Admit it, CEOs: Layoffs are coming to your company. And while getting through that is going to suck, know what is going to be worse? The lawsuits.
Fortunately, we talked to HR lawyer Kirk Nemer of Career Protection and he told us how to pull off cutting your workforce without getting sued:
- Bone up on employment laws. It’s a good idea to ask laid-off employees to sign a waiver or release promising not to sue, but be careful giving them deadlines. The OWBPA Act stipulates that if an employee is over 40, they get a minimum of 21 days to consider signing the release and another 7 days to change their mind after they do. If a company cuts a group of employees, each employee gets 45 days to consider the release. Force them to sign any sooner, and the waiver’s no good. The WARN Act requires companies laying off more than 50 employees to give them 60 days notice.
- Pay out severance according to title and length of service. Only. Don’t play favourites. Be objective and use length of service and title as your guide. One of Nemer’s clients was a director, but his company only prepared severance packages for vice presidents and regional managers. When the company canned Nemer’s guy, it gave him a regional manager’s severance because it was cheaper. Now he’s suing.
- Don’t treat laid off employees like criminals. Laid-off employees do not all need to be escorted from the building by burly, armed guards before 3 p.m. or else. That kind of confrontational stance “sets up a battle,” says Nemer — a legal battle.
- Don’t set layoff traps. Nemer tells