Employers everywhere are being forced to make tough choices due to COVID-19 (Coronavirus). For many, unfortunately, orders to close nonessential businesses, reduced demand, or concerns related to social distancing have created a situation where layoffs, reductions in force, or furloughs are necessary or may become necessary. For those employers considering a reduction in force, it is imperative that you develop a clear plan for any layoffs so that the decisions made to save your business now do not destroy it in six months due to lawsuits or administrative charges.
The first part of the plan should involve an analysis of your short and long-term business needs. How many employees do you need to lay off? Are you anticipating that the business disruption will be temporary, such that furloughs or reduced hours would be appropriate, or will the effect on the business be long-term, such that you need to lay people off? If so, what positions need to be eliminated or reduced? Within those positions, do the layoffs have a disparate impact on individuals in EEO-protected categories, such as older workers, minorities, or employees with disabilities? If so, you will want to reconfirm that the criteria being used to determine who is laid off are not a pretext for discrimination. Finally, you’ll want to confirm that the amount of notice being provided to employees complies with state or federal law, such as the WARN Act, which requires that certain notice be provided to employees when the employer is undergoing a mass layoff. For COVID-19, the WARN Act is unlikely to require more advance notice than is reasonably applicable because it would fall under the “unforeseeable business circumstances” exception.
The next question is whether you intend to offer severance benefits to laid off employees in exchange for a release. If you do, and you are laying off 2 or more employees, you will need to provide the notices required by the Older Workers Benefits Protection Act (the “OWBPA”). The OWBPA requires that employees be given 45 days to consider any release agreement and 7 days to revoke consent. It also requires that the employer provide a written list disclosing the unit of individuals covered by the layoff, the job titles and ages of all individuals selected or eligible for the layoff, and the age of all employees not selected or eligible for the layoff. If this information is not provided, any release signed by the employee could be invalidated.
If you’re considering a layoff or reduction in force due to business interruptions caused by COVID-19, consulting counsel now could prevent a misstep creating significant legal liability later. Please contact Gregory Currey if you have any questions about how to ensure that your layoffs achieve their intended result and protect your company’s long-term viability.
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