Employee Layoff Checklist
Nearly 700,000 U.S. employees were subjected to layoffs between Nov. 1, 2008, and April 2010, according to Forbes.com. Companies preparing to layoff workers should take steps to avoid legal pitfalls. Analyze company policies in key employment areas to avoid complications after layoffs.
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Employment Status
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Determine the status of the workers under consideration for layoff. Employees who are considered at-will employees can be terminated or laid off with minimal -- if any -- notice. Employees under contract, however, may have special protection from terminations. Review company policies regarding employee hiring status to avoid violating any employment agreements. The most important factor in this area is whether an employer is legally obligated to meet certain expectations of an employment agreement.
Special benefits
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To lure employees away from other companies, some employers may offer new hires generous benefits, such as a stock option package. Benefits that were initially offered -- either verbally or written -- may be legally binding in the event of layoffs as well. Review the hiring offers to all employees prior to announcing layoffs. What you discover may influence whether you decide to terminate certain employees.
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Notice of Intent
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The U.S. Department of Labor instituted the Worker Adjustment and Retraining Notification Act, or WARN, to protect workers and communities from unexpected mass layoffs. Companies with 100 or more employees must provide written notification to affected employees at least 60 days prior to the beginning of layoffs. All employees, including managers, supervisors, hourly workers and salaried positions, are covered under the WARN guidelines. Also, the employees' representatives - such as a union, the local chief elected official such as the mayor and the state dislocated worker unit -- must be given 60 days' notice as well. The U.S. Department of Labor defines a mass layoff as at least 50 to 499 employees, if the total represents at least 33 percent of the total number of employees. For example, a business with 100 employees that lays off 50 employees is enacting a mass layoff, because the number of affected employees is greater than 33 percent of the total employed. Determine whether your company must file a layoff notice.
Overtime Pay
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An employee who typically worked beyond the typical 40-hour work week and was not paid overtime may feel justified in seeking compensation for this time after a layoff. Regardless of how the employee handled the issue while actively employed, a laid-off employee may sue for back compensation and be entitled to up to three years of unpaid overtime service. The business owner is often held responsible for the laid-off employee's attorney fees. Review company policy regarding overtime and overtime pay to avoid this issue.
Final Paycheck
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Depending on state regulations, laid-off employees may be entitled to their final paychecks within as little as 24 hours after termination. Review your state's regulations regarding final paychecks after termination. Company policy regarding sick leave, vacation leave or any other paid time off also will dictate the amount owed in the final paycheck.
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