May 26, 2023

Dan Prokott Addresses Companies’ Workforce Approach With Minnesota Lawyer and Finance & Commerce

In Minnesota Lawyer and Finance & Commerce, labor and employment partner Dan Prokott shared insight on companies’ workforce approach in the current economy.

“Employers are just being very cautious about growth and being very thoughtful about what they are projecting for the balance of this year into next year,” Prokott said. “On the exit side of things, we have seen at least a modest increase in workforce reductions for different employers,” he added.

“We are also seeing more modest workforce restructurings or reductions across a variety of industries where, from my perspective, employers are looking at the current demand for products and services that are within their industry and seeing that there may be a leveling-off perhaps in some areas,” Prokott asserted. “There may be some decline that causes them to right-size their organization going forward.”

Prokott suggested that businesses will maintain a cautious approach to hiring and workforce size. He also explained how employers may consider alternatives to firings, such as “reductions in hours, either on a temporary or longer-term basis” or “work-sharing — opportunities for multiple people to fill a position or role.” Prokott is not seeing as much of this, though some companies are looking at temporary layoffs instead of full terminations.

Further, Prokott noted that while businesses are considering “non-personnel cost-savings,” some will terminate workers. “The risks are facing claims that…they were selected for an impermissible reason, based on being a member of a protected class or retaliation for something they had said or done in the workplace,” he stated.

In conclusion, Prokott advised companies to have protocols in place to avoid these legal claims. “The way to guard against those claims is to ensure that there is a designed process from the beginning where the employer is identifying ‘why are we doing this workforce reduction’ and ‘what are the legitimate business reasons that we need to reduce headcount.’”

The full articles are available for Minnesota Lawyer and Finance & Commerce subscribers.

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