I have been waiting for a gap in my practice with no pending claims about a layoff gone wrong.  Honestly, I have been waiting for over two years, and there has been no gap, so I am taking the plunge and writing this blog post now.

Why are there so many claims involving layoffs?  Because employers consistently think that having a legitimate business reason for a layoff is enough to avoid and ultimately win a legal claim.  Well, sorry to be the bearer of bad news.  It isn’t enough to have a good reason (even if it is the real reason) — you have to be in a position to prove it.

So, how do you prove that your layoff is legitimate?  Here are some tips:

  • First, have someone vet the decision to test whether it passes the “smell test.”  That person can be Human Resources, internal legal counsel, or outside counsel, but someone really has to dig into the facts and make sure that the proposed business justification is legitimate.  And by the way, digging into the facts is not just asking the manager; it is making sure that the manager’s reasons are complete and all risk factors are appropriately identified and considered.  I often ask clients:  “What do you expect the employee to say when you inform her of the layoff?” and “How will you answer that question?”
  • Second, document the reasons for the decision at the time the decision is made.  This becomes very important when the decision makers have left the company and taken the thought process behind the business justifications along with them.
  • Third, make sure all layoff documentation clearly states the legitimate business reason.  No subterfuge here.  Don’t say one thing in the layoff meeting and something else on the separation notice for goodness sakes.  Have a script and make sure everyone sticks to it.
  • Fourth, while performance often weighs into a layoff decision, remember this is not a performance based termination.  So, if there is good reason for termination (such as consistent poor performance, policy violations, or bad behavior) document that behavior and call the separation what it is – a termination, not a layoff.  I have been known to say “a pig in a prom dress is still a pig.”
A pig in a prom dress is still a pig
Copyright: niknikpo / 123RF Stock Photo
  • Fifth, always (and I mean every time) show the individual a list of open positions at the company, and ask if they are qualified for and interested in any of them.  I don’t care if the positions are for janitorial in San Diego and the person laid off is a manager in San Francisco, show the list.  If they indicate interest, explore that option.  If they decline, document that the position list was provided and they declined.  If you don’t want to do this, then refer back to tip #4 (and this is probably not a layoff and should be a performance based termination).
  • Finally, be kind and empathetic.  It stinks to be laid off.  It hurts to have to leave the office without notice.  Treat the person laid off as you would want to be treated (or how you would want your closest family member to be treated).  Period.  No exceptions.

Employers who follow this six simple steps will be well positioned to defend a layoff claim.  If not, well, more business for us lawyers.