Limit Liability for Layoffs by Understanding WARN and OWBPA Acts

Layoffs open employers up to the possibility of lawsuits under a wide range of laws, including the Worker Adjustment and Retraining Notification (WARN) Act, state “mini-WARN” requirements and the Older Workers Benefit Protection Act (OWBPA). Nonetheless, employers can adopt some practices to limit their potential liability. Here are a few examples of such practices in this second of a three-part series on layoffs. Law experts recommend:

  • Identifying business reasons for layoffs and document supporting those reasons; securing copies of documentation in a layoff planning file.
  • Considering how the size of layoff(s) will be determined — for example, a percentage of the overall workforce, a specific number of employees or a budget cut level.
  • Determining when the layoffs will occur — all at once or in stages.
  • Considering whether the reduction in force (RIF) will likely trigger a WARN event, or if it can be structured to avoid one.
  • Considering possible benefits and detriments to allowing employees to self-select by volunteering for the reduction, and of offering severance release agreements.
  • Carefully determining criteria used to select individuals recommended for inclusion in the RIF.
  • Identifying decision-makers who will select affected employees and provide an internal memorandum that describes the process and criteria to be used.
  • Asking the decision-makers to go through the process and make a preliminary list of recommendations about who should be included in the RIF and why. HR can then scrutinize these recommendations and raise questions if justifications for certain selections are unclear or appear weak.
  • Once the final list is prepared, HR should perform a statistical adverse impact analysis to see if any protected classifications of employees appear disproportionately affected and to confirm nondiscriminatory justification.
  • Determining whether severance will be offered to selectees, decide how it will be calculated and prepare releases that meet all OWBPA and Age Discrimination in Employment Act (ADEA) criteria for those employees age 40 or older. These requirements include the necessary statistical information to be provided to those employees, a 45-day period within which to consider signing the release, and a seven-day period to revoke after signing before it becomes enforceable, along with other language required by the ADEA.
  • Having and executing a well-thought-out communications plan — internally, and possibly externally — to announce the layoffs.

Be sure any employee releases are enforceable.