As COVID-19 continues wreaking havoc on the economy, you may have to make some tough employment decisions. Many of you already have — more than 20 million Americans have applied for unemployment benefits in the past month, and economists estimate that in the first quarter of the year the global economy contracted at its sharpest rate since World War II.
If you have to let a portion of your workforce go, adhering to best practices for terminating and laying off employees can make the difficult process smoother for you and them. Layoffs and terminations, even during times of crisis, must still comply with federal and state regulations. Ignoring these laws may present employers with legal challenges that remain long after the crisis ends.
In fact, we’re hosting a webinar on May 12 to explore just this. Save your spot today!
Brush Up on the Law
Just because we’re dealing with an unprecedented situation doesn’t mean that ordinary compliance is put on hold. The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to provide written notice at least 60 calendar days in advance of covered plant closings and mass layoffs for employers of 100 workers or more at a single employment site.
While the WARN act allows exceptions based on a faltering company or unforeseeable business circumstances, which would most likely apply in the case of COVID-19-related layoffs, employers are still required to provide notices to employees along with an explanation of why employees did not receive the full 60 days of notice. States can also impose their own guidelines for fair warning to employees in the face of layoffs and furloughs.
EEOC requirements are also still in effect. The EEOC provides a checklist for employers to help ensure layoffs do not disproportionately affect protected groups. For larger employers, it may be appropriate to run a disparate impact analysis to ensure that minority employees aren’t disproportionately affected, says employment lawyer Mark Kluger, co-founding partner of Kluger Healey, LLC. A disparate or adverse impact can be any action taking in hiring, termination or layoffs that may appear neutral but actually have a discriminatory impact on protected groups.
A disparate impact analysis can help you identify any potential adverse impacts before making decisions about layoffs and terminations. “Weigh the age, race or gender of the people who are being let go against the general population,” he says. “They should be balanced.”
Employers also need to consider the impact of layoffs or terminations on any Paycheck Protection Program (PPP) funds received. The loan is designed to offer a direct incentive to keep employees on the payroll during the COVID-19 crisis, and forgiveness for the loans will be reduced if an employer’s full-time headcount declines or if salaries and wages decrease.
Communicate Your Intentions Clearly
In casual use, it’s not uncommon to hear the terms layoff, furlough and termination used interchangeably. But each term has a very specific meaning, and using the correct term lets employees know where they stand with the organization.
If you don’t intend to bring employees back on board when business ramps back up, then call it a termination. “But if you do intend to bring those employees back, you can call it a furlough,” he says. “Just make it clear that the timing isn’t definite — employees who are currently furloughed could be terminated if business conditions don’t improve.”
Deliver the News With Care
You will need to clearly and candidly explain the process to the employee. Ordinarily, a face-to-face conversation is ideal, but may not be practical. A video conference or phone call are your next best options. Do not terminate employees over an mass email or a Zoom call, Kluger says.
Prepare to answer the most common questions. For example, how will this decision affect their health insurance? Are you offering severance? If so, how much? Is this temporary or permanent? If it’s a furlough, when do you plan to bring them back aboard?”
Empathy is an indispensable part of the termination conversation. “Leaders can and must find a way to maintain the spirit of human connection and caring, even if you must deliver the bad news via video chat,” says Deb Boelkes, founder of Business World Rising and author of Heartfelt Leadership. “Offer plenty of time, and your undivided attention, to the conversation.”