The Department of Labor released new unemployment figures today. Nationwide, the unemployment rate is 5.7%. That is the highest it has been in 4 years. The DOL found that the manufacturing, construction and retail industries were seeing lots of layoffs, while education and health care are still growth industries.
In the Panhandle of Texas, the unemployment rate is not nearly as high. The last figures I found are for June 2008, and show that the unemployment rate is only 3.7% here. But that doesn’t mean that every industry is solid in our area. Several of my clients have recently laid off a few employees because of increasing expenses, mainly for transportation.
If you have to lay off employees, it is important to know how to do so without discriminating against any of the employees who lose their jobs. Just because you have an economic reason for your actions doesn’t mean that your business is immune from facing a lawsuit by one or more of the employees you laid off. In fact, in hard times, an employee who has been laid off may have difficulty getting reemployed and then decide he/she has little to lose by suing you. So here are some tips to protect your business during a layoff:
- Remember that you are eliminating jobs, not people. Only fire those people whose positions will not be continued at your company. That way, you can never be accused of replacing the terminated older employee with a younger employee, for example. Discrimination claims often hinge on a determination of who replaced the fired employee. Many human resources experts urge you to leave the position unfilled for at least one year to allow the statute of limitations to run on most claims that your former employee could assert.
- You should review the race, age and sex of all of the employees you are planning to lay off, so that you can do some statistical analysis to assure that your lay off is not going to have a “disparate impact” on any particular protected class of workers.
- Never use a layoff as an easy way of avoiding confrontation with a poor performing employee. A lay off is not a substitute for progressive discipline. If you are having trouble with an employee, you need to address the problems that the employee is exhibiting and give the employee an opportunity to cure the problem. After much documentation, you may be able to fire that employee, but it should be treated as a termination for cause of that particular poor performer, not disguised as a layoff for economic reasons.
- Remember that if you have 100 or more employees, you are required by the WARN act to give 60 days notice of plant closings or mass layoffs. Hopefully, if you have that many workers, you have an employment attorney on speed dial and wouldn’t dare to undertake a layoff without lots of attorney advice.
- Finally, consider offering severance packages to the workers you are going to lay off. I know that in hard economic times, you don’t feel that you have any money to spare. But you can probably afford to offer each worker a couple of months of salary and benefits to tide them over while they look for work. Think of it as an investment in the good will of the community and your former employees. And from a legal standpoint, think of it as an investment in avoiding all those attorneys’ fees you will spend if you are sued. By providing a severance package that requires the employee to sign a written release of liability, you are literally buying peace for yourself for the future by assuring that you stay out of the courthouse.