Manage the Challenges and Risks when Re-hiring | DCR Workforce Blog

Manage the Challenges and Risks when Re-hiring

No employer would intentionally re-hire someone who was fired for cause. But, in the aftermath of the recessionary days, many employers are open to re-hiring old workers whom they let go for reasons other than performance issues. In fact, re-hiring of former workers has been identified as a key recruitment and workforce strategy of many large companies. These individuals have already demonstrated their skills, work ethic and knowledge of the company. They can “hit the ground running”. But of course, if helps to be aware of the possible pitfalls arising out of this strategy, before embracing it.

Any plan to re-hire former employees will need to take the following challenges and risks into consideration:

  • Employee-classification issues: If you are planning to invite a former employee to return as an independent contractor, be sure that theclassification will not get called into question. The IRS always examines former employees to ensure that, in their new role as an independent contractor, they are assigned different responsibilities, their work location and hours are not set by their former employer, and that the worker clearly qualifies for 1099 categorization.
  • Discrimination Issues: The decision to invite an employee back to work should follow a transparent process consistent with normal hiring procedures. The individual must have the required skills for the job, and be paid appropriately for the position. We advise our clients to ensure that the individual is being hired against a written job order and job description that has undergone the normal internal review and approval process and that more than one candidate is considered for each position. . Any contentions of discrimination on account of race, color, religion, sex, national origin, age and disability etc. may lead to considerable legal problems. The use of a well-reasoned out plan and standard hiring procedures is of particular importance when re-hiring only some of the former employees.
  • Potential bias: Make sure that the recruitment process is managed in such way that there is no possibility of anyone in the hiring team succumbing to persuasions which are personal rather than professional. If your standard approach is to involve multiple interviewers, adhere to that approach. Always consider more than one candidate, and be prepared to justify the selection decision.
  • Transition and Assimilation: When re-hired employees come back on board, they may find themselves in a different reporting structure – perhaps in a lower supervisory level – when compared to their old subordinates. They may also find themselves unable to work harmoniously alongside the people that were hired in their absence. Such possibilities will need to be anticipated and addressed. It may also be necessary to ensure that the re-hired worker does not harbor any rancor over the separation or that existing employees are not threatened by the individual’s return..
  • Legal and Policy issues: Internal policy guidelines – like voluntary job abandonment policies, leave policies, severance or lay-off/recall must be scrupulously followed and consistently applied to all the employees; and duly documented for later reference. The company should have a written position on the calculation of tenure of returning employees, as this may affect vacation accrual and other benefits.

Performance-related issues: While most companiesdo not rehire individuals dismissed for performance reasons, there may be extenuating situations that justify an exception. For example, employees whose performance related issues and policy violations (like applying too much leave) were the result of a personal situation which was beyond their control may be re-hired. In these cases, a formal review process should be in place that places the decision with human resources, a hiring manager, and the hiring manager’s supervisor.  In these situations, companies must walk a fine line, verifying that the original issue leading to dismissal has been resolved without violating the privacy rights of the individual. Companies must also consider the level of disruption previously caused by the dismissed worker, and the potential disruption to operations that may result from any reluctance on the part of the existing employers to work with the individual.

  • Contractual Parameters with Employee Unions, if any: There is no right of recall for non-unionized employees of a private employer when they are downsized or laid-off.If an employer is under a collective bargaining agreement with an employee union that specifies that employees who were laid off due to lack of work must be rehired when business conditions improve, the agreement will have to be honored in a manner that meets contractual obligations and is non-discriminatory.
  • Issues with Pension Plan Payments: When workers who participate in pension plans are terminated, they would have received their benefits.  When rehired, the company must first determine whether the specific conditions constitute termination (e.g., leaves of absence, inconsistent work schedules, and other factors may not constitute termination of employment). The employer must then sort out rules of parity and the one-year hold-out rule.

Clearly, there are benefits to rehiring former employees. These individuals can offer rapid productivity, cultural fit, savings in the cost and time spent on training, and more. In most situations, these benefits far outweigh the concerns and risks associated with such a strategy. However, it is important to recognize the legal and practical implications; so that effective policies and business practices are put in place.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.