Labor and Employment

RIF or Layoff: What Difference Does it Make?

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People have always made a living by working for others. And the fact that people sometimes lose their jobs is just as old as work itself.

Maybe it's happened, or about to happen, to you or someone you know. On the news, in an e-mail message or at the water cooler, you're probably hearing words like "reduction-in-force" (RIF), "layoff" or "downsizing." And you may wonder, does it make any difference what it's called?

Is There a Difference?

For all practical purposes, there isn't any real difference between RIFs and layoffs. You lose your job either way. There are some subtle differences, though.

Layoff: You May Have a Future

A layoff is when a particular employee, or a group of specific employees, is taken off the payroll, usually because there's a lack of work or the employer's economic condition makes it impossible to meet payroll obligations.

Traditionally, a layoff meant you were out of work only temporarily. There was a chance you'd be rehired when there was enough work for you to do or the employer's finances improved. For example, a roofing company may layoff workers during the winter when there's less work to do, and then rehire those workers in the spring or summer when business picks up again.

Today, that distinction is all but lost. A layoff is usually permanent. Nonetheless, if you're being laid off, you should ask your employer if there's any chance that you might be rehired in the future.

RIF: The job is Gone

A RIF, on the other hand, is the total elimination of jobs or positions. Again, RIFs usually happen because of a lack of work or the inability to pay everyone doing a particular job or task. For example, say your employer sells a product that you and several other workers make. Your employer decides to stop making and selling the product because it isn't profitable. Through a RIF, the employer can terminate all jobs related to the product.

Selective RIF. Take the same example, but say your employer only wants to reduce the volume of product it makes, rather than stop manufacturing it completely. Here, the employer has to be careful. It has to come up with a plan to identify which workers will be eliminated.

Usually, the decision is based on factors like each employee's past performance and number of years with the company, or "seniority." But it can't use a RIF to discriminate against specific employees. In other words, it can't use a RIF to terminate employees based upon their age, race or gender, for example.

Benefits if You Lose Your Job

Generally, if you're laid off or lose a job in a RIF, you can collect certain benefits.

Unemployment Benefits

Unemployment compensation benefits are meant to help you make ends meet until you find a new job. How much money you can receive and for how long depends on the unemployment compensation laws in your area. In most states, you can't receive these benefits in certain situation, such as when you voluntarily quit for no good reason or voluntarily resign, for example.

Health Insurance

Employees covered by employer-provided group health care plans may be able to keep their health insurance after losing their jobs. The Consolidated Omnibus Budget Reconciliation Act (COBRA) lets you can keep your benefits under certain conditions, such as if your employer has at least 20 employees and you pay all of the costs of the coverage after you're laid off.

Job Search & Training

An employer covered by the Worker Adjustment and Retraining Notification Act (WARN) must help you find a new job by giving you:

  • Job search placement assistance
  • Job training or retraining, including help with formal classroom education
  • Help writing your resume and preparing for job interviews

WARN applies to large employers, those with 100 or more employees, and benefits kick-in only when certain layoffs or RIFs occur, such as when 50 or more workers are laid off.

Should You Sue?

Probably not. The general rule in the US is that a worker can be fired (or can quit) for any reason or for no reason at all. This is called employment at will. So, realistically, unless you can show that you lost your job because of discrimination or in violation of the terms of your employment contract, you've got nothing to gain by suing your employer.

Losing your job can be frightening and stressful. In a RIF or layoff situation, however, you usually have some advance warning. Take advantage of it. Finding out what benefits you'll keep and starting a job search immediately will help you ride out the storm.

Questions for Your Attorney

  • I was recently laid off and my employer didn't pay me for all of the hours I actually worked in the last pay period. What can I do?
  • Several of my co-workers and I think that we were targeted for a layoff because of our age. We are all over 40 years old, and our employer didn't fire anyone under the age of 35. What kind of proof do we need for a discrimination claim?
  • Four months ago, I, along with six co-workers and lost our jobs in a RIF, at least that's what they called it. I just found out the company hired four new people to do the same job we were fired from. Can it do that? Didn't the employer have to offer those jobs to the seven of us who were let go?
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Odin, Feldman & Pittleman, P.C.

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Day & Johns, PLLC

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