Letting workers go — whether you’re laying off a single worker or conducting a large layoff — is one of the toughest tasks managers face. And because of the emotional stakes involved, it’s also one of the tasks most likely to land a company in legal trouble. To ease the pain and avoid the courtroom, consider the decision carefully.
Laying off an employee is different from firing an employee. “Firing” means letting a worker go for any reason, whereas a “layoff” refers to an employment termination based on economics, usually involving more than one worker. (For information on firing, see Nolo’s article Firing Employees FAQ .)
If layoffs are under consideration at your company, you need to make two decisions: Is it in your company’s best interest to conduct a layoff? Which employees should your company lay off?
Though making the decision to let someone go is rarely easy, this article can help you feel confident you’ve made the best of a bad situation. (If you’ve already considered the below factors and feel a layoff is right for your business, read Nolo’s article How to Conduct a Layoff .)
Deciding to Conduct a Layoff – Companies that consider layoffs are usually trying to cut costs in order to dig the company out of a hole or make it more profitable. But keep in mind that layoffs can be costly in other ways. For example, the company may have to pay severance packages, remaining workers’ productivity and morale may decline, and the company might even be faced with a lawsuit, depending on how the layoff is conducted.
Given the risks, companies should carefully consider whether they really need to conduct layoffs and whether they can do so legally. Consider Alternatives to Layoffs In some cases, less painful alternatives can do the trick. These might include: a freeze on hiring, promotions, or [More]