Layoffs FAQ

Get answers to some common questions about laying off employees.

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What should we consider before laying workers off?

Think carefully about whether the company really needs to lay workers off. If other, less drastic alternatives would help, start there. Make sure your company has valid, business-related reasons for the layoff. Also, consider possible constraints on your company’s right to lay off workers, such as a collective bargaining agreement or employment contracts. For more information, see Making Layoff Decisions.

We’re cutting employee hours and pay in order to save as many jobs as possible; are there any potential pitfalls we should be aware of?

Yes. Wage and hour laws may limit your ability to cut hours or pay, or restrict the ways you can implement these measures. Even though employees generally support cuts like these if they’re necessary to avoid layoffs, you could still face legal problems if you aren’t careful.

How should we choose the workers who will be laid off?

When you have to conduct a layoff, you should consider your company's plans going forward. Are you expanding in some areas and shrinking in others? Which jobs will be absolutely essential in the future? Based on this information, consider which departments can be safely cut and what criteria you want to use to decide whom to keep.

From a legal perspective, it’s safest to use objective criteria: factors that can be measured and compared, such as seniority, productivity, or sales figures. If you want to use some subjective measures – like quality of work, skills, or teamwork – you must apply them consistently in evaluating workers. And, make sure your list doesn’t include a disproportionately large number of workers in a protected class. For more information on deciding whether to conduct layoffs and whom to lay off, see Making Layoff Decisions.

How should we tell our workforce about the layoffs?

Resist the temptation to just get it over with by laying workers off in a group, in an email, or in a rush. Meet with each targeted employee, explain the decision, and take the time to answer questions about what will happen next. And, don’t forget about the employees who haven’t been laid off: You should also meet with them, once the layoffs have been carried out, to explain why cuts were made and how your company plans to succeed in the future. For more information, see How to Conduct a Layoff.

Can we wait until the last minute to tell employees about a layoff, to avoid unnecessary gossip and wasted work time?

Legally, it depends on the size of your company, how many people are losing their jobs, and why. If the layoff is subject to the Worker Adjustment Retraining and Notification (WARN) Act, you must give employees who will be laid off at least 60 days’ advance notice, with a few exceptions. Even if you aren’t legally required to give this much notice, however, your plan to avoid gossip might not be furthered by laying people off suddenly. Whatever work time you save up front will probably be lost after the layoffs become public. 

by: , J.D.

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