The WARN Act and Best Practices for Conducting a Layoff
Fact: in terms of stress levels, losing a job is #2, right behind losing a loved one. That’s why doing the right thing is always the right thing to do.
Regardless of the WARN (Worker Adjustment and Retraining Notification) Act and its legal ramifications, every employer should give its employees plenty of notice when a layoff is inevitable. If you need to do a layoff, approach it from a thought leadership perspective.
As we all know, layoffs are necessary from time to time, for reasons ranging from acquisitions to economic downsizing. Any company considering a layoff of any size should seek legal counsel. The legal people are the ones who know how the organization is set up, and the federal and local rules and laws that apply. In addition to legal counsel, HR professionals should work closely with senior and middle management to determine the specifics of the layoff, and with an outplacement provider to get advice on best practices for notifications and taking care of impacted and remaining employees.
What is the WARN Act and who does it protect?
The WARN Act is an American labor law that “protects workers, their families and communities by requiring employers…to provide at least 60 calendar days advance written notice of plant closings and mass layoffs affecting 50 or more employees at a single site of employment," according to the U.S. Department of Labor.
WARN comes into play with:
- Facility closings
- Mass layoffs
- Company relocation
There are many things to take into consideration when mass layoffs become a fact of corporate life. That’s why comprehensive research, along with legal counsel, is imperative.
- Employers have to know whether or not the layoffs will be permanent or (possibly) temporary
- They must know about bumping rates (a complex seniority transfer process) and their availability at the company
- They must consider the legal rules about email notification vs. other kinds of notification
- They must provide a statement of unemployment benefits at a certain point in this process
- They must notify the Commissioner of Labor in a specific manner
- They must be cognizant of the boomerang effect, which is an HR term for hiring back employees who left the company on good terms. (It is not uncommon after some layoffs, or by those who voluntarily moved on to another job. Former employees may also reappear as customers, competitors or advisors.)
- They must consider whether or not letting go of someone based exclusively on performance is considered a layoff. (Employment attorney Alix Rubin says yes, though if it’s really because of performance issues, WARN may not apply.)
- They must do performance reviews in the proper manner. There must be good documentation for the review’s content, and the review must be communicated to the employee well in advance of the layoff
And this is just the short list of all the rules, terms, concepts and consideration employers must consider!
How much notice?
The number of days of notice that is required is directly proportional to the number of employees (or the percentage of the workforce) affected by the planned layoffs.
Rubin also notes that the length of notice may differ by state. Some states require a lengthier period, such as New York (90 days); others require only a 60-day notice. Rubin says she generally advises employers to give employees as much notice as they can when planning layoffs and urges them to comply with WARN Act standards, even when they aren’t subject to the law due to the size of the company.
The timeline of a layoff notice is as important as anything else the process requires. Considerations include:
- Do you want to “let the cat out of the bag” to the entire company at once?
- Is there a chance the news will cause mass distress and confusion?
- Can your timing decision give employees enough notice to allay their fears?
- Will many of them start to look for another job even before they’re personally notified?
Please note that a general notice will not satisfy WARN. Each employee needs a specific timeframe. Under New York state law, for example, it’s not even just the employees who must be notified, but also the labor representative (if unionized), state Commissioner of Labor, and the local Workforce Investment Board (for federal law).
Best practices for layoffs
The March 2018 layoffs of former Time Inc. staffers by the media giant Meredith Corporation generated some controversy. It was speculated that to avoid the legal requirements of having to file WARN Act notices, the company limited the number of people laid off to under 250 and classified layoffs in other areas as separate events. By structuring the layoffs as separate events, the company was able to avoid WARN Act stipulations and provided less notice than would have been required otherwise.
As a best practice – and to avoid the kind of negative media attention employers commonly receive when large numbers of people are suddenly let go from an organization – employers should always be as transparent as possible. Keeping lines of communication open and letting employees know the reasons behind the layoffs by holding in person meetings – either individually or in groups helps employers from alienating their impacted and remaining employees. Alternatively, organizations who simply inform their people via a group email to “clean out your desk” risk former employees telling countless others – including local media – how they were treated, which translates to the worst kind of public relations.
Even though it may have been difficult to do so, Toys R Us paid its employees through the entire phase-out of their operation, which was in excess of a 90-day process. Many industry observers saw this as a very ethical and honorable way of handling what could have been a sticky situation. Even while going out of business, they displayed a culture of caring.
