Unfortunately, layoffs happen all the time. Even when the economy is good, some organizations are not reaching the heights they desire or can’t make payroll or planned poorly. As a result, people may lose their jobs regardless of their individual performance, dedication, or achievement. Human Resources is charged with conducting layoffs, and doing this task properly is of the utmost importance. After all, poorly executed layoffs can result in bad PR or even violations of the law. This guide is meant to help HR professionals define layoffs and understand the major laws HR must confront amid changing employee expectations.
In this article, learn:
- What Are Layoffs?
- Employment Law and Layoffs
- Get the Messaging Right
- Do You Have to Offer Severance Packages?
- Examples of Bad Layoffs
- Expectations in the Wake of Layoffs
What Are Layoffs?
Layoffs describe when an organization must discharge one or more workers because of poor economic conditions or a lack of available work. Many organizations have conducted layoffs, especially in the years since the start of the pandemic in 2020. Companies, forced to close their doors because of COVID-19 had no work to offer employees. Therefore, they had to make tough choices that included letting people go. Some companies opted for furloughs, which is a temporary layoff with the intent to bring back an employee when economic conditions change. However, even the furloughs sometimes turned into layoffs.
READ: HR News Roundup to Stay Up-To-Date on High-Profile Layoffs
Fast forward to 2023 and layoffs are happening in drips and drabs rather than all at once like during the pandemic. Now, LinkedIn feeds regularly feature news of layoffs that make it seem like there is a crisis. However, most experts say that this is mostly happening in the tech sector, largely because the economy has dipped and tech leaders had over-hired because people being stuck in their homes to avoid catching COVID-19 made it seem like growth was never ending.
Still, layoffs are a concern and a constant, regardless. At the end of 2022, HR professionals responding to the latest State of HR survey, recognized an economic downturn and listed the following as its greatest consequences:
- Hiring freeze (25%)
- Increased pressure on leadership (21%)
- Budget cuts (18%)
- Layoffs (11%)
- Burnout (10%)
Fourth on the list, layoffs still made the cut, but they were not a pressing issue. It’s more complicated mid-2023. The economy still is not the bull market that it was before the pandemic, however, people are unsure if the United States will face a full-fledged recession. Many economists have said if a recession comes, it might be a softer landing than imagined at the start of the year.
Still, Bloomberg recently reported that planned layoffs have quadrupled in 2023 with 417,500 jobs cut through May. Layoffs.fyi counts 206,000 layoffs in tech alone in 2023. Forbes reminds that the United States experienced 136,000 layoffs in the first three months of the year, and some big name companies experiencing redundancy include Amazon, Google, Meta, and Microsoft.
Click on the image below to view a conversation with leading employment lawyers and workplace influencers about how to appropriately conduct layoffs.
Employment Law and Layoffs
There are both federal and state laws meant to protect workers if and when layoffs become necessary. Organizations must consult employment lawyers to ensure they are complying with rules, regulations, and laws that apply to them.
One of the better-known laws related to layoffs is the federal WARN (Worker Adjustment and Retraining) Act, which dates back to 1989 and is meant to protect workers by giving them warning of a plant closure or mass layoffs. Many communities faced chaos and crisis in the wake of unexpected businesses closing up shop, which prompted Congress to create this law.
Specifically, this law applies to companies with at least 100 employees. The Department of Labor writes that they are required to provide notice 60 calendar days in advance of plant closures and mass layoffs. The situations that fall under this umbrella include a facility or plant closure shutting down, cutting at least 50 jobs, the number of job cuts should be at least one-third of the workforce, or cutting more than 500 people. The minimum of 50 job cuts must happen within a 30-day window for it to apply to this law.
What does that mean? Well, the Austin-American Statesman recently suggested that this means there are many loopholes in the federal act and that some states have stricter laws.
“Many layoffs don’t even meet criteria for self-reporting due to the narrow and complex regulations that govern whether, and when, employers have to disclose mass layoffs,” according to the publication.
There are built-in waivers to this law, too. For instance, if a company gets unexpected notice that it is losing its biggest contract, then this advanced warning may no longer apply. This complicates matters for smaller and mid-size organizations. Generally, those behemoth companies comply. After all, it would be hard for them to hide mass layoffs. Some might make smaller cuts here and there to avoid the bad publicity. The other problem with the law is that it is difficult to enforce, and therefore even violators sometimes face no consequences, according to the Austin-American Statesman.
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Get the Messaging Right
To begin, think about who is getting laid off and how that relates to the values of the company and specifically its DEI efforts. All employers, regardless of size, must consider who is getting laid off and determine whether the outgoing group is part of protected classes.
"From a legal perspective, my starting point is always, "What do the demographics of the layoff look like? Is your workforce 50% male, 50% female, currently. And after the layoffs, is it going to look 75% male, 25% female. Or is it going to look younger? Is it going to look white, or is it going to look, whatever whatever the protected class is. When a client comes to me and says we need to conduct a layoff, my first question is, I want to see a spreadsheet of all your current employees... You may have legitimate reasons why everyone who was included to be laid off was laid off. But if your workforce looks a lot whiter after the lay off than it before the lay off, you're going to have to explain it. You might not want to have to go to court to justify why you got rid of every single black employee you have," said Employment Attorney Jon Hyman at the HR Exchange Talks - Layoffs Debate.
Next, HR professionals and business leaders must actually deliver the bad news to those who will be impacted. This is probably the hardest part of conducting layoffs and requires choosing words carefully and being sensitive to people's feelings and the gravity of losing one's livelihood.
