| The steps outlined below will help to answer some | | | | employees to make the decision to leave the |
| of these very questions and provide guidelines to | | | | company voluntarily. However, this approach may |
| follow when faced with a layoff situation: | | | | also have some drawbacks; most notably the |
| 1. Consider the alternatives. A knee-jerk reaction | | | | potential for star employees to take you up on |
| may result in a quick layoff and a quick buck, but | | | | your offer. |
| it may not be the best solution long-term. Before | | | | 6. Severance packages. Although employers |
| making a layoff decision, always consider the | | | | typically have no obligation to offer severance |
| alternatives. Layoffs should typically be a last | | | | packages to exiting employees, some employers |
| resort, after other cost-cutting measures don't | | | | may decide to. Severance pay usually equates to |
| pay off. Work sharing, for example, is one option | | | | a week or two of pay for each year of service |
| that may help the company save some money | | | | and can be provided in a lump sum or paid over a |
| and still allow employees to retain their jobs. Work | | | | period of time. In some instances, a severance |
| sharing allows two employees to share the | | | | package may also include other extended benefits |
| responsibilities of a full-time employee. | | | | such as continued health insurance or |
| Company-wide pay cuts may be another feasible | | | | outplacement assistance. |
| alternative to a layoff. Although not appealing to | | | | 7. Outplacement services. Employers may want |
| most employees, for some, it's better than having | | | | to consider providing affected employees with |
| no job at all. A reduction in pay works best if it is | | | | outplacement services. These services are |
| shared by all employees, including management. | | | | designed to help terminated employees prepare |
| Another option is to offer those nearing | | | | for a new job and typically provide assistance in |
| retirement exit incentives if they choose to resign | | | | resume writing, interview skills, job placement, and |
| early. Employers want to be cautious with this | | | | career counseling. |
| approach, however, to avoid claims of age | | | | 8. Ensure employees are informed. Employers can |
| discrimination. | | | | help make the transition between jobs a bit easier |
| 2. Layoff criteria. It is recommended that prior to | | | | by providing employees with helpful information on |
| layoff employers develop objective and justifiable | | | | income support assistance programs such as |
| criteria for selecting employees to let go. Some | | | | unemployment compensation, and health insurance |
| factors you may want to consider in making a | | | | continuation options, such as COBRA. |
| layoff decision include seniority, job performance, | | | | 9. Paychecks. Each state may have their own |
| leadership potential, and one's overall value to the | | | | requirements relating to issuing an employee's final |
| company. Just remember, any decision you make | | | | paycheck. In some states, employers may be |
| must be supported by a legitimate business need. | | | | required to provide employees their final paycheck |
| 3. Seniority. When seniority is considered to be | | | | at the time of layoff; other states may allow |
| the criteria for making layoff decisions, an | | | | employers to provide the final paycheck at the |
| employee's tenure will determine his or her | | | | next scheduled payday. Check your state |
| susceptibility to a layoff. Although length of | | | | requirements in the Layoffs section of our State |
| service is recommended to be part of the layoff | | | | & Federal Laws database. |
| decision, it should be coupled with other factors | | | | 10. Legal considerations. As with any employment |
| such as an employee's performance history. | | | | decision, employers want to tread carefully before |
| 4. Performance and skills.The knowledge, skills and | | | | following through with a layoff. To avoid |
| abilities (KSA's) needed for a company to survive | | | | discrimination claims, all decisions should be made |
| after downsizing, and to ultimately remain | | | | based on objective criteria and supported with |
| competitive in the marketplace, may also help | | | | documentation. It's recommended that equal |
| guide a layoff decision. Competencies such as | | | | employment opportunity (EEO) implications are |
| resiliency, leadership and organizational | | | | considered in order to ensure that employees of |
| commitment, for example, may all be particularly | | | | a protected class (i.e., minorities, those over the |
| valuable to the company. It may be wise to retain | | | | age of 40, the disabled, or veterans) are not |
| employees possessing the skill sets that are | | | | disproportionately impacted by a layoff decision. |
| desired company-wide. In addition to specialized | | | | Further, when large number of workers are laid |
| skills, job performance is often used to make | | | | off at once, state law may require |
| layoff decisions. When performance is used during | | | | that employers notify their state Department of |
| the decision making process, be sure to review | | | | Labor. Check your state requirements in the |
| past performance appraisals and other records of | | | | Layoffs section of our State & Federal Laws |
| performance history before making a layoff | | | | database. |
| decision. | | | | If downsizing is the best option for ensuring the |
| 5. Voluntary layoffs. To avoid making the difficult | | | | company stays afloat during tough economic |
| decision themselves, some employers offer | | | | times, there are a variety of considerations |
| "voluntary layoffs" by informing employees of | | | | employers should make in order to protect |
| their options. For example, an employer may | | | | themselves. Establishing criteria that will be used |
| approach their employees and offer them to | | | | when making layoff decisions should always be |
| either remain with the company and take a pay | | | | your first course of action, followed by |
| cut or allow them to resign and take a severance | | | | considerations relating to whether or not to offer |
| package. Offering attractive exit incentives, such | | | | severance packages, outplacement assistance, or |
| as severance pay, continued health insurance, and | | | | exit incentives. |
| pay for unused paid time off, may encourage | | | | |