If your company is facing the need to cut costs or restructure, a group layoff may be a necessary solution.
As HR experts, we know that conducting a group layoff is a challenging and sensitive process for any business.
We support businesses through layoffs by ensuring they treat employees fairly and in compliance with the law.
In this article, we’ll explore strategies for protecting your business from legal risks during group layoffs while ensuring the process is respectful and transparent for those affected.
How to Conduct a Group Layoff
If you need to lay off a group of employees, it’s important to avoid mistakes that can lead to legal issues and kill employee morale.
There are several steps you can take to ensure a mass layoff goes as smoothly as possible:
1. Inform Senior Employees
Schedule a confidential meeting with senior employees, including the head of human resources, if you have them.
Explain the situation that has led to the decision to lay off employees so they understand your reasoning.
This is important because you will need their support during and after the layoffs.
2. Review Your State’s Notice Requirements for Layoffs
Businesses with only a few employees may not be required to give employees any notice before closing.
But in some states, notice is required under certain circumstances.
For example, New York requires businesses with 50 or more employees to provide 90 days’ notice before conducting mass layoffs or plant closings that affect 25 or more workers, when the layoff affects at least 33% of the workforce at a single site as part of New York’s WARN act.
3. Choose a Day and Time
Choose a day when the maximum number of senior employees and employees who will be terminated are present in the office.
Pick a time that gives laid off employees a couple of hours to gather their things and still allows you to conduct a company meeting with your remaining employees after the departing employees have left the building.
4. Break the News All at Once
It is a good idea to have a group meeting with all employees who will be let go to break the news all at once.
Be sure to include senior leaders, company owners, and HR who should have already been informed in advance.
Start the meeting by explaining the situation that has led to the need for layoffs.
It is a good idea to be brief but as honest and straightforward as possible.
Afterward, offer to have one on one meetings with anyone who wants one.
If there is concern that an employee might become violent, arrange for appropriate help to be standing by.
While laid-off employees are in the meeting, have your IT staff disable access for anyone with the skills to damage, steal, or compromise your systems.
If an employee asks to retrieve personal files while packing up, this can be allowed under supervision.
5. Have a Meeting with Remaining Employees
Remaining employees will inevitably feel shaken when news about large numbers of their co-workers being laid off gets out.
It is very important to have a meeting with all remaining employees shortly after the meeting with those who were let go so information can be shared about the reasons behind the layoffs.
6. Prepare Final Paychecks.
Have your payroll provider or bookkeeper prepare final paychecks that include pay through the last day of work and all accrued vacation.
Some states require final pay on the last day, others within 72 hours or by the next payday.
To stay compliant and avoid penalties, it’s best to pay on the last day.
Many states also require unused vacation to be paid out immediately.
Failing to pay on time can lead to steep penalties up to $1,000 per employee, per pay period, or 30 days’ wages.
7. Write Letters of Recommendation.
Write a courteous letter of recommendation for each employee being let go.
Include their job title, dates of employment, and a positive comment about their skills work ethic.
If the employee didn’t perform well, just stick to the basics like job title and employment dates.
It’s a thoughtful gesture that can make it easier for outgoing employees to find a new job.
8. Provide Information about COBRA Coverage
When laying off employees, employers with 20 or more employees are generally required to offer continued health insurance coverage through COBRA.
This federal law allows eligible employees to keep their group health benefits for a limited time after termination, typically at their own expense.
Employers must provide a COBRA notice outlining coverage options, costs, and deadlines to ensure compliance and avoid penalties.
9. Pay Severance If You Can
There are no employer laws that mandate severance pay for laid-off employees, and unless you’ve promised it through an employee contract, you really aren’t under any obligation.
But it is a good idea to do so if you can because departing employees will feel more respected and less likely to damage your reputation and remaining employees will see that you care about your employees.
To avoid claims of discrimination, apply severance pay using an objective formula such as one week of pay for each year with the company.
Don’t forget that some states mandate PTO payout at termination so any unpaid PTO will need to be paid in addition to severance if your business operates in a state with that law.
If you’re offering severance pay, you may wish to have employees sign a release agreeing not to sue before providing the severance check.
State laws vary on this, so talk to an employment lawyer about asking for a release, especially if you are concerned that an employee might take legal action.
10. Don’t Forget to Say Thank You
Thanking employees for their hard work and dedication to the company before they head out the door is a good way to show you care.
What Not to Do When Conducting Group Layoffs
There are several mistakes that companies can make when conducting group layoffs.
As HR experts, we recommend avoiding the following:
1. Using vague language, euphemisms, and insincere statements
Out of respect for your employees (both those who are going and those who are staying), you must be clear, honest, and transparent about why the layoffs are happening and what they can expect in the coming weeks.
Stay away from euphemisms like “transition assistance.”
Instead, provide a list of concrete ways that you will help employees transition to another job.
2. Failing to answer questions and address concerns
Employees may have questions and concerns, so it’s important to leave time for a question-and-answer period and to be as transparent in your answers as possible.
3. Providing inconsistent messaging
Ensure that everyone communicating about the layoffs has all current and relevant information so that employees receive accurate and up-to-date information.
4. Using a robotic or uncaring tone
While facts need to be shared, they should not be delivered in a way that feels devoid of care or emotion.
It is best to show empathy and respect for the affected employees.
5. Failing to provide adequate support
Understandably, employees will be stressed when they hear that their source of income is ending.
It is very important to come prepared with a list of resources for job searching, resume writing, and other transition assistance to help employees navigate their new situation.
6. Ignoring the remaining employees
After a group layoff, it is natural that remaining employees may be feeling shaken up.
A 2022 study by bixreport revealed several alarming statistics, including 71% of layoff survivors who reported their work motivation declined since the layoff.
It is very important to have open discussions with remaining employees to answer their questions and offer reassurance.
How To Select Employees for Layoff Without Discrimination
In order to avoid discrimination lawsuits, it is important to carefully select the employees for layoff based on non-discriminatory measures.
Follow these steps to avoid discrimination when selecting employees for layoff:
1. Establish Objective Criteria
The best way to ensure that you are selecting employees for layoff without discrimination is to establish a list of objective, nondiscriminatory criteria, such as seniority, performance, skills, and experience.
2. Screen For Protected Groups
Carefully avoid any selection criteria that could disproportionately impact protected groups, including race, gender, age, disability, etc.
3. Document Reasons
Keep thorough records of the reasons for layoffs as well as the criteria used for selecting who will be laid off.
4. Consult with HR and Legal
Consult with HR and legal counsel to ensure layoff decisions comply with all applicable laws and company policies.
Seay HR Can Help with Compliance
Seay HR provides a broad range of HR services designed to support your business’s growth and ensure compliance with all state and federal employer regulations.
From severance packages to wage and employee handbook development to on-site training and consultation, our team is here to help you in every aspect of human resources so you can get on with running your business.
Contact us today to learn more about how we can help your business conduct layoffs smoothly and stay compliant with the law to protect your organization from potential legal issues.
Please note: This article is for informational purposes only and does not constitute legal or professional advice. Seay Management Consultants makes no representations or warranties, express or implied, regarding the accuracy, completeness, or applicability of the information contained herein.
Seay Management Consultants disclaims all liability for any actions taken or not taken based on the information in this article. Readers are solely responsible for their own interpretation and use of this information.
