Employee Rights During a Layoff

A layoff can be stressful, but companies have to follow certain rules when laying off employees.

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Knowing your employee rights during a layoff helps ensure you get through this transitional period as smoothly as possible.

A layoff is a loss of employment due to factors within the company. Unlike being fired, getting laid off isn't the fault of the employee. Instead, layoffs result from a company's decision to reduce the overall number of employees. Layoffs generally affect many employees at once.

Common reasons a company may choose to lay off employees include:

• Reduction in available work tasks for employees
• Funding for a specific project no longer exists
• Mergers have created job redundancies
• Company reorganization or downsizing eliminates specific departments or job tasks

What Are the Laws Around Layoffs?

In general, employers can lay off employees at any time, and there are no laws protecting employees from being laid off. In most states, employment is considered "at will," so the company or worker can choose to end employment at any time for any reason.

During a layoff, some federal laws may apply that limit how companies handle mass employee termination. For example, a company can't discriminate in layoffs. These laws prohibit companies from basing layoff decisions on race, sex, religion, pregnancy, national origin or disability. The Age Discrimination in Employment Act (ADEA) protects workers who are 40 and older from age-related discrimination, including discriminatory practices during layoffs.

Antidiscrimination laws relevant to layoffs don't mean a company layoff can't include people in a protected group. However, companies may face issues if the layoff includes a large proportion of employees in one or more of the protected groups. As an example, if the majority of those laid off are older employees, female employees or employees of a specific race, the company may have illegally discriminated during the layoff process.

Another set of laws regarding layoffs includes those preventing employers from using layoffs as retaliation. A company that fires or lays off someone for reporting illegal behavior, filing workman's compensation claims or taking family leave may be held liable for unlawful termination.

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Does HR Have to Be Present During a Layoff?

There are no laws requiring a human resources (HR) representative to be present during a layoff. However, many companies have internal policies requiring the presence of someone from HR during layoff announcements. Some layoffs are handled directly by the HR department, and this department typically handles all the paperwork related to the layoff, including any severance documents.

Is Severance Required for Layoffs?

Severance pay is not required during a layoff. Employers offer severance to remain competitive in their industry and to avoid negative press related to layoffs. In many cases, severance is contingent on the former employee agreeing not to pursue any future legal action against the company related to the layoff.

Typical severance amounts range from 1 to 4 weeks of pay for every year the employee worked for the company. You may be able to negotiate your severance terms before signing the legal documents agreeing to severance.

In addition to severance, you might want to ask your employer about payment of accrued time off after a layoff. While there aren't any federal laws related to unused paid time off, some states have laws requiring employers to pay out unused vacation time or sick leave after a layoff.

What Is the WARN Act?

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law designed to protect employees during mass layoffs. The WARN Act only applies to larger businesses, which are defined in the law as companies with over 100 full-time employees. Employees who haven't been employed for 6 of the prior 12 months aren't counted for purposes of the WARN Act.

The act requires these companies to give a 60-day advance notice of layoffs that fit the following criteria:

• Over 500 full-time employees are laid off at once.
• A plant closure results in the loss of over 50 full-time jobs within 30 days.
• Over 50 full-time employees are laid off at once, and the layoff eliminates 33% or more of the total active workforce at the company.

Getting laid off is a difficult situation for anyone, but knowing your rights can help you navigate the transition and ensure you're prepared for your next career move.