Disclaimer: These guides are an overview and by no means detailed, in-depth or an exact list of rules to programs and provisions. Always consult professionals and lawyers that understand the items and laws surrounding the subjects you are interested in learning more about. The potential legal exposure faced by employers when navigating reductions in force can be immense. 

Avoiding legal pitfalls requires companies to undertake careful planning and extensive research. It also requires speaking to and/or hiring a lawyer to review your plan of action. Your policies already in place, federal and state law, and the employment contract.

First, you must start with a legitimate reason for the layoff. You’ll want to have a very clear and concise reason for putting hard-working people out of work. You should not make the decision on a whim or for personal reasons. Give yourself legal footing before moving forward with your layoffs.

Review company policies and employee contracts. You’ll want to abide by any agreements you set in place between your company and the employees. Remember if ever in a situation where you are in front of a judge, you will have wanted to follow the rules of legal documents – the judge can help you if you follow the rules of the legal document, you don’t want to be his foe and disregarded contracts – you’ll have no legal footing.

If a union exists, you’ll need to review the collective bargaining contract. According to Jed L. Marcus of  Bressler, Amery & Ross, P.C, “A collective bargaining agreement generally does not prohibit an employer from laying off an employee, although it will contain rules and procedures regarding the manner in which an employee is laid-off. These will include rules for the order of lay off, such as by seniority. Often more senior employees in higher classifications who are slated to be laid off can “bump,” or displace, less senior workers in lower classifications, so long as the more senior worker is capable of doing the job. There may also be notice requirements to the union and an obligation to bargain with the union over such matters as severance pay. Finally, there will be rules regarding the obligation of the employer to recall an employee to work when work picks up.”

Plan to offer as many resources and benefits that you can to soften the blow to the employee. You’ll always want to show your concern for the welfare of your employees and respect and value their contributions. Being professional and making sure the employee leaves feeling dignified and respected can go a long way in avoiding legal action against the company down the road.

There’s no silver bullet that will eliminate the possibility of legal problems resulting from a reduction in force. However, careful planning, legal opinions, and common sense can go a long way when it comes to avoiding them. When it comes down to it, the best defense against these issues is a thorough understanding of the applicable laws and a healthy dose of common sense. 

Lisa Guerin, J. D., “Making Layoff Decisions”, NOLO, https://www.nolo.com/legal-encyclopedia/making-layoff-decisions-29949.html