Many employers in Bakersfield and Kern County have had to make the agonizing decision to lay off employees. Unfortunately, probably more local employers will soon be following suit. In order to properly handle these situations, employers considering a layoff need to know the following:

There is an alternative available. In 1978 the California State Legislature established the Work Sharing program, which allows employees whose wages and hours have been reduced to receive Unemployment Insurance. According to the Employment Development Department, “any employer who has a reduction in production, services, or other condition that cause the employer to seek an alternative to layoffs may participate in the Work Sharing program.” Contact EDD’s Special Claims Office at (916) 464-3300 for more information about the program and how to participate. 

Use objective criteria when making layoff decisions. Length of service, performance, job skills, and job elimination (eliminating entire locations, departments, or job categories) are all permissible criteria to use. According to HRhero.com, “Courts have consistently determined that such criteria, when unrelated to factors like gender, race, and religion and based on business reasons, are legitimate justifications for employment decisions.” Legal claims usually result when layoff decisions appear to disproportionately affect members of a protected class (women, minorities, people 40 years old and older, etc.). Personnel Policy Service, Inc. noted that, “Age discrimination claims are particularly popular after layoffs since older workers tend to be more highly compensated and may be selected because of their higher salaries.” Additionally, legal problems are likely to result if it appears that employees who have recently filed claims (harassment, discrimination, workers’ compensation), who have been on a leave of absence, or who have been involved in union activity are targets of the layoff. Finally, follow any internal policies or collective bargaining agreements that may stipulate the criteria or procedures for the layoff.

Communicate with employees. Under the Federal Worker Adjustment and Retraining Notification Act (WARN), employers with at least 100 full-time employees (or at least 100 employees who together work at least 4,000 hours per week) are required to give advanced warning of a mass layoff. California has its own version of the WARN Act, which affects employers with at least 75 full-time or part-time employees within 12 months prior to a layoff. Employers in California must comply with both State and Federal laws. Because WARN rules can be complex, these employers should consult with legal counsel before taking action. Regardless of legal requirements, keeping employees in the loop is a good idea for all employers. Some employers are afraid that communicating that type of information will adversely affect productivity. Not so, says HRhero.com: “Studies have shown that employees value employers that keep them informed, particularly of developments that could affect their jobs…that type of communication actually fosters loyalty and morale (which also affect productivity).” Meet with each affected employee separately (as opposed to telling them in a group, by letter, or mass email). Explain why the employee was selected for the layoff and be honest if it was because of performance issues. “When employers try to sugarcoat the reasons for an employment decision in an attempt not to hurt feelings or offer no reasons at all, it can adversely affect their ability to defend themselves if they’re called on in later litigation to explain the reasons for their decision,” warns HRhero.com. If the reason for laying off the employee was entirely economic, thank him for his service and mention specific accomplishments he made to the company. Said employment attorney Michael S. Kun, “Both experience and studies have shown that two intertwined notions often drive employees to file suit against their employers: the notions that their employers did not treat them fairly and did not treat them with respect…There is no reason to diminish their self-worth or belittle their accomplishments” (at the time of termination).

Have the paperwork ready. When terminating an employee, California employers are required to provide a final paycheck (including any accrued vacation or PTO) and the following notices:

• Notice to Employee as to Change in Relationship
• For Your Benefit pamphlet (form 2320)
• Health Insurance Premium (HIPP) notice

Employers with twenty or more employees who offer a group health care plan must notify the terminated employee of his COBRA rights at the time of termination (COBRA requirements are changing under the Obama administration; therefore, employers should consult with their insurance carriers to ensure they are in compliance with the new regulations). Additionally, if giving severance pay, employers should obtain a written release of all claims against the employer in return. This release must comply with the Federal Older Workers’ Benefit Protection Act for employees who are 40 years old or older. Consider using a termination checklist to help ensure that appropriate documentation is being provided, company property is being collected, and layoff meetings are being conducted in a consistent manner.  

Layoffs are difficult for everyone involved. Carefully preparing for them and conducting them with thoughtfulness and respect minimizes the potential damage to employees as well as employers.