Mistake #2: Conducting Layoffs Without a Written Layoff Plan and Process.
The layoff process should be in writing, methodical, consistent and fair. Management decides which positions, groups, offices or departments need to be reduced. There should be a written justification of the need for a layoff, a layoff policy, and a written procedure for selecting employees for layoff. This last documentation should include the selection criteria, management’s role, Human Resource’s role, and, if applicable, a severance and release agreement. The company’s attorney should be involved in each step and certain documents should be maintained as confidential under the attorney-client privilege.
Mistake #3: Neglecting to Assess the “Adverse Impact” of Layoff Decisions.
When layoff decisions are made, HR should be tasked with conducting an adverse impact analysis. This is often done in conjunction with the company attorney in order to maintain the confidentiality of the information under the attorney-client privilege. This process includes analyzing the protected categories of each potentially affected employee in comparison to each other and to the workforce at large. For example, if every employee laid off is over the protected age of 40, then the older population within the company may be disproportionately affected by the layoff and an age discrimination lawsuit may ensue. The goal is to ensure that a protected group of employees it not being targeted, purposefully or not.
Mistake #4: Failing to Follow the Requirements for 40+ Year Olds Affected by Layoff.
Older workers (those over 40) are members of a protected class and this is one of the categories that must be assessed during the adverse impact analysis addressed above. Employers who offer older workers a release agreement must also ensure that it is a “knowing and voluntary” release under the Older Workers Benefit Protection Act. To meet this criteria, then, the release must specifically reference claims under the Age Discrimination in Employment Act, offer an extended period to consider the release agreement (45 days for “group terminations” and 21 days for individual terminations), allow older workers 7 days to revoke the release agreement after signing, and inform the older worker the right to consult with an attorney prior to signing the release.
In addition, older workers who are subject to being laid off due to a “group termination” are entitled to receive data under the older workers’ laws. The employer must provide information about the ages (not the names) and job titles of those employees selected and those not selected from the “decisional unit.” Broadly speaking, a decisional unit consists of the group of employees that were considered for layoff, such as a specific department. The rules on this issue are complex and can be located at 29 C.F.R. sec. 1625.22(f).
Mistake #5: Failing to Give Advance Notice Under WARN.
Larger companies (75 or more employees under California law and 100 or more employees under federal law) have notice obligations under the California and federal WARN Acts. These Acts require large employers to give 60 days advance notice of a “plant closing” or “mass layoff,” as those terms are defined in the statutes (generally, an employment loss of 50 or more employees during any 30-day period). Most employers look at employment losses that occurred or are planned within 90 days forward and backward to see if they reach the 50-employee threshold within any one 90 day period. The California WARN law also applies to “relocations.” There are certain extremely limited exceptions to the 60-day notice requirement.