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Employee Layoff: Is There A Correct Way To Handle A Layoff?

By December 29, 2011 February 19th, 2015 No Comments

iStock_000008581545XSmallFull Question:
We are entering our slow season and we need to lay people off (at least temporarily). We want to make sure that we do it properly. Can you tell us the proper process for layoffs, both temporary and permanent?

Response:
Barring any applicable collective bargaining agreements or other employment contracts that govern termination of employment, an employer is generally within its rights to make staffing decisions, including layoff and reorganizational decisions, as it sees fit to maximize effectiveness, productivity, and profitability. The justification for any layoff or reduced capacity decision and the selection criteria must be legitimate and not unlawfully discriminatory. When determining which employees to select to be impacted by such decisions, an employer would be within its rights to use criteria like seniority or tenure, classification (i.e., full/part time), past performance, skill set, value to the employer, flexibility for future roles in the organization, or some combination of these, but it is not required to use all or any particular one. Indeed it is a business decision to determine the criteria to use to make layoff decisions, so long as they are not unlawfully discriminatory or retaliatory. Note, however, that if an employer uses attendance and flexibility as selection criteria, to the extent any employee had unsatisfactory attendance or less flexibility due to things like disability or religious beliefs or other protected class status, it WOULD be unlawful to use these factors in making layoff selection decisions. The best practice relative to conveying a layoff decision is just to be candid with the affected employees about the layoff decision and why they were selected for impact.

Should business needs later justify increased headcount, or if a position becomes available because another employee has voluntarily vacated it, we are not aware of any legal requirement imposed upon an employer to rehire laid-off or terminated employees. Employers generally have the right to hire the best qualified person for a vacant position. Ideally, the employer should be candid at the time of a layoff about whether the impacted employees would be eligible for rehire or not (without making any promises or commitments). You can always give greater weight or consideration to former employees, which may impact them positively, if they were good performers, or negatively, if they were not, if you choose to make that part of the hiring criteria when there are job openings later on. If a former employee is passed over for rehire and seeks to challenge that decision as discriminatory, if you can articulate a legitimate, nondiscriminatory justification for the decision (i.e., you hired a better qualified candidate), you ought to be able to defend such a claim. However, if you advise any laid-off worker that he/she will be eligible for rehire, and then fail to even consider that person for re-employment without a legitimate justification for the turnaround, it would be more difficult to defend a challenge to the decision.

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Ultimately, the best practice is to be very clear with impacted employees at the time of a layoff about whether or not they will be eligible for rehire. If you are, there should be no legal issues associated with not considering and/or not rehiring a laid off employee who was previously advised of his/her eligibility (or ineligibility) for reemployment (and assuming the reason the individual was not eligible for rehire was legitimate, as it should be)..