COVID-19 Economic Impact: Laying Off Employee Considerations
March 23, 2020
ARE YOU CONSIDERING LAYING OFF EMPLOYEES?
By Chuck Bachman and Billy Miles, Attorneys at Law
We know many of our clients are considering layoffs or reductions-in-force during this difficult time. To that end, we thought it might be helpful if we sent out a broad list of items you might want to consider when preparing for and implementing a layoff. As you can imagine, layoffs can be a complicated process and this checklist should not be considered specific legal advice. Rather, this is a broad overview of factors you should consider if you decide you want to move forward with a layoff.
Pre-Layoff Planning Considerations
Before moving forward with a layoff, you should consider whether there are any alternatives to the layoff or whether the layoff is going to have the desired effect in light of your existing policies/contracts:
Have you considered alternatives to the layoff including:
• a voluntary resignation program;
• across the board salary reductions;
• reduced work hours;
• a brief shutdown;
• early-retirement packages; or
• reassigning employees?
Do you have a clear communication plan about the layoffs to minimize the stress/impact the layoff will have on your employees and your reputation in the community?
Have you reviewed your employment policies and contracts for language limiting your ability to conduct a layoff, such as:
• specifications of layoff procedure;
• policies negating at-will employment; or
• termination notice provisions (e.g., provisions that state employer must give employee some number of days’ notice before moving forward with termination)?
Have you reviewed your policies, past practices, and contracts to determine whether the you must make any payments at the time of termination, such as:
• accrued vacation/personal time off benefits;
• severance pay mandated by an employment contract; or
• severance pay mandated by an express or implied policy?
If your workforce is unionized, have you considered the terms of any collective bargaining agreement (CBA)?
Are you going to offer severance packages to the impacted employees in exchange for full waiver of any potential claims against you? If so, do you have the appropriate notice provisions in place for those releases to be valid?
Who Are You Going to Layoff?
Assuming you have decided that a layoff is your best alternative, here are some important questions to consider:
• How are you going to decide who is going to be laid off?
• Are you eliminating an entire department?
• Are you choosing employees based on seniority?
• Are you going to terminate the highest/lowest paid employees? Are you going to terminate based on performance history?
• Have the individuals that will determine the layoff group been trained on selection guidelines and equal employment opportunity considerations?
• Has the process for documenting the decision-making been determined and documented in writing?1
• Has an adverse impact analysis of the effect of the selection process been conducted and documented to ensure that no particular protected classes are disproportionately affected?
• Have the selection decisions been reviewed to ensure that they are consistent with the stated layoff goals?
Is there any risk than an employee selected for layoff may claim retaliation for:
• pre-existing legal claims;
• recently protected leaves of absence;
• internal complaints such as harassment or discrimination; or
• whistleblowing activities?
Have You Considered Your Reporting and Notice Obligations?
In the event you layoff a certain number of employees, there may be federal and state notice requirements:
Does the layoff trigger the federal Worker Adjustment Retraining and Notification Act (WARN Act) and if so, have its reporting and notice requirements been complied with?
Do the circumstances warrant an exception to the notice requirement or is shortened notice permissible under the federal WARN Acts and any state WARN laws?
Is there a state law “mini-WARN” statute that applies?
Have you considered legal obligations to file unemployment claims on behalf of your employees?
We recently had a meeting in another context with an investigator with the United States Equal Employment Opportunity Commission (one of the federal agencies responsible for protecting the federal rights of employees). That investigator told us that the EEOC takes the position that “if the employer did not document what it did in writing, it did not happen.”
Conducting a layoff can be a challenging process riddled with potential legal landmines. We encourage you to seek legal counsel if you decide to move forward with layoff. If you’d like to discuss any of these concepts in more detail, please contact us.
Chuck Bachman (firstname.lastname@example.org) and Billy Miles (email@example.com), GDCR Attorneys at Law, (770) 422-1776.