What Does the Law Say About Laying Someone Off?

Following the letter of the law in layoffs can help companies avoid the courtroom.

Layoffs have become very common since the economic fall of 2007. Since then, there has been an increase in fights for the rights of the employees laid off, which include proving the layoff was reasonable, avoiding discrimination, giving appropriate notice and following the law following a layoff. If these guidelines are not followed with legal precision, the company can be vulnerable to massive lawsuits. These lawsuits can be extremely detrimental to a company already fighting an economic battle.

Proper Documentation

A document outlining the layoff plan can help protect the company from a lawsuit.

Perhaps the most important piece of the layoff process is proper documentation. The initial documentation stating why a layoff needs to occur must be formal. It must include the reason why a layoff is needed, the process that will decide who gets laid off and why the laid-off employees were chosen. This will help to protect the company in case of a lawsuit as it will help to avoid the impression that the layoff was done quickly, irrationally and/or emotionally.

Avoiding Discrimination

When laying off people, avoid even the appearance of discrimination.

Avoiding discrimination, or even the appearance of discrimination, is vital to the layoff process. No comments must be made, neither in writing nor verbally, that could make it appear as if the layoff decision was made on the basis of gender, race, socioeconomic status or any other external factor. Decide in advance on the positions to be released, rather than the people to be released. After creating this list, top management must review it, thinking critically about the impact the layoff will have on positions remaining at the company.

Giving Proper Warning

In some cases, companies must give employees at least 60 days notice prior to laying them off.

According to the Worker Adjustment and Retraining Notification Act, employers must provide at least 60 days notice of mass layoffs or plant closings. This applies to companies that have more than 100 employees. If a company has to give notice according to WARN, it can create a difficult situation for employees that have been notified they will be let go. While it would give them time to look for another job, it can open the company up for harsh reactions from the laid-off workforce. When giving notice is required, the company must think through external and internal communication policies and procedures.

Post-Layoff Issues

Following a layoff, companies may need to execute a benefits and severance plan.

Besides rebuilding morale and confidence in those remaining at the company, the employer may need to handle some kind of benefits package to those let go. There is specific legal language on some issues, such as COBRA, that needs to be included. Other issues are up to the company. For example, is the company going to provide benefits for an extended period of time? How will the employer pay out accrued vacation time? These are important decisions that must be decided with a legal team.

References

• "Bloomberg Business Week"; A Better Way to Handle Layoffs; Karen E. Klein; April 2008
• "Puget Sound Business Journal"; Legal Issues Complicate Layoff Policies; Tom Platt, et al.; April 2001