Layoff Process Steps

Layoff Process

Layoffs, also known as reductions in force (RIFs), occur when a company reduces its workforce due to various reasons such as financial difficulties or changes in organizational structure. The layoff process involves selecting employees to let go, communicating the decision, and providing support to those affected. Here are the steps involved in conducting a layoff:

Step 1: Select Employees for Layoff

After designing the future organizational structure, the company must decide which employees to retain and which ones to let go. Selection criteria could include factors like seniority, performance, job classification, or job knowledge and skills. Employers should avoid considering sensitive categories such as leave status or protected conduct (whistle-blower issues) to prevent adverse impacts on protected groups.

Step 2: Avoid Adverse Action/Disparate Impact

An organization should evaluate the selected employees for layoff to check for disparate impacts on protected classes, such as race, color, ethnicity, national origin, religion, gender, genetic information, age (over 40), disability, veteran status, or any state-specific protected classes like sexual orientation, marital status, or smokers. If a protected class is disproportionately affected by the layoff, the employer needs to assess and justify the decision.

Step 3: Comply with WARN Act Regulations

The Worker Adjustment and Retraining Notification (WARN) Act requires employers conducting mass layoffs to provide notice to affected employees, depending on the size and duration of the layoff. Employees must be informed if the layoff is permanent or temporary, the expected separation date, and bumping rights. Employers should consult state laws for additional requirements known as "mini-WARN" legislation, which may impose additional regulations for smaller businesses.

Step 4: Determine Severance Packages and Additional Services

Employers may choose to offer severance packages to displaced employees, which could include salary continuation, vacation pay, continued employer-paid benefits coverage, COBRA premiums, outplacement services, counseling and resume workshops, and other forms of assistance. Some states have specific criteria for required severance, while federal law does not obligate employers to provide severance.

Step 5: Review Older Workers Benefit Protection Act (OWBPA) Regulations

To effectually release claims under the Age Discrimination in Employment Act (ADEA), employers must comply with the OWBPA. The OWBPA sets specific requirements for releasing ADEA claims, ensuring that older workers' rights are protected.

Step 6: Conduct the Layoff Session

Communicating during a layoff is crucial. Employers should notify employees individually, be respectful, and explain the reasons behind the decision. Information shared includes health benefits, COBRA election procedures, retirement plan options, outplacement services, the recall process, and unemployment information. Providing a script to follow can assist in delivering the news more compassionately and professionally.

Step 7: Inform Remaining Workforce

Notifying the remaining workforce of the layoffs can help quell rumors and maintain transparency. The employer may also communicate the company's financial situation and its commitment to achieving organizational goals moving forward.