10
MiMfg Magazine
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May 2020
Layoff Considerations
During Uncertain Times
By Megan Norris and Brian Schwartz • Miller Canfield
Layoffs and terminations often conjure feelings
of worry and trepidation from employers and defense
counsel alike: Did we make the right decision? Did
we adequately protect ourselves from litigation? Did
we give an employee a reason to file a lawsuit? Could
we have done anything differently? There are myriad
issues to consider when economic conditions and
unforeseen events such as the coronavirus pandemic
force difficult business decisions, and employers must
consider not only the necessity to right-size the work-
force, but also the necessity to minimize the likelihood
of legal fallout following such a tough decision.
The Decision
Advanced planning prior to executing a layoff or
a reduction in force (RIF) can help avoid and defend
against potential litigation. First, the employer should
evaluate what functions, if any are being eliminated.
Second, the employer should determine factors for
identifying the affected employees (e.g., employees
performing that function? seniority? performance
evaluations? specific skill sets?). Employers should
not identify specific individuals for layoff until going
through and documenting this analysis. Employers
should articulate and document the business reasons
for the action.
Prior to selecting a worker for a layoff, it is helpful
to establish and document that job-related factors for
the layoff do not have a disparate impact on a protected
group. To protect disparate impact analysis from
discovery under the attorney-client privilege and/or
attorney work product doctrine, it is advisable to seek
legal advice, allowing time to address issues in the
selection process that may subject an employer to an
unreasonable risk of litigation.
Providing Notice
The Worker Adjustment and Retraining Notification
Act (WARN) applies to employers with 100 or more
employees, excluding part-time workers, or 100 or
more workers who in the aggregate work at least
4,000 hours per week, excluding overtime. It requires
covered employers to provide 60 days of advance
notice of “plant closings” and “mass layoffs” that
result in an “employment loss” at a single site of
employment during any 30-day period.
An “employment loss” includes a termination, a
layoff exceeding six months, or a greater than 50
percent reduction in hours for any individual employee
during each month of a six-month period. During
the current pandemic, where layoff may not exceed
six months, WARN Act notice might not be required.
A “plant closing” includes the permanent or temporary
shutdown of single site of employment or one or more
facilities within a single site of employment that results
in an employment loss for at least 50 employees during
a 30-day window period. A “mass layoff” involves a
reduction in force other than a plant closing that results
in an employment loss, during a 30-day window period
of at least 33 percent of active employees (excluding
part-time employees) and at least 50 employees
(excluding part-time employees). If, however, there is
a reduction of 500 or more employees, the 33 percent
requirement does not apply. Mass layoffs differ from
plant closings because there need not be a shutdown
of a unit at an employment site.
The notice must be given to the affected employees
or their bargaining representative, the state dislocated
worker unit, and the chief elected official of the local
unit of government. The requirements for notice to
each of these groups varies.
There are exceptions to the 60-day notice
requirement, including:
• The faltering company exception, which applies
to plant closings, but not mass layoffs. The company
must be actively seeking capital or business and
have a realistic opportunity to obtain it.
• The unforeseeable business circumstances
exception, which requires an employer to show
that the circumstances are based on sudden and
unexpected actions outside of its control, such
as a strike at a major supplier or the termination
of a major contract.
• The natural disaster exception, which applies to
plant closings and mass layoffs and encompasses
floods, earthquakes, droughts, storms, tidal