Heard it on the Hotline: How to Prepare for Impending Layoffs

Q: Our company is going to be laying off several employees in the near future. What can we do to prepare?

A: There are several items to consider when faced with an indefinite layoff or reduction in force.

One initial step is to determine any alternatives that could reduce the number of employees impacted. Considerations could include a voluntary reduction in hours, offering early retirement, restructuring, or attrition. If it is determined that you need to execute a reduction in force, HR and the leadership team should work together to plan the event thoughtfully and carefully.

Once you have an estimate of the number of employees who may be impacted, determine if the Federal Workers Adjustment and Retraining Notification Act (WARN) law applies. Depending upon the number of employees and the work location(s) of those affected, these laws should also be investigated at the state and local level for compliance with WARN/mass layoff laws.

Employers will also want to discuss providing a severance payment to impacted employees. If a severance will be offered, consider requiring employees sign a release agreement and use the severance as consideration for signing the agreement. Since agreements have differing requirements based on the work location and age of the employee, employers are encouraged to work with legal counsel to ensure the agreements are defensible.

In addition to severance, employers may want to consider offering the impacted employees outplacement benefits to assist with finding their next employment opportunity. Outplacement can help impacted employees focus on future opportunities and also sends the message to retained employees that the organization works with employees throughout the employment life cycle. MRA offers outplacement services and can assist or answer questions about related services.

Another consideration is benefits. Under some circumstances, employees who are laid off may be eligible for continued coverage for a period of time, as long as premiums are paid. Some retirement plans also allow for in-service loans for qualified reasons. In cases of permanent reductions, those impacted may be eligible for benefits under COBRA. Employers may also wish to provide information for retirement fund withdrawals or rollovers as part of the outplacement process. Employers should also be cognizant of the wage payment and vacation payout laws for the states where the impacted employees are located. Some states require final wages to be paid immediately at the time of involuntary termination.

MRA has many great resources to assist members facing a reduction in force/layoff, including our Layoff Toolkit. You may also contact the 24/7 HR Hotline at 866-HR-Hotline (866.474.6854) or [email protected] for guidance on how to help you prepare for this challenging situation.