"The rule I've always used is, 'How would I want it to be communicated to me?' And you know it's respectfully. But I also was told by a mentor, early on in my career, that if it ever gets easy to do this - meaning terminate someone - get out of HR immediately," said Katee Van Horn, Co-Host of Inclusive AF Workplace Thought Leader.
Do You Have to Offer Severance Packages?
The WARN Act and other laws do not require severance be paid to those who are impacted by layoffs. However, many companies choose to provide something to long-time employees who are now losing their jobs. Obviously, budget is a consideration. Companies that are laying off employees are usually doing so because of having to tighten their belts. Still, many make agreements with employees when they are hired about what may happen if they are ever laid off, and making good on promises is always a good idea.
Human Resources professionals and business leaders must use their budgeting skills and empathy to make decisions about severance.
“Favorable severance agreements offer one month’s worth of salary for every year of tenure with the company; while more frugal packages provide just one week’s worth of salary for each year, experts said,” according to ABC News.
During the HR Exchange Talks on layoffs, Employment Lawyer Kate Bischoff joined Hyman to confirm that organizations are not obligated legally to provide severance packages when conducting layoffs. But the consensus of the panel was that even if companies are not legally bound, people expect some form of compensation when asked to leave.
Examples of Bad Layoffs
Employers can’t hide if they conduct a bad layoff. Our expert panelists, which included Bischoff, Hyman and Workplace Thought Leaders and Podcasters Joey V. Price and Katee Van Horn, described workers awaiting news of layoffs via email at midnight. One company blogged an announcement about layoffs.
One of the most egregious examples of poorly conducted layoffs comes from Better.com. Its CEO Vishal Garg went viral for breaking the news to 900 employees during a Zoom meeting that reportedly took less than three minutes. Garg had a history of insensitivity and crudeness that didn’t help matters.
Laying off people at the start of the holidays or right before a big vacation is another mistake. Some companies have had people show up to work only to give them a pink slip and have them escorted out by police or security guards. While workplace safety is an issue and some people may react to unexpected layoffs with anger, fear, or even violence, most agree that this is a rare response and having the authorities move out workers makes them look like criminals.
After all, laying off employees is different from firing them. Most layoffs happen because of financial decisions and not because the employee did anything harmful or wrong. Bad layoffs show insensitivity and a lack of kindness. If employers do not want their treatment of laid off staff (or those who end up staying) going viral on LinkedIn, then they should not do it. Thinking about those consequences is an additional step to conducting layoffs nowadays.
Expectations in the Wake of Layoffs
In the past, handing over that pink slip and providing some form of severance, even if measly, sufficed. Gen Z and Millennials are demanding more of their employers and their work. Upon reading LinkedIn posts about layoffs, HR professionals should realize that they must provide some sort of support in finding new work. Some possible ways to address this desire is by offering recommendations and references, access to job posts and networking opportunities, or even help with mental health and wellness in the wake of an unexpected change that impacts emotional and financial health.
Also, employers must care for the employees who stay with the organization and make the cut after layoffs. They are often fearful about the future and wonder if they will be next. In addition, they usually end up working more to make up for the tasks previously done by their colleagues who have left. These are suggestions for employers and HR:
Plan Ahead
Time to think about how to conduct layoffs at an organization is now and not minutes before deciding to conduct layoffs.
"You should be setting aside intentional time to take a look at your organization. And are you prepared? Do you have [the necessary] information? Are you collecting this data? Do you have the right processes in place? The time to be mindful about this isn't when you need it. It's before you'd even face it...Make sure you're writing your list of things that you need to do in order to be in compliance and have less of a headache, if you are facing layoffs in the future," said Joey V. Price at the HR Exchange Talks - Layoffs Debate.
Be Transparent
Answer questions, talk frankly about the future and what may happen depending on economic outcomes, and listen carefully to the thoughts and feelings of workers.
"I've had success with clients, who have done a town hall where they're going to have some food, but there's not going to be alcohol involved. There's not going to be that kind of party atmosphere. They say, 'We are here to take all of the hits that you have for us, and we are going to sincerely apologize.' And for one of my clients I said, 'You're going to watch this video on how to apologize, and I'm going to test you on it because you're going to have to be ready to say these words when you meet with those folks because they're going to be mad that their best buddy just lost their job. And so you have to strike the right tone," said Bischoff at the HR Exchange Talks - Layoffs Debate.
Be Sensitive
This is no time for curtness or being matter-of-fact in a conversation. People depend on their jobs for livelihood, for survival. At a time when expenses are high, many cannot afford a $400 emergency, and they are living paycheck to paycheck, news of layoffs can be traumatic and fear inspiring. Be human by choosing words carefully, expressing sympathy, and showing empathy.
Avoid Overworking Individuals
While the work must get done, managers must realize that people are going to absorb tasks and duties of those who have been laid off in addition to fulfilling their own responsibilities. Most likely, they will not be compensated for rewarded for this additional work. Managers should pay attention to hours being kept, tasks getting done, and the well-being of workers. Encouraging PTO or providing a helping hand are ways to address the problem.
Ultimately, handling layoffs with care requires emotional intelligence and common sense. Plan wisely, and turn to layoffs as a last resort. Be cognizant of the law and consult employment lawyers. Then, be sensitive and kind to both those who are getting laid off and those who are getting left behind to keep working.