In the United States, employers have a great deal of freedom to lay off employees. Nevertheless, laying off employees is regulated by law. Employers that do not follow those rules in a clear, unbiased layoff policy run the risk of lawsuits.
Federal Law Requires Advance Notice of Mass Layoffs
The federal Worker Adjustment and Retraining Notification Act requires employers that employ more than 100 employees to give 60 days' notice in case of a mass layoff.
This law applies if an entire facility is closed for more than six months. It also applies if at least 50 employees are laid off at a single facility over a 30-day period, as long as the laid-off employees are at least one-third of the facility's total work force, and the layoff period exceeds six months. There are certain exceptions to these rules.
Employers Must Not Discriminate in Layoffs
Employers who use the layoff process to discriminate against employees can be sued. "Protected characteristics" include race, gender, nationality, skin color, disability, or age (over 40). These laws may be used against employers who target particular groups by laying them off in disproportionate numbers.
For example, if 35 percent of a company's employees are female and 65 percent of laid-off employees are female, the laid-off employees could make a case for sex discrimination. Employers have a defense if they can show that the reasons for laying off these employees were unrelated to gender. Perhaps, for example, the laid-off female employees all worked in an unproductive division of the company.
Employment Contracts Offer Protections
Some employees sign a written employment agreement that guarantees employment for a certain period. If you signed an agreement and are laid off, your employer could be liable for breach of contract and resulting penalties. In addition, collective bargaining agreements may also limit an employer's freedom to lay off employees without paying compensation.
Layoffs Must Be Documented
In the case of a mass layoff, employees must be provided with a written, dated notification. There should be a business justification for the layoff, like the loss of a major contract. Employers must document how the reason for the layoff affects business and why particular employees, or employees in particular divisions of the company, must be laid off.
If you feel that your employer does not follow procedure, or have a valid reason for the layoff, or for laying off particular employees, complaints can be filed under the WARN Act or with the Equal Employment Opportunity Commission.