In the United States, employers have a great deal of leeway in conducting layoffs. This doesn’t mean every layoff is legal, however. Employers may not discriminate based on certain protected characteristics in deciding who loses their jobs, for example. Employers also may not lay off an employee if it would violate an employment contract. And, larger employers may have to give employees notice of a layoff in advance.
Employers Must Not Discriminate in Layoffs
Most employees in this country work at will, which means they can quit or be fired at any time, with or without cause, as long as the employer doesn’t fire them for an illegal reason. One illegal reason is discrimination based on a characteristic protected under federal or state law, such as race, national origin, or gender. Employers that use the layoff process to discriminate against employees based on a protected trait can be sued.
For example, if an employer uses a layoff as a pretext to get rid of most of its female employees, that would be illegal. Whether the job action is called a termination or a layoff, it is illegal to make job decisions based on protected characteristics. (For a complete list of protected characteristics, select your state from the list at our employment discrimination page.)
Employment Contracts May Offer Protections
Some employees have written employment agreements that guarantee continued employment for a period of time, such as one year. If you have a contract like this and you are laid off for reasons that aren’t stated in the contract, you might have a legal claim for breach of contract. (To learn more about the different ways a contract might be created, see What Does It Mean to Have an Employment Contract?)
Even if you don’t have an individual employment contract, you might have other contractual protection against layoffs. If you are a union member, your collective bargaining agreement might spell out the circumstances in which you can be laid off, or the process that your employer must follow in deciding which employees lose their jobs. Talk to your union representative to find out.
Federal Law Requires Advance Notice of Mass Layoffs
The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100 or more employees to give at least 60 days' notice before conducting a mass layoff: a reduction in force in which at least 500 employees at a single job site will lose their jobs, or in which 50 to 499 employees lose their jobs if they make up at least one-third of the employer’s work force.
Employers must also give 60 days’ notice of plant closings: the shutdown of a single employment site, operating unit, or facility, in which at least 50 employees lose their jobs.
The WARN Act requires only that employers give notice; it doesn’t protect employees from layoffs, nor does it require employers to pay any severance. Some states have similar laws requiring notice, and a few require employers to pay a small amount of severance. See State Laws on Plant Closings to learn more.
Your Rights in a Layoff
Even if you don’t have the right to keep your job, you might still have certain rights in a layoff. In addition to the right to notice under the WARN Act and similar state laws, you have the right to any severance promised in your employer’s policies, your employee handbook, or your employment contract. For example, if your employee handbook states that employees who are terminated will receive severance of one week’s pay for every year of employment, you are entitled to that severance pay when you are laid off.
In addition, you have the right to receive your final paycheck relatively quickly after you lose your job. Some states, such as California, require employers to provide the final paycheck immediately upon termination. Other states give employers more time: For example, Vermont requires payment within 72 hours, while New York requires payment by the next regularly scheduled payday.
You may also have the right to continue your group health insurance plan under the federal COBRA law. (For more information, see our article on COBRA rights after a job loss.)