Dignity, respect, and transparency are the values that leading organizations embrace during times of transformation. It is important for employers to note that some people, once they are out of a job (particularly if they have been in the position a very long time) don’t have the current skills to find a new job successfully on their own. Making sure impacted employees have the support they need is not only the right, ethical, and humane thing to do – it is the best way to ensure a positive employer brand and future business success.
Some companies plan ahead; others procrastinate
Proactive employers partner with a contemporary outplacement services provider as soon as they have decided that a layoff is unavoidable. Some companies fear negative reactions and premature churn once employees learn about the reduction – but what they should probably fear more is the reactions of employees who feel left out in the cold.
There are plenty of layoff horror stories. Some companies put all employees in a conference room, make the announcement, and then try to justify why neither severance nor outplacement services are being offered.
Whenever possible, companies should consider scheduling one-to-one conversations to deliver layoff notifications. When individual meetings are not a viable option, due to the numbers of employees impacted or other considerations, group meetings can help. In either case, employees need an opportunity to ask questions or follow-up with their managers with specific concerns. When planned for and delivered correctly, notification meetings should focus on building trust and communicating the business reasons behind the decision to eliminate specific positions.
“Companies have to weigh many factors when contemplating a layoff, including WARN Act requirements and notices to unions, labor commissions, and others as specified by federal or state law,” Rubin said. “But from a morale perspective, it’s usually a good idea to give employees as much notice as possible and to provide incentives for key staff to stay if attrition before the termination date is a concern.”
Age Discrimination and Employment Act
“The Age Discrimination and Employment Act affects anyone over the age of 40,” Rubin explains. “You only have to lay off two people over age 40 to potentially violate this act.” Eliminating two employees over 40 in the same time period for bad performance may trigger questions as it relates to the federal age discrimination act.
When deciding which positions to eliminate, employers should seek the advice of legal counsel to carefully review the demographics of the eliminated workforce. Without careful review, employers may unconsciously violate various laws aimed at protecting groups of people. Whether intentional or not, violating these laws can result in high legal fees and wrongful termination settlements.
The role of outplacement
The goal of a layoff is to make your organization stronger, not to make your transitioning and remaining employees feel uncomfortable. It is an unpleasant and stressful situation that deserves your best intentions and transition support for the entire workforce. For impacted employees, services such as career coaching, resume writing guidance, and effective job searching is vital to getting people into new jobs quickly. Not only will your transitioning employees feel cared for, but you’ll be investing in your future employer brand and saving on future unemployment tax costs.
Even before the layoff, an outplacement firm can help craft notification messages to employees and provide management notification and resiliency training. Once the layoff has occurred, your contemporary outplacement provider can work with remaining employees to improve productivity and engagement through resiliency training and ongoing career development sessions.
During workforce transformations, taking care of employees is not only the right thing to do, it’s the right thing to ensure your future business success.
Alternatives to layoffs
The way a company handles layoffs also speaks to its image – and image, in turn, is very important to a modern workforce. Although larger employers may not be required to file WARN Act notifications, depending on the numbers and locations involved, they should still provide advance notice and strategic considerations to affected employees. In any case, a layoff should be the last resort after every other avenue of cost reduction has been explored.
For example, Rubin explains that employers should first think about offering a voluntary layoff in which they would not be subject to the WARN Act. It must be offered to everyone, novice and veteran. Whoever takes it can move forward, but whoever doesn’t will not be penalized. Offering employees an opportunity to take control of their destinies has a powerful effect on their emotional reaction to the separation, and has the added benefit of allowing the company to lower its layoff numbers and liabilities associated with reductions in force.
As an alternative to layoffs, some companies also offer redeployment programs – a period of time in which employees can find another role within the company before their current position ends. In reality, companies who are laying off in one business unit are often actively recruiting and hiring in another. Moving team members into new roles saves money and helps companies retain institutional knowledge and valuable employees.
Treat employees about to be laid off with the respect and dignity they deserve. There are many ways to do that without compromising company business or confidential information. When companies act with compassion, fairness, and transparency, current staffers feel better about the company, former employees are less likely to hold a grudge, and future colleagues will be attracted to the organization as an employer of choice.
Celia Stangarone, CPRW, CEIP is a RiseSmart Certified Resume Writer and Transition Coach. With a background as a Recruiter for an MBE/SBE employment agency and an HR Associate at a marketing research organization, she understands every perspective of the job search, sourcing, and hiring arenas. Celia takes a holistic approach to her writing and coaching by understanding people t hrough career progression and projection including cultural, behavioral, and digital observations to create engaging personal branding.