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Ten Steps for Employers Facing Layoffs, Furloughs, and Workplace Closures

The Coronavirus (COVID-19) has taken a toll on the workforce, with many employers forced to consider furloughs, layoffs, and workplace closures. Few business decisions involve as many legal, emotional, and practical considerations as the decision to lay off employees. The challenge for management is to reduce the workforce in a legal yet humane way while still achieving the intended cost savings associated with a leaner workforce.  

Should your company find it necessary to reduce your labor force through involuntary layoffs, do so with caution and consider these ten steps:

  1. Start with a group of decision-makers to avoid the risk of individual bias.
  2. Consider alternatives to full layoffs, such as Shared Work programs or partial unemployment.
  3. Establish criteria for layoff decisions based on objective information, which can include seniority, wage or salary rates, productivity, education, test scores, performance reviews, and demonstrable abilities for the available work.
  4. Use caution if relying on job performance as a layoff criterion; ensure pre-layoff performance evaluations are consistent and correspond to management’s historical perspective of the employee. In other words, a negative layoff review that contradicts a history of positive performance reviews may be a recipe for a lawsuit.
  5. Ensure layoff selections do not violate discrimination laws that protect employees from discrimination in any employment decision. For example, in a layoff, an employee in a protected status may claim disparate treatment by showing that the employer discriminated against the employee (i.e., selected the individual for layoff) because of the person’s protected characteristic.
  6. Review all policies, employee handbooks, collective bargaining agreements, and employment agreements, if any, to ensure the company follows its own rules for implementing layoffs. Noncompliance, with its own written commitments, can create additional liability and support the inference of discrimination against a protected group or individual.
  7. Should you give advance notice of a layoff? The Worker Adjustment and Retraining Notification Act (WARN) requires employers with 100 or more employees must provide employees sixty (60) days advance notice of mass layoffs or plant closure. Employers should consult legal counsel for assistance in interpreting and implementing WARN requirements.
  8. Create a communication plan for delivering the layoffs that include how to get unemployment benefits, use of Employee Assistance Plan (EAP) benefits, and/or, if available, severance and outplacement services. 
  9. Create a communication plan for remaining employees that assists with morale and engagement. 
  10. If providing a severance agreement and/or retention bonus, ensure legal counsel reviews all agreements before presenting to the affected employee(s).

For additional information, a recording of our webinar, “Managing a Reduction in Force During Covid-19: What Employers Need to Know,” is available on the Archbright website. Members can access it via our Covid-19 Resources Page in the Member Home section. Non-members can register here to receive the free recording. Eligible Archbright members are encouraged to call our HR Hotline with questions or seek clarification when necessary and have an Archbright HR Advisor or Legal Counsel review layoff processes and decisions before implementation.  

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Joy Sturgis, SPHR, SHRM-SCP

Joy has more than 15 years of managerial and director-level human resources experience in both manufacturing and service organizations. As an Archbright Content Manager, her responsibilities include creating and reviewing HR and legal content for all aspects of federal and Washington, Oregon and Idaho state employment law. She also supports our members with a variety of HR functions including HR advice and counsel, handbook and policy review, and employee development training. During her HR career, she has been responsible for leading HR strategies and functions for Washington companies as well as multi-state Business Units. Joy has a Bachelor of Science in Business Administration from Villanova University and a MBA from University of Phoenix.