August 29, 2001
Take Legal Precautions When Laying Off
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Employers planning mass layoffs must make certain that the action is economically justified and unbiased, if they want to avoid wrongful-termination and other employment-related lawsuits, according to a Chicago employment lawyer.
Michael D. Karpeles, head of the Labor and Employment Practice Group at the firm of Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz Ltd., says "companies need to carefully document the criteria for selecting who is let go."
"If there are any questions concerning the selection, the company must be ready to respond," he says. "Most layoff criteria are based on performance reviews, compensation factors, and subjective judgment by management. Of course, subjective judgment is what can get companies into trouble."
The federal Workers Adjustment and Retraining Notification Act requires that employers give a 60-day layoff notice to workers, their representatives and local government officials under certain circumstances.
This written notice is required for companies with 100 or more employees that close plants or operating units with 50 or more employees, or that lay off either 500 or more employees or 50 or more employees making up at least a third of the workforce.
A layoff should not affect a disproportionate number of minorities, women or workers over age 40. If the layoff numbers appear to favor one group of workers over another, the company may be asked to justify the layoff decision-making process.
"The layoff criteria must be consistently applied to workers across the board," Karpeles says.
Karpeles says it's usually easy to conduct an analysis of the make-up of those being let go.
"Most information is already in human resource databases," he says. "If it appears that a large proportion of minorities, women or older workers will be affected by a layoff, the employer should carefully document the business justification for the layoff criteria or consider making adjustments to the layoff criteria so fewer workers in these categories are affected."
Karpeles also suggests offering workers a voluntary termination plan in which the company provides a generous exit package to those who volunteer to leave. "The hope is that there will be enough workers who accept the exit package to cover the number of necessary layoffs. It's a much more positive approach to downsizing."