4 Layoff Laws You Need to Know for your Outplacement Process

The first thing most organizations do when going through a layoff is create a thorough outplacement plan for the entire workforce transition. There are many crucial elements to factor into this process, but one of the most important is the legal implications. What enables a human resources executive to plan the details of a layoff is more information about laws and regulations that can affect the efficiency and success of their overall plan.

In other words, an HR professional needs to do their homework.

In this article, we’ll go over the most important layoff laws you need to consider in designing your outplacement process to ensure a smooth and successful layoff event without incident.

What Are the Legal Issues in Laying Off Employees?

A layoff event can have significant consequences for employers, including negative impact on company brand, morale, retention, and the bottom line. This is especially true if any former employees decide to pursue legal action against the employer in response to being let go. So this is a crucial area to focus on as you prepare your layoff and outplacement plan.

There are several laws that can affect how you conduct a layoff, depending on where your organization and employees are located. For the purposes of this article, we will focus on four fundamental layoff laws that impact United States-based organizations. When preparing for your organization’s layoffs, make sure to research laws and regulations that are specific to your state(s) as well.

Three out of these four layoff laws affect the process of selecting employees who will be let go. These laws are focused on protecting employees from discriminatory hiring or firing practices. The fourth law is meant to regulate how an organization notifies employees, the public, and the government when deciding to hold a layoff.

Let’s dive into each of these four layoff laws to understand how they can help ensure that your impacted employees are laid off as legally and prudently as possible.

You can also click below to download our free essential layoff guide for a step-by-step ebook packed with the essentials you’ll need to successfully conduct your layoff and navigate the outplacement process from start to finish.

What Are the Federal Laws for Layoffs?

1. Title VII of the Civil Rights Act of 1964

This is a federal law that prevents employers from discriminating against different groups of employees. It provides protection to employees against discrimination on the basis of sex, race, color, national origin, and religion. Thus, employees who belong in one of these categories can be considered part of a protected class.

This law only impacts organizations that have over fifteen employees, meaning that small business owners are not bound by these regulations. However, we recommend following the regulations regardless of company size as it upholds ethical business practices.

Read more about this law here.

2. Titles I and V of the Americans with Disability Act of 1990

Similar to the Title VII Civil Rights Act, this law provides protection to employees who have disabilities. Therefore, this group is also considered to be a protected class. Employers are not able to lay off employees in any way that unfairly discriminates against those who have a disability.

Also stated in this law is an employer’s duty to provide reasonable accommodations to employees with disabilities. Thus, an employer is required to make accommodations for someone with a disability within reason.

In terms of layoffs, this means that an organization cannot lay off someone due to an accommodation that could be reasonably met by the company.

Read more about this law here.

3. The Age Discrimination in Employment Act of 1967

This law applies to another protected class: employees who are over the age of forty. When selecting the employees that will be let go in a layoff event, it is important to not have a disproportionate amount of the selected group of employees be over this age threshold.

Similar to the previous layoff laws, this does not impact small businesses with less than fifteen employees. However, it’s important that all organizations follow this regulation as it is a guideline for ethical business practices.

Read more about this law here.

4. The Worker Adjustment and Retraining Notification Act

Commonly referred to as the WARN act in the HR space, this law regulates how an organization must give notice of upcoming layoffs. It primarily impacts large organizations, and is imposed both at the federal level as well as different layoff notice requirements by state.

Here are some of the specifics:

Notice must be given for plant closings, mass layoffs, and sales of business.
Employees that have not worked more than six months in the last twelve months, or who have worked less than 20 hours a week do not count in determining employee counts.
A “mass layoff” consists of more than 500 employees, or 50-499 employees if they make up 33% or more of the entire workforce.
The WARN 60 day rule for layoffs requires that employers give at least 60 days notice in advance of layoff events.

Make sure you consult with your legal team and thoroughly research the federal WARN act requirements you will need to follow for your layoff, as well as any pertinent WARN layoff notice requirements by state where your organization and impacted employees are located.

Read more about the WARN act here.

Layoff Laws and the Outplacement Process

Once you’ve made the decision to hold a layoff, you will need to carefully navigate every step of the process from employee selection to outplacement support to ensure a smooth transition.

This process usually consists of the following activities:

• Analyzing the amount of workers that need to be laid off.
• Selecting the employees that will be let go.
• Creating and executing a communications plan.
• Conveying notification of layoffs to affected employees.
• Delivering severance benefits to employees, such as severance pay, unemployment benefits, and outplacement.
• Onboarding employees into the outplacement program.
• Setting up employees to work with a career coach.
• Optimizing employees’ resumes and online job search.
• Helping employees find a new position!

The layoff and outplacement process outlined above is fairly high-level. In order to give it more detail specific to each layoff situation, it is important for organizations to consider the four layoff laws we covered above. Without proper attention to these regulations, layoffs can result in legal trouble far more expensive than the costs you might save by eliminating the laid off positions.

Layoff Laws: Final Takeaways

Among the many key considerations in planning, announcing, and conducting a layoff event are the layoff laws that could impact every step of that process. In order to ensure you are laying off your employees as legally and prudently as possible, you need to consider these four layoff laws that impact United States-based organizations, as well as any state-specific laws where your organization and employees are located.

Here are the key takeaways for those four layoff laws:

1. Title VII of the Civil Rights Act of 1964 provides protection for employees in a “protected class,” including discrimination on the basis of sex, race, color, national origin, and religion.
2. Titles I and V of the Americans with Disability Act of 1990, known as ADA, provides protection to employees who have disabilities, ensuring they have reasonable accommodations and cannot be laid off if those aren’t met.
3. The Age Discrimination in Employment Act of 1967 provides protection to employees over the age of forty, ensuring they don’t make up a disproportionate percentage of the employees selected to be laid off.
4. The Worker Adjustment and Retraining Notification Act, commonly referred to as the WARN act, regulates how and when organizations must give notice of an impending layoff.

Remember that these federal laws, as well as your applicable regional and state-specific laws, could also impact your outplacement process. So make sure you factor these layoff laws into your process for selecting which employees to let go and providing ample notice of your upcoming layoff event to all relevant parties.

Here are our tips for ensuring that you have designed a successful outplacement process in regards to these four layoff laws:

• Have a defined system for selecting which employees you will be letting go and have this system validated by a legal professional. This will decrease your liability throughout the outplacement process.
• Analyze the group of employees you will be letting go. Are any of the protected classes (e.g., sex, age, disability, race, color, origin) being disproportionately affected? A good test is to compare the percentage of each of these groups as a part of your total employee population. That percentage should still hold in the final group of employees that you are letting go. For example, if 48 percent of your workforce is female, then it would make sense for 48 percent of your laid off employees to be female as well.
• Plan for your event far enough in advance to follow WARN act regulations. Providing sixty days notice may seem extreme, but it is legally mandated and ethical. Your employees deserve adequate time to prepare for their next career transition, so provide them as much notice as reasonably possible in your outplacement process.

Interested in receiving support from Careerminds for your next layoff event? Click the button below to speak with one of our experts and see a demo of our industry-leading outplacement services.

Rebecca Ahn

Rebecca is a writer, editor, and business consultant with over 10 years of experience launching, managing, and coaching small to midsize companies on their business, marketing, and HR operations. She is a passionate people advocate who believes in building strong people, teams, and companies with empowering culture, content, and communication that facilitates meaningful results at every level and touchpoint. In her spare time, Rebecca is an avid traveler and nomad who also enjoys writing about travel safety and savvy. Learn more on her LinkedIn page.