How To Lay Off Employees: 5 Things to Know
Being a small business owner can be difficult in even the best of times. You are called upon to be the finance department, marketing specialist, head product developer, and human resources expert all at once. But, when the economy takes a turn for the worse, running a small business becomes even more challenging. Unfortunately, you may be wondering how to lay off employees and all of the requirements afterward. Here are some things you should think about when you are considering laying off employees:
Consider Alternatives to Layoffs
Downsizing is always the first thing that comes to mind if a business is having financial issues. However, a reduction in force can have a negative impact on your customer service and workforce, including the morale of your remaining employees. Before you resign yourself to mass layoffs, consider other alternatives such as reorganization, more focus on the type of work that is most lucrative for your company, or maybe early retirement options for employees who are close to that age.
Give Notice to Employees About Plant Closings or Mass Layoffs
If you believe you have no choice but to let some of your employees go there are notice requirements that you have to follow. You must give written notice to the affected employees under the federal retraining notification (warn) act if you are having a reduction in force (RIF), a plant closure, or plant relocation and you employ at least 100 people. This is a federal law, but some states also have their own WARN law so make sure and check all of the requirements. Failing to provide the appropriate layoff notification could subject you to fines and other penalties so make sure to follow the instructions to avoid any issues.
Beware Layoffs for Jury Duty, Family Leave, and Other Protected Classes
If your employee is called to serve on jury duty you cannot fire or threaten to fire them pursuant to federal law and many state laws.
The Family and Medical Leave Act (FMLA) grants unpaid time off for illness or to care for the illness of a family member. It is a federal law that applies to certain employers. Many states have similar laws. If your company meets the requirements you cannot fire or threaten to fire an employee for their decision to take this leave.
Consider Giving a Severance Package
If you will have laid-off workers you should consider providing them a transitional period followed by a period of severance pay. Your employees will also have the option of Cobra to extend their health insurance after they have been let go. All of this information should be outlined in a severance agreement. Following all of these steps should allow your former employees to apply for unemployment benefits if they need them.
In addition to being better for your employees, a properly drafted severance agreement can help protect you from future lawsuits. It's a good idea to have a lawyer draft your severance agreement to comply fully with federal and state laws.
Protect Employee Confidentiality
In order to ensure that the layoff process is proceeding smoothly and according to the letter of the law, the small business may choose to retain an attorney or consult with a human resources specialist before, during, and after the process of laying off employees. Keeping everything in order will make it easier for you as well as the departing employees as they look for new employment. Be aware that co-workers will talk to one another so keeping performance reviews and severance pay confidential is important.
If you have any questions regarding an employee layoff and how you can handle it best for your company, your remaining employees, and your soon-to-be former employees, you should speak to a local attorney with expertise in employment issues.
Related Resources:
- Can My Boss Force Me To Take Unpaid Time Off Work? (FindLaw’s Learn About the Law)
- Can I Get My Pension Money If I Get Laid Off? (FindLaw’s Learn About the Law)
- Final Paycheck Laws by State (FindLaw’s Learn About the Law)
