Bracing for layoffs? 4 considerations to help avoid litigation

Marquee brands including Tesla, Twitter and Bed, Bath & Beyond are among employers facing lawsuits following mass layoffs—a trend that some experts predict is going to pick up steam.

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The layoffs came amid ongoing economic uncertainty, which isn’t expected to let up any time soon—and could have more employers moving to reduce headcount to cut costs, says Leighton Henderson, an employment attorney with the Liebert Cassidy Whitmore firm in San Francisco. Mass layoffs can be misconstrued as targeting particular groups and, with presumably nothing to lose, employees may be more inclined to raise a claim.

4 must-haves in a layoff strategy

While employers can’t do much to contend with current economic conditions, they can prepare a well-thought-out strategy in case they move toward layoffs. Henderson offers four considerations that employers, guided by HR, must weigh before rolling out a headcount reduction.

Selection criteria

If an employer anticipates layoffs, the first and most important step it should take is to decide what criteria will be used to select the employees who will be laid off.

Leighton Henderson
Leighton Henderson

It should go without saying, she adds, that such decisions must be based on nondiscriminatory, objective criteria. For instance, employers cannot simply lay off the employees with the most absences, as those employees may have missed work for legally protected reasons like parental leave. Instead, employers should review internal documents like job descriptions to determine whether certain positions are redundant and could be consolidated.

The criteria and subsequent decisions must be meticulously documented.

“When a company is anticipating layoffs due to economic distress, the best thing it can do is to have consistent documentation showing which positions are going to be laid off and why,” Henderson says.

Avoiding subjectivity

Understandably, some employers want to base layoff decisions on individual performance ratings in order to retain higher-performing employees, but Henderson warns that the subjectivity of this basis makes it more difficult to defend against claims.

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“In the event of a lawsuit, [employers] will have to be able to prove with consistent documentation that the employee in question received low ratings, and that the ratings were justified,” Henderson says.

The decision-makers

Even with a well-documented selection strategy, an employer could still be accused of decisions being influenced by factors like age, sex, race, religion, national origin or disability, she says; however, that risk will be much higher if the decision-making process is personal. The decisions should be as “anonymous” as possible, in that they come from top-level management.

See also: Josh Bersin-Let’s talk about layoffs and how to handle them

“Supervisors should not be making decisions about who in their department should be released, as the selected employees are inevitably going to feel targeted,” she says. “The decision needs to come from a higher level and be based on documented, nondiscriminatory criteria.”


Depending on the size of the company and the number of layoffs it anticipates, it may be required by the federal WARN Act and any corresponding state laws to provide 60 days’ advanced notice of a “mass layoff.”

Some organizations may even choose to be more transparent about the decision-making process.

“While an employer is not required by law to be transparent about how it has or will identify the positions for layoff, it is precisely that type of transparency that can help prevent discrimination claims,” Henderson says. For instance, are entire teams or departments being eliminated, or is it individual positions or employees within those departments?

“An employee is less likely to feel targeted and file a claim if they have been treated the same as other similarly situated employees,” she says.

Employers should take note, Henderson cautions, that employees who know layoffs are coming are more likely to submit a complaint, for things like harassment or retaliation—and HR needs to treat the complaint the same as it would if it came from another employee not being laid off.

“Some view it as a form of job protection, while others sincerely feel the need to convey the information before they potentially leave the company,” she says. “Regardless of the suspected motivation, employers have a legal obligation to conduct a thorough investigation in a timely manner and to take corrective action for any sustained misconduct.”

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Tom Starner
Tom Starner is a freelance writer based in Philadelphia who has been covering the human resource space and all of its component processes for over two decades. He can be reached at [email protected].