Layoffs and Lay-Ups (Part 1)

File 24:  In today’s file, the team begins a 2-part discussion on the job market.  In this episode, they’ll focus on layoffs.  Several clients have reached out to Jamie and Molley to plan for potential layoffs and the specific steps companies are required to take. 

In File 11 (Breaking Up Is Hard to Do), the team discussed the topic of separating with dignity.  This might be a good reference point. 

Legal Considerations Involving a Layoff

To begin, it’s important to note none of this should be considered legal advice, as the members of the WTF Podcast team are not lawyers.  However, they’ve been involved in these situations and are prepared to share some perspectives and tips.  Today’s discussion might provide an outline for a series of questions you might want to review with your business attorney.

Information regarding the WARN Act can be found on the Department of Labor’s website.  It’s the Worker Adjustment and Retraining Notification.  This Act ensures advanced notice in cases of qualified plant closings. 

When are Employers Required to Provide Advance Notice to Employees of a Layoffs or a Plant Closure?

Jamie explains that if you are an employer planning a layoff, plant closure or significant reduction in work hours, you are required to do a WARN notice.  It must be filed with the unemployment office.  The threshold is that you must have over 100 full-time workers, excluding workers who have been there for less than 6-months, or who work less than 20 hours per week.  If you’re laying off 50 or more people, at a single site, or if you employ more than 100 workers who work at least a combined 4,000 hours.

Please note, there are many other group descriptions that should be reviewed in determining your specific requirements.

The benefit to this process is that it can help the various community resources to engage in planning and coordination to assist affected workers in the area.  It also provides 60-day notice so that the affected employees can make plans regarding their individual situations.  Jamie notes that the time and notice can make a difference for continued employment for those impacted employees. 

What Can Companies Do to Help Employees Affected by a Layoff?

Jason comments that the notification, per the WARN Act, goes to the local career centers and unemployment offices.  Once notified, those agencies can provide information on opportunities and programs for up-skilling and training.  Some agencies may even come on-site to provide employees with information about job openings and other potential resources, including providing information about how unemployment works.  It’s good to utilize these services as early in the process as possible.  It’s also the right thing to do for your people.

Most of the previous files on this podcast have focused on attracting good people; the right talent for your company.  You probably have a large group of people you really hope to retain.  You may even be able to come up with solutions that could avoid the need for a layoff.

Alternatives to Enacting a Layoff

Consider the use of furloughs.  If you’re trying to reduced costs, you may have the option of instituting temporary furloughs and avoiding the need to issue a WARN Act notification.  The advantage is you might still be able to retain your talent.  They should be able to draw unemployment for periods of time.

Jamie recalls working with a client who was having a dip in business, but believe it wasn’t a permanent situation.  As a company, they decided to implement furloughs to get them through the current period and come out together, on the other side.  Everyone, including management took a 2-week, unpaid furlough.  In their case, the payroll savings enabled them to survive.

Molley comments that communication is key, especially when the company itself is under stress.  By being transparent about the situation, it may help to gain important buy-in for an option, such as a furlough, instead of having to layoff a significant number of people.  This transparency also helps the company to control the narrative, rather than letting rumors and misinformation to get traction.

It’s important to understand that a furlough for a specific period of time is much different from a layoff, which means you’re losing your job.  It’s an entirely different situation. 

Molley points out that some companies might try to use a layoff to mask poor performance.  Often, this is due to a lack of good management, in her opinion.  If you’re laying off for poor performance, is it possible your managers weren’t given the tools or opportunities to lead? 

Jamie, agrees that using “layoffs” for poor performance is a misuse of the term.  You’re not required to retain a poor performer.  You should take the necessary steps to notify someone of their lack of performance and to provide opportunities and time for improvement.  This is the best way to get someone to demonstrate improved performance.  Nonetheless, some leaders may share responsibility for the underperforming employees.  It might be the best thing for the business, but have other alternatives been explored?

Why Not Use a Layoff to Purge Your Weakest Performers?

In reality, few companies have extremely solid performance data, enabling the organization to definitively identify its weakest performers.  Thus, you’re going to create a risk for the business if this is the chosen path.

What Are Recommended Criteria for Selecting Which Employees Are to be Laid-Off?

Jamie has seen companies use a last-in, first-out criteria.  This may be effective if your workforce is unionized.  Another approach is to identify critical roles for the future success of the business and to isolate other roles that will be less needed. 

Molley’s team at Incipio was recently working with a company that had to downsize its workforce.  Effective leaders naturally struggle with this communication because they understand the impact these decisions are going to have on the lives of their people.

Jamie recalls the first layoff she as involved with.  She’d been out of college for about 2 years.  She was the person delivering these notifications.  Some of the affected employees had been with the company for 20 years or more.  The situation caused her to have literal nightmares about what could happen to her, as a result of the communications.  Her car was keyed, she was spit-on, her desk was messed up. 

Interestingly, Jamie observes that no one had prepared her for how to have these conversations.  They didn’t help her to prepare for effective communication that would allow the person receiving the bad news to receive it, along with the compassion and empathy that should be part of this type of discussion.

While you may be the person communicating the decision, recognize the person receiving the news is experiencing a million emotions, all at once.  What if their family has medical conditions?  How is this going to affect household finances?  The list of life-obligations just starts racing.  In this moment, as a leader, if you’re not prepared and able to show care and concern, you’ve missed out on an opportunity. 

If handled well, that employee may decide to return to the company, once the current situation has improved. 

Considerations for Remote-Work Companies Informing Employees about a Layoff

The team has touched on this topic in previous files.  Molley strongly advises that you should have legal participate in these communications, along with your HR staff.  There are many variable that can surface.  What if the employee were to record the discussion?  How do you handle the employee who is attempting to trigger the manager to react to specific questions or accusations?  Any number of issues could develop resulting in liability for the company.

It’s important to do this before the first conversation is held.  Jason recommends engaging Jamie and Molley to help your organization to have a game plan before the situation gets underway.  Preparation is vital.  Nonetheless, hiring and firing are often the most short-sighted processes.

Jamie notes the number of Instagram clips and Tik Toks that are recorded possibly without the companies being aware.  A lot of states have varying laws regarding one-party consent, as it relates to recording conversations.  These recorded conversations can quickly take on a life of their own.  Again, you’ve got to be prepared.

Molley and Jamie point out that if a legal situation were to stem from this conversation with an employee, it’s possible that an actual class action lawsuit could develop involving each of the affected employees.  Even if the employer wins the case, consider the expense, damaged reputation and other negative outcomes.

There is a solid process that can be followed to ensure you effectively communicate the intended message, while avoiding creating scenarios that could open your company to legal and financial exposure.  Jamie reminds the audience that the WARN Act requires 60-days’ notice, so this isn’t a process you can implement next week. 

If your organization’s leadership has an effective business plan and is monitoring key performance indicators, you should see the smoke signals on the horizon.  This phase should be just as well thought out and implemented.  You have to make sure your managers are equipped and prepared for this difficult situation. 

Molley brings up the large layoff by Big Lots, just before Christmas 2024.  They were attempting to work through a merger or buy-out.  When that failed, they were forced to file for bankruptcy.  The notices to the employees were issued around December 15^th.  Families and communities were impacted and the lack of preparation and communication only exacerbated the situation.

Does the Term Layoff Signify Temporarily or Permanently?

Jason asks about the usage of the term layoff.  It seems this is a temporary situation, but today’s conversation seems to indicated it can be a permanent separation.  Which is correct?

Jamie explains that some employees have union contracts.  It may contain a clause for a layoff with right of recall.  This means those employees will be added to list and will be contacted for rehire, once the company begins that process.  On the flipside, the company may not be required to specify the duration of the layoff, nor when the rehiring process would begin. 

Jamie further explains that a layoff typically occurs due to no fault of the individual.  Termination may be performance-related, but generally means employment has ended.  Going back to the term furlough, it would normally involve a defined period of time.

Be sure to join us for File 25, Layoffs and Lay-Ups (Part 2). 

That’s where we’ll leave the conversation for today.  Before we close the file, we invite you to reach out to us with questions, suggestions or other comments.  We’d love to hear from you.

Did You Enjoy Today’s Conversation?

Visit www.WorkforceTherapyFiles.com to listen to additional WTF files or to let us know you’d like to be a guest on an upcoming file.

Need Help Supporting Your Company’s Recruiting and Staffing Goals?

We’re here to help.  You can contact us via our individual websites, depending on your specific needs or questions:

·      Jamie Swaim, SPHR – www.ParcelKnows.com

·      Molley Ricketts – www.IncipioWorks.com

·      Jason Heflin – www.CrowdSouth.com

 

We hope you found this file insightful and helpful.  Thank you for listening!