the last months that the plant is in operation. They should continue to encourage safety programs already in effect and continue with award incentive programs until the plant is closed. In addition all claims that occur following the announcement of the plant closing or layoff should be investigated as soon as possible by the plant safety personnel and the claim adjuster of the insurance company or third party administrator. OSHA requires employers to have the Material Safety Data Sheets on file for substances that their employees are exposed to. It will be important to maintain the OSHA file and any Material Safety Data Sheets after the plant closure to document that they were on file and to indicate what substances were not in the facility as much as substances that were. When there has been a plant closure or layoff, many times there are claims made for hearing loss. This comes generally from older, long term employees. Hearing loss is generally a very specific benefit in the workers compensation section of the state law. In the early seventies many employers began hearing conservation programs with well documented base lines and the progression of hearing loss or the lack thereof. In addition the Hearing Conservation Program included vigorous prevention methods that would be well documented. Make sure all such records are retained and that appropriate personnel are available to testify as to there accurateness. In addition to the discussion about the Material Safety Data Sheets and the Hearing Conservation Program make sure the Transition Team discusses any other potential claim for occupational disease or illness. One emerging claim that is gaining momentum in the nineties is Occupational Allergy or Asthma. Several jurisdictions have ruled that exposure to second-hand smoke resulting in disease or illness is work related. Consider all conceivable claims that may be available to your former employees under your specific state workers compensation law. 5. Litigation Although it would be great to have zero litigation following a plant closure or layoff the steps outlined in this paper are for the specific purpose of being prepared to enter a vigorous defense of workers compensation claims arising after the announcement of the closure or layoff. A dedicated workers compensation defense attorney should be selected and made a member of the Transition Team from the beginning. This attorney should not be the leader of the team since many other actions must take place, but the attorney should be involved in the strategy for litigation post announcement. The attorney should lead the defense strategy of the Transition Team. The Transition Team should review all relevant workers compensation case law and the statute in the jurisdiction in which the affected plant is located, to establish a defense posture. If the state has ADR, Alternative Dispute Resolution, this should be considered as a part of your strategy. When presented with claims, if given a choice, which case should be defended first? Should there be different defense strategies for different types of claims and what should those strategies include? Would there be a benefit for the defense attorney and a physician to tour the plant to get the "lay of the land" prior to the announcement? It is important that you vigorously defend the first few cases. If successful this may preclude further action from taking place. Also if your chances of success are limited consideration should be given to settling cases that cannot be won and concentrating on those that will give you the best position post trial. Remember that workers compensation is liberal in nature, slanted toward the employee. If it is felt that the chances of winning a case are low and would encourage others to file claims, perhaps a nominal settlement for the amount it would cost to defend should be considered. This will limit the monetary exposure and avoid clogging up the court system that will hear your cases, giving you favor with the courts in the event you elect to defend chosen cases that may be won. It is critical that there be witnesses available from the employer to testify to all records that have been maintained. This should be a person or persons that is a member of the Transition Team from the beginning. This should be a person or persons that are familiar with all potential claims and that can be a convincing witness on a variety of issues that may arise following the plant closure or layoff. 6. Job Descriptions Before the announcement is made is the most appropriate time to insure you have all your various positions well documented in written form. This will most likely have been done in your ADA documentation. Written Job Analysis are most likely on file. Once again, the JA’s are very important documentation that must be preserved. Prior to the announcement make sure the JA’s are current. The Transition Team may consider having specific jobs documented by video prior to the announcement. This recording should be done professionally and should document department by department, with emphasis on jobs, types of machines, and tools used. 7. Other Claims Even though the primary purpose of this document and the duties of the Transition Team are for Workers Compensation Claim Management post plant closure or layoff, many items covered can also prepare you for other potential legal actions. Pension claims ADA (Americans With Disabilities Act) Age, Sex or Racial Discrimination Remember that any claim of discrimination is specifically excluded in Part One, of the Workers Compensation Policy, the Employers Liability section. Exclusion 7 states: "This insurance does not cover damages arising out of coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination against or termination of any employee, or any personnel practices, policies, acts or omissions." The EEOC, in their report governing the ADA point out that the Act prohibits covered employers from discriminating against qualified individuals with disabilities because of their disabilities in connection with virtually all aspects of employment, including application procedures, hiring, firing, advancement, compensation, training, and other terms, conditions and privileges of employment. It applies to recruitment, advertising, tenure, layoff, leave, fringe benefits and all other employment-related activities. 8.. Loss Run The first analysis the Transition Team should make is of prior claim activity. A review of the claim activity for the prior two years should take place. The Transition Team should examine what types of claims have occurred, both medical only and lost time. All claims should be considered whether open or closed. This will give the Transition Team the information of what types of claims to expect and also the people that may have had injuries in the past, and employees that are currently working in transitional duty jobs. A change in condition claim from an employee working transitional duty whose job is terminated may be covered by workers compensation while at the same time is temporary in nature and not cause an action under the ADA. Loss run analysis should give the Transition Team an outline of what to expect. Rules for Layoffs There are Seven Rules to follow in layoff situations. 1. Communicate Tell the remaining employees the reason for the layoffs. Let them know the strategy of the company and how certain jobs will change. 2. Encourage Two-Way Communication Let employees have the opportunity to vent their fears and ask questions. Don’t mistake questions about the future as disloyalty or as an indication that they are planning to leave. 3. Reengineer Redefine and reengineer as soon as possible. Productivity is related to the clarity with wqhich employees understand their roles and responsibilities. People need to know how the work will be redistributed and how they will be measured. 4. Set New Goals Redefine priorities according to the company’s new mission. 5. Build Commitment to Change by Involving Employees Your employees have intelligent, well-considered ideas about their work and their company. Include them in solving problems and redesigning work. If you strategy is to have layoffs and not plant closure you should consider naming an employee to your Transition Team. 6. Innovate Look at your business from a new perspective. Think outside the box. Don’t do it the way you always did it. Set ambitious goals and encourage the remaining employees to help you accomplish them. 7. Be Open-Minded Managers should listen, not just talk. You have two ears and one mouth and should use them in that ratio. Your employees have intelligent, well-considered ideas about their work and their company. Involving them in solving problems will help rebuild their commitment to the company and implement the new strategy following layoffs.
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