With the current economic conditions, employers face an uncertain future long-term (in some cases, in the short term). As many organizations are considering a reduction in force to improve cash flow, it’s critical to prioritize meeting compliance requirements and protecting employee engagement and retention. MP’s HR compliance experts share three important reminders employers should consider as they handle the difficult task of conducting layoffs.
4 Reminders for Conducting Layoffs
1. Ensure compliance with WARN.
The Worker Adjustment and Retraining Notification Act (WARN) requires employers with more than 100 employees to give a written layoff notice to affected employees for at least 60 days before a mass layoff. Some states have their own WARN Acts, which apply to smaller organizations and may have stricter requirements. If a company is conducting layoffs on a wider scale, they should consider working with an employment lawyer or HR expert (like the ones at MP) to ensure their plan is in compliance. Employers should work through these questions as they develop a detailed plan for layoffs:
- How many employees will be impacted? Start with an estimate and solidify the number later, if necessary.
- How will the company choose who to lay off? Ensure a solid business reason is in place and documented for layoff decisions. This documentation will be vital for avoiding discrimination or wrongful termination claims. Will an entire department or function be eliminated? Will selection criteria be based on:
- Performance metrics?
- How recently an employee joined the company?
- When will the company let laid-off employees know? When will the company let all employees know? Will notification meetings be done on the same day or phased? Will they need to perform a WARN notification 60 days in advance?
- What will occur in situations where managers who deliver notifications are also being laid off?
In addition to WARN, employers should also be mindful of these basic compliance concerns:
- Ensuring compliance with federal and state employment laws regarding discrimination.
- Creating a comprehensive business case for the layoff event. Share this business case in separation meetings with laid-off employees, remaining employees, and the media (if making statements).
2. Ensure compliance with last paycheck laws.
Organizations should remember that states have varying “last paycheck laws.” These laws may require a business to pay former employees within a certain timeframe, pay out remaining vacation time, etc. Employers should consider working with an HR expert or employment lawyer to verify their procedure before laying off employees. This is particularly critical for employers with:
- Offices in multiple states
- Remote employees in multiple states
Employers should pay former workers in a manner compliant with the last paycheck laws for the location where they work.
3. Provide severance and support services to former employees when possible.
When employers are able to, it’s ideal to offer some (or all) of these to make a difficult situation less painful for impacted employees:
- Severance pay: Ideally, employers will offer this compensation in continued payment rather than one sum. Employers should also consider paying the severance completely, even after the former employee has landed a new role. Employers should offer severance pay on a consistent scale to reduce exposure and liability. For example, offering severance pay commensurate with an employee’s years of service.
- Continued health benefits: If employers can offer fully or partially paid health benefits, this is ideal.
- Support for finding new job opportunities: This might include access to recruiters, free resume reviews and updates,
Making these offerings available will pay off in a few ways. Firstly, laid-off employees will be more likely to protect, rather than damage, the organization’s reputation. Every business’s most valuable assets are its employees. If their former employees are damaging their reputation, an employer will have extensive difficulty retaining current employees and hiring new ones when ready. Offering severance, continued health benefits, etc., will also improve current employee engagement and retention. If the employees remaining after a layoff see their former coworkers were treated well, they’ll be more likely to trust the employer.
4. Positive communication with remaining staff post-layoff is vital.
The staff remaining after a layoff are always deeply impacted by the event. Employers should focus on supporting these employees, as employee engagement and retention will be crucial for the company’s success. These are six best practices employers should use:
- Understand that remaining staff may be experiencing a form of grief. They may also be feeling stressed and worried about how their workload may change, or if they will also be laid off in the future. Be empathetic during this time and acknowledge their feelings.
- Set meetings with remaining employees as soon as possible after conducting layoffs. It may make sense to meet in a group or individually, especially for the more impacted employees.
- Share concern for the people who were laid off. If the company offers severance pay, support for a job search, etc., let remaining employees know about it.
- Outline what will happen next. This might include meetings for each department to redistribute work and reset goals, meetings with individuals to reset goals and discuss new responsibilities, etc.
- Share availability and answer any questions employees have. When employees have concerns, it’s essential to answer the question calmly with as much transparency as possible.
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