How to Legally Lay Off an Employee - Free Enterprise
Free Enterprise - The FindLaw Small Business Law Blog

How to Legally Lay Off an Employee

It's one of the toughest decisions for any employer, small or large: Should you lay off your employees, and how should you do it so you don't get sued?

The decision about layoffs is entirely up to you. But as for how to implement layoffs, here a few legal considerations.

You've been WARNed. The Worker Adjustment and Retraining Notification Act, or WARN Act, is a federal law that requires 60 days' written notice before a plant closing or a "mass layoff." The federal WARN Act applies to employers with more than 100 workers, but state versions of the WARN Act may apply to smaller employers, according to HRHero.com.

Don't discriminate. Federal and state laws place some employees in a "protected" class. For example, the Age Discrimination in Employment Act (ADEA) prohibits an employer from treating older workers differently than others. So make sure your planned layoff doesn't discriminate.

Don't retaliate. Layoffs can't be in retaliation for a worker's complaint. That could be grounds for a workplace retaliation lawsuit.

Employees on leave. For employees on family or medical leave at the time of an announced layoff, an employer must show their leave is unrelated to the layoff, and that the worker would've lost his or her job regardless.

Members of the military. The Uniformed Services Employment and Reemployment Rights Act (USERRA) requires employers to reinstate servicemembers to the jobs they would have held had they not been called to duty. An employer can't layoff a servicemember unless the employer can prove circumstances have drastically changed.

Continuing health insurance. Under federal law, most employers with group health plans must allow a laid-off employee to continue to pay for the same health coverage for a specified period of time.

Severance agreements. These offer an employee an incentive, such as additional compensation or benefits, in exchange for agreeing not to sue an employer. But remember, an employer can't force employees to sign a severance agreement. An employee must also get time to consider the agreement -- either 21 or 45 days, depending on the worker's age, according to the Older Workers Benefit Protection Act.

Related Resources: