How Do You Handle More Layoffs?

Follow eight steps for more seamless reductions in force

Allen Smith, J.D. By Allen Smith, J.D. August 14, 2020
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laid-off worker caring box of personal belongings

​One round of layoffs is bad enough for rank-and-file morale. Subsequent layoffs can be even tougher on remaining employees, who may mourn the loss of their colleagues and wonder if they will be next. Employers can take steps to limit the damage and avert potential liability problems before and during the layoff process.

Open communications before and after layoffs, to the extent possible, can help workers come to terms with the layoffs.

"Employers should be in communication with employees as much as possible about the business conditions, what they are doing to avoid layoffs and the goals that the company needs to achieve to be able to avoid layoffs with emphasis on how employees can help," said Robin Shea, an attorney with Constangy, Brooks, Smith & Prophete in Winston-Salem, N.C. "Communication can also provide employees with the time to take whatever financial steps are necessary to survive the layoff, such as postponing big-ticket purchases or not taking on new household debt."

A company should convey measures being considered or implemented to avoid any further layoffs, said Elizabeth Gross, an attorney with Polsinelli in St. Louis. "For example, are there other cost-cutting options being considered, such as targeted expense reductions, reductions in hours, reductions in pay, voluntary separations with enhanced severance pay and voluntary retirement? If so, employees should be aware of those efforts," she said.

Employees should have access to employee assistance programs, Gross said. "Layoffs have a huge impact on morale, so supporting remaining employees is crucial to maintaining headcount, productivity and employee spirits."

Employers should focus on the scope of the layoffs at the outset, including which units will be affected, and explain the selection criteria. Involve an attorney so that selections are part of a conversation protected by the attorney-client privilege, said Lynne Anderson, an attorney with Faegre Drinker in Florham Park, N.J.

Eight Steps

Robin Samuel, an attorney with Baker McKenzie in Los Angeles, said employers should keep in mind the following when planning to lay off employees:

1. Be sympathetic, but don't say, "I'm sorry," "This wasn't my decision" or "I wish there were something I could do." Such extraneous comments might annoy someone being laid off.

2. Plan the layoff well in advance, if possible, and train front-line managers on their roles. Documenting the reasons for the layoff, for example, with a financial analysis of how many jobs had to be eliminated to meet payroll, will make it easier to defeat any discrimination claims filed by those laid off.

3. Comply with applicable legal requirements, such as the federal Worker Adjustment and Retraining Notification (WARN) Act and state mini-WARN notice mandates, employment contract obligations and collective bargaining agreements' notice requirements.

4. Conduct an adverse-impact analysis of the layoffs. This step can ensure that an employer is not taking a step backwards from a diversity, equity and inclusion perspective, and can also help in the defense of discrimination lawsuits.

5. Comply with final-pay rules.

6. Prepare for negative publicity. Develop an explanation for what's happening, practice saying it and make sure that it's circulated among the people who speak on behalf of the company. Create an internal communication plan to explain the layoffs.

7. Secure intellectual property and information by eliminating access to computer systems and, if a laid-off employee works remotely, retrieving documents. Employers need to think about this in advance of layoffs, so things go as smoothly as possible.

8. If offering severance, make sure any associated release is valid and tailored to meet state requirements. Employers should give individuals time to decide whether they will sign releases and possibly consult with their attorneys, he said. Otherwise, individuals may challenge the releases later.

Under the Older Workers Benefit Protection Act, employees who are 40 years old or older are guaranteed time to think about whether or not to sign a release—21 days if only one person is being laid off, 45 days if two or more are laid off. After signing, they have another seven days to revoke the acceptance of the agreement, Samuel explained.

When the release is signed in exchange for a severance package, the separation agreement must list the job titles and ages of all employees in the organizational unit, showing which are being laid off and which are not, noted Neil Capobianco, an attorney with McDermott Will & Emery in New York City.

[Need help with legal questions? Check out the new SHRM LegalNetwork.]

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After a layoff, it's natural for remaining employees to wonder if their jobs are up next for elimination. The employer should craft a positive but cautious message that conveys that every effort was made to avoid the layoffs, which were the last resort, Samuel said.

Give remaining employees a chance to talk with management about the layoffs. The dialogue back and forth helps remaining workers understand what the layoffs mean for them, he noted.

Employers should remain open with employees about ongoing business challenges, said Lilian Doan Davis, an attorney with Polsinelli in St. Louis. "While many employers believe the best strategy to assuage employees' fears about layoffs is to completely avoid the topic, an employer's silence during an economic downturn or challenging time for a business can often lead to more insecurity among employees."

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