What Does My Company Need to Consider Before Conducting Layoffs?

 

Workers are the backbone of any business. They drive what we do and open up possibilities throughout the life of a business. But, circumstances change and companies can shift focus, goals, or structure over time.

As your company evolves or goes through an M&A deal, the makeup of your employees can evolve, as well. You may need employees who fulfill different roles and services or you may even not need as many employees as profits and losses change future outlooks.

So, as your company evolves, what do you need to consider before conducting layoffs?

Provide Advance Notice

Before you make any layoffs, there are federal and state regulations to consider. Federally, the Worker Adjustment and Retraining Notification Act (WARN Act) requires certain employers to provide at least 60 calendar days' notice of plant closings and mass layoffs.. This notice must be given to the impacted employees or their representatives (labor unions or similar), the necessary state employment agency, and any other appropriate local government.

A WARN notice is required when a business with 100 or more full-time workers (not counting workers with less than 6 months on the job and workers who work fewer than 20 hours per week) is laying off at least 50 people at a single site of employment or employs 100 or more workers who work at least a combined 4,000 hours per week and is a private for-profit business, private non-profit organization, or quasi-public entity separately organized from regular government.

WARN is triggered when a covered employer:

  • Closes a facility or discontinues an operating unit permanently or temporarily, affecting at least 50 employees, not counting part-time workers, at a single site of employment or closes an operating unit that has fewer than 50 workers but that closing also involves the layoff of enough other workers to make the total number of layoffs 50 or more 

  • Lays off 500 or more workers (not counting part-time workers) at a single site of employment during a 30-day period 

  • Lays off 50-499 workers (not counting part-time workers) and these layoffs constitute 33% of the employer’s total active workforce (not counting part-time workers) at the single site of employment 

  • Announces a temporary layoff of fewer than 6 months that meets either of the two criteria above and then decides to extend the layoff for more than 6 months

  • Reduces the hours of work for 50 or more workers by 50% or more for each month in any 6-month period 

WARN is not triggered when a covered employer closes a temporary facility or completes a temporary project and the employees were hired with the clear understanding that their employment would end with the closing of the facility or completion of the project or when a covered employer closes a facility or operating unit due to a strike or lockout and the closing is not intended to evade the purposes of the WARN Act. 

Beyond these requirements, it’s important to review the details of your state’s WARN Act or other notice guidelines (if applicable). Many states have enacted “mini-WARN” legislation which may impose additional requirements and include smaller employers. 

Layoff the Right Employees

Sometimes entire departments get wiped out during the layoff process. If your company is conducting layoffs in a manner that requires individual decisions on which employees to let go, though, you should be meticulously selective in this process. It is important to determine (and document) the selection criteria at the outset, such as seniority, performance, job classification, or job knowledge and skills. 

Senior employees may carry a heavier cost to your bottom line, but they also may have earned the right to stay on board for whatever the next phase of your company is. Their experience and expertise can hold a value that outweighs the savings you get by lumping them in with other layoffs.

You also need to be considerate of any protected classes and ensure your layoffs are not disproportionately impacting one such group – by age, race, gender, religion, disability, etc. In addition, you should not consider leave status or other protected conduct when selecting affected employees. 

Crafting Severance Packages

Some employees may be entitled, whether by contract or by law, to receive severance packages during a layoff. Be sure to review your employment contracts and relevant laws to ensure compliance.

In addition, many employers choose to offer severance packages to departing employees when not required. A severance package benefits both the employee and the employer as it will include additional financial compensation and may also cover extended healthcare options, paid time off to conduct a job search, resources to assist with a job search, any unpaid vacation time, and more and can help minimize the risk of legal claims from former employees. 

Layoffs Impact Public Perceptions

Conducting layoffs in any business can be a gut-wrenching decision. Businesses should and do care for their employees so making such a move cannot be taken lightly, and both internal and external messaging should be carefully crafted. 

In today’s world, information gets around quickly. Companies often face scrutiny when laying off employees, and if public perception plays a role in the success of your business it’s crucial to take steps to mitigate this impact. Understand not only the internal costs but also external ones.

Work with White Summers

At White Summers, we work with companies at every stage of their development. From the ground level, through growth, and onto the global stage, we are there for our clients.

If you are considering layoffs but need help navigating the legal, financial, and public impacts, contact our team before making any commitments.


By White Summers

 
Samantha Gee