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Employers use recession to cut workers

Marketplace Staff Sep 7, 2009

Employers use recession to cut workers

Marketplace Staff Sep 7, 2009


Tess Vigeland: The economy has forced companies all over the world to cut jobs. The number of announced layoffs has topped one million so far this year, according to outplacement firm Challenger Gray and Christmas.

That’s 60 percent more than at this point last year. Most of those pinkslips are the result of money woes. There’s just not enough of it to issue all those paychecks.

But Sally Herships reports the recession is also giving cover to companies looking to get rid of employees, just ’cause.

SADIE NARDINI: Sadie Nardini managed a New York City yoga studio for the last two years. While there she had to layoff 15 employees. That was half of the workforce. She was told to say it was due to the recession. Except that wasn’t the real explanation. Her boss had other reasons. Too many men at the front desk.

SADIE NARDINI: And she wanted some goddess energy up there, which means some women, apparently.

Or someone looked unhealthy.

NARDINI: Or this person talks too loudly.

Whatever the real reasons, Sadie’s boss said to use the economy as an excuse. No one was given any notice. Even Sadie’s mom. She worked for the Yoga Studio too.

HERSHIPS: Did they fire your mother?

NARDINI: They fired my mother last week, due to the economy. The economy is a scapegoat right now. It’s dangerous a little bit.

David Lewis is a human resources consultant in Connecticut. He says on a scale of one to 10 for good excuses — recession is an 11.

DAVID LEWIS: It is that ripe and that rich for the opportunity to be able to let that individual go who you just haven’t been able to figure out a way to let go before.

Lewis says there are many employers who have a worker they should have fired long ago. One example:

LEWIS: Where that person is older, does not have the skills necessary to do the job today, they may have had those skills when they joined the company some 20 years ago, but the job’s passed them by.

Dan O’Meara is a lawyer in Philadelphia. He represents employers. He says for employers honesty is the best policy.

DAN O’MEARA: I think it’s better that employers tell employees an uncomfortable truth than a flattering lie. Sometimes employers want to say, “Oh, this had nothing to do with your job performance, oh, etc., etc.,” — when in fact it did.

But what about lawsuits? O’Meara says use release agreements to soften the blow. That’s a severance package in exchange for an agreement not to sue. But HR consultant David Lewis says that can be expensive.

LEWIS: Even there you have no guarantee that the person is going to accept it.

Instead of a severance package, Lewis says employers may want to use the economy as an excuse.

LEWIS: Put ’em into a group of five people, you’re laying off a lot easier.

SUZANNE GOLDBERG: When an employer is engaged in massive layoffs, proving that the reason for the layoff was discrimination rather then just financial distress will be more difficult.

That’s Columbia University law professor Suzanne Goldberg. She says you obviously can’t fire someone for race, gender or religion. But both lawyers agree there are a lot of reasons you can legally fire someone. O’Meara says, most U.S. workers are what’s called employed at will.

O’MEARA: Meaning the employer can fire them for good reason, bad reason, or no reason.

Which brings us back to using the recession as a excuse. Human resources consultant David Lewis says while getting rid of dead-weight employees may be a plus, no employer is happy to see their business shrink.

I’m Sally Herships for Marketplace.

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