If I Can’t Fire Someone, Can I Lay Him Off Instead?

Paul Falcone By Paul Falcone March 4, 2020

One of the biggest mistaken assumptions in the workplace is that companies can simply lay off their weakest performers rather than proceeding with progressive discipline.  In almost all cases, progressive discipline is the method of choice when it comes to dealing with substandard performance issues. To simply make the person and problem magically go away rarely works.  Read below to understand why so that you can avoid this potentially dangerous landmine.      

Managers who want to avoid the confrontation associated with progressive discipline and termination often look to the path of least resistance—a no-fault layoff—because it appears to provide a quicker solution to ending employment. However, there are certain legal and practical guidelines that you will need to follow when considering a layoff. Specifically, you'll need to evaluate the appropriate employee to be laid off, how long you'll have to wait before refilling that position, and what could happen if you were legally challenged for having improperly laid someone off.

First, keep in mind that you eliminate positions, not people.  In other words, your written records must reflect that a position is being eliminated because of a legitimate business need, and the individual who currently fills that position will now be impacted because there's no longer a job to report to.  If removing a problem performer is your goal, then eliminating that individual's job may be a big mistake. After all, you'll still need to get the work done.

Second, determining which employee should be separated once you've established a legitimate business reason to eliminate a position can be challenging.  Remember, you can't arbitrarily select someone for a layoff simply because she is your weakest performer or because she happens to be sitting in the seat that's being eliminated.  Instead, you must first identify the least qualified person in the department or unit to assume the remaining duties.  The least qualified person on paper, however, may end up being your best (albeit newest) performer. 

Let's look at an example to clarify these concepts. Let's say you're looking to eliminate one of three administrative assistant positions in your marketing department. Since there are three individuals that currently fill the role of administrative assistant in marketing, you've now got a pool to choose from, and your company will be required to conduct a "peer group analysis" to see which of the three current individuals is the least qualified to assume the remaining job responsibilities once the position is eliminated. 

First, develop a list of all employees in that group with similar titles or responsibilities. Second, review the nature of the remaining work to be done after the position is eliminated. For example, if the assistant position reporting to the digital/social media team is being considered for elimination, then document the responsibilities that will remain in the unit after the reduction in force. (Job descriptions are very helpful for such comparisons.) 

Third, determine which of the three assistants in marketing is the least qualified to assume those remaining duties. In essence, you'll be comparing all three employees' essential job responsibilities, skills, knowledge and abilities. In addition, review the employees' annual performance reviews, tenure, and history of progressive discipline to create the appropriate written record. It would also make sense to review their work experience prior to joining your organization so that tenure alone doesn't outweigh other considerations.

Finally, once that documented comparison occurs for the three employees who could potentially qualify to perform the remaining work, then it's time to determine who is the least qualified individual.  If that individual is the person you originally targeted for the layoff because of her ongoing performance problems, then you may be safe to separate her employment.  But it's rare that it works out that way.  It's more often the case that the underperforming employee is arguably not the least qualified individual (based on your review of all relevant criteria, including tenure, performance evaluations, and other written records). Since your records don't support separating the problematic employee in question, then you'd have to lay off one of the other two assistants. Of course, that would mean that a layoff would no longer be a viable alternative for you since you can't use it to separate the one administrative assistant who's causing all the problems. Therefore, you'd have to revert to managing that individual's performance via documented progressive discipline.

But wait.  There is another key consideration when determining if a layoff is the appropriate employer action when dealing with underperforming employees. You've also got to keep in mind that courts and juries have certain expectations about employers' responsibilities when eliminating positions and laying off workers. The logic is simply this: If a company has a legitimate business reason to eliminate a position, then it probably shouldn't have a need to recreate that position in the near future. If the company were to do that, it could appear to a judge or jury that the company's original action was pretext.  In other words, the court could be persuaded that the so-called "layoff" was really a termination for cause in disguise. This could obviously damage the company's credibility during litigation.

How long does the position need to remain unfilled?  That depends on your state.  In California, for example, there is a two-year statute of limitations on many unlawful employment practices if there was a potential violation of public policy. In other words, an ex-employee may file a complaint up to two years from the date that the unlawful practice occurred. So, California employers are safest waiting at least 24 months before filling a position that was previously eliminated.

What if this California employer were willing to gamble and fill the position after, say, twelve months?  Well, if the ex-employee learned that his previous position was filled and he then engaged the services of a plaintiff attorney to pursue the matter, then the damages sought would be similar to a wrongful termination claim.  If you were held to a for-cause standard of termination, you could be burdened with providing documentation to show that you had reason to terminate the employee because of substandard job performance, inappropriate workplace conduct, or excessive absenteeism. And that's not an easy threshold to meet if you laid off someone who has no corrective action on file and is simply just the weakest performer in the selection pool in your opinion.

As a result, an out-of-court settlement would probably need to be reached. Damages could include reimbursement for lost wages, compensation for emotional distress, plaintiff attorneys' fees, and in egregious cases of employer misconduct, punitive damages.  Bottom line:  Progressive discipline is the optimal way to deal with substandard job performance or inappropriate workplace behavior.  Trying to hide behind a layoff may feel easier to implement on the front end, but could leave your company high and dry should the matter ultimately proceed to litigation.

Paul Falcone (www.PaulFalconeHR.com) is CHRO at the Motion Picture & Television Fund in Los Angeles and author of 101 Tough Conversations to Have with Employees, 101 Sample Write-Ups for Documenting Employee Performance Problems, 96 Great Interview Questions to Ask Before You Hire, and 2600 Phrases for Effective Performance Reviews.  This article is adapted from 75 Ways for Managers to Hire, Develop, and Keep Great Employees (AMACOM/ HarperCollins Leadership, 2016).


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