Overview: When employers have no choice but to layoff significant portions of their workforce, they must be careful to comply with federal and state law. Specifically, the federal Worker Adjustment and Retraining Notification (WARN) Act covers certain employers depending on their size and obligates certain employers (depending on the scope or circumstances of their planned action) to notify employees identified for termination in advance. Some states impose more severe restrictions on employers engaging in layoffs or reduction in forces and employers in those states are bound to comply with both their state's version of the WARN Act and the WARN Act itself.
HR plays an important role in the process of determining whether to proceed with a layoff or reduction in force. Specifically, it must help cultivate performance-related metrics to identify employees for termination, assess any post-termination risks for the employer, manage organizational exit and maintain communication with remaining and outgoing employees, notify the employees to be terminated and finally, work with the remaining workforce to maintain productivity and morale.
Trends: WARN Act terminations which require notification are somewhat cyclical in that they mirror the strength of the economy and may be more frequent during political election and changeover cycles. A periodic review of layoff or reduction in force policies by HR - taking recent developments and changes in the law into consideration - can be extremely helpful in limiting post-event risk to the employer.
It is also important for HR professionals to familiarize themselves with WARN Act legislation to ascertain what types of claims against employers are typically successful. This way, HR can identify problematic areas of its WARN Act protocol before they become costly for the employer.
Author: Michael Jacobson, JD, Legal Editor
Updated to reflect new legislation that protects some franchisors from employment claims, but with some exceptions, effective December 23, 2015.
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