For most organizational leadership, a layoff, a firing or “letting people go” that at one time you hired and made a “permanent” employee hurts and is hard for all parties. In almost every case where I am involved as an outplacement provider, I see decision pain and difficulty. When I talk to human resources people and senior leadership about this issue, I see their empathy and the burden of remembering compliance issues. In some cases, letting someone go because of economics and a downturn in business isn’t the only reason. How to handle a layoff or reduction in force (RIF) the right way can be done if you bear in mind key tenets around compliance. This article should give you a primer or starter guide when facing tough decisions.
It’s people first, but choose selection criteria.
With some companies severing an employee, they take the hire-slow-and-fire-fast mindset, which is an industry myth. Make sure you set selection criteria for those who you keep at your company very clear. For those you keep, think about performance, productivity, skill sets, versatility or agility, performance, education, seniority, experience, tenure, productivity, long-term potential, attendance and attitude. It is better to have these and other factors pre-built into your policies before a layoff. How you evaluate people prior to a layoff should align closely with how you make decisions at the end of tenure.
Question: Will your selection criteria seem fair, and do they reflect how you must move your organization forward?
Align attorneys, CFOs and the team with your values.
If you have internal counsel, great, and if you don’t have internal counsel, you certainly need to talk to an attorney familiar with employment law and preferably an attorney who shares your positive commitment to people. At the time of a layoff, your internal counsel, HR consultants and outplacement provider should have a say in how you are treating those you are letting go. Make sure that your counsel is not just making sure you are compliant but has a heart to see the impact this will have on those left behind. This should not be just a financial decision but a people decision.
Question: How will your layoff decisions reflect the values that you state and try to uphold during the course of anyone’s career?
Pay attention to protected classes.
After aligning your hopefully people-first values with your executive team, you need to pay attention to other compliance issues. Talk to counsel about the adverse or disparate impact on a protected class for selected employees. Watch disproportionate percentages.
What are the protected classes? They include race, color, ethnicity, national origin, religion, gender, genetic information, age (in most states, 40 or over), disability and veteran status. Check state law for additional protected classes — for example, sexual orientation, marital status, smokers.
Question: Will this layoff look like it is tilting toward a disproportionate percentage of people in a protected class?
Know about Worker Adjustment and Retraining Notification Act regulations.
According to the U.S. Department of Labor, under certain conditions, the Worker Adjustment and Retraining Notification (WARN) Actrequires employers to give their workers 60 days’ notice before a plant closing or mass layoff. How do the feds determine a mass layoff? I recommend you study the standards of how a mass layoff is defined to learn how you need to respond and nuanced questions that may be different for your company in your state. In general, it is 50 or more people, but study the math, according to your state and federal law. Providing notice to state dislocated worker units and rapid-response teams? These need to be studied, as do plant closure laws. How you inform employees about layoffs, duration, separation dates and more needs to be communicated properly to reduce your risk.
Question: Does your state have any other additional requirements, like mini-WARN laws or other exceptions that you need to know about now?
Review regulatory compliance of the Older Workers Benefit Protection Act.
The Older Workers Benefit Protection Act (OWBPA) is an amendment to the Age Discrimination in Employment Act (ADEA). The OWBPA is federal law and requires employers to offer older workers, defined as at least 40 years old, benefits that are equal to or, in some cases, cost the employer as much as the benefits it offers to younger workers. The OWBPA sets minimum standards for an employee waiver of the right to sue for age discrimination. This is designed to ensure that the waiver is knowing and voluntary. Under the OWBPA, employers also need to provide workers aged 40 and over a consideration period of at least 21 days when one older worker is being separated, and 45 days when two or more older workers are being separated. Additionally, employees must receive a revocation period of at least seven days.
Question: Do you know the additional requirements that are needed to validate the releases as you do a reduction in force or as part of a voluntary exit incentive program?
There are many considerations during a layoff, whether it is one person or 50-plus, that the leadership of any company needs to consider. It is a hard time for both employee and employer, but it can be a time where you do not incur more hardship if you follow wise counsel and positive values.
Bonus Suggestions: How you handle a layoff with an affected person matters, whether it is one or more. There are the legal, financial and emotional sides of this that must be handled in tandem and the right way. Determine severance packages, and don’t skimp on outplacement services that can help lessen the impact, possibly prevent more serious situations and give that person tangible work to do to land their next opportunity. Remember, in all of this, it is a message you are sending to those left behind. Handle it correctly, with class and dignity, and you won’t regret it.