Layoff Labyrinth

The rough and tumble of fiscal 1996 appropriations augurs bad budget seasons to come. Thus executives and managers need to begin planning for a new kind of downsizing: the anticipatory reduction in force. Officials forced to close agencies or operate for months without final budgets likely will be compelled to run layoffs in anticipation of running out of money. Because of tardy action by Congress, executives at the Interstate Commerce Commission and Bureau of Mines were compelled to conduct RIFs before legislation closing the agencies had been passed.

"If I didn't take actions to protect my budget, then I would have ended up having to RIF more employees. I think that's a concern that many managers will have in this anticipatory situation," said former ICC chief Linda Morgan. "You're trying to anticipate what your budget is going to be. If you fear what it is going to be, you can't really risk waiting and then having it happen and then having to RIF more people than you might have had you taken some actions in advance."

Civil service law states employees can be laid off "when the release is required because of . . . shortage of funds." Managers can take some comfort in the fact that the courts and the Merit Systems Protection Board give agencies wide latitude in deciding whether to use RIFs. In a 1985 ruling on layoffs at the Housing and Urban Development Department, the Federal Circuit Court of Appeals said, "An agency is accorded wide discretion in conducting a reduction in force; absent a clear abuse of that discretion, a substantial departure from applicable procedures, a misconstruction of governing statutes, or the like, we do not upset a final agency decision."

"The standard here is that a prudent manager has to take contingency actions," said Ed McHugh, who heads the Office of Personnel Management Workforce Restructuring Office. "Now, if Congress, for example, had changed at the last minute and said, 'OK, the final bill is that we are not going to get rid of ICC, or we're not getting rid of these functions,' the RIF can always be canceled. But [managers] had to get the process moving in order to meet these other legal requirements."

Nevertheless, McHugh acknowledged layoffs spawned by this year's budget struggles have broken new ground. "Under the RIF process, you have to establish the reason and have a legitimate reason for conducting it. And usually, that's a statute, an appropriation act, or something that's definite. In these cases, you didn't really have anything that was final," McHugh said. "We have not typically had cases where an agency on the one hand is forced to act because of the need to get employees notice and get the process moving, and at the same time, has some ambiguity about whether these things were actually going to take place when all was said and done."

Executives and managers are further hamstrung by the requirement that they give employees 60 days' notice of layoffs, McHugh said. "And the irony is that as you get into the fiscal year your options narrow considerably because you have got less time available and less money available to work with."

Morgan RIF'd approximately 120 people in closing the ICC. By mid-February, 12 people had appealed and Morgan expected several more filings. Despite the appeals, Morgan remains convinced she acted appropriately. "Congress expects you to not run out of money and then say, 'Oh, you know, I don't have the money, please help me.' They would say, 'Well, why didn't you separate employees if you thought you were going to run out of money?' "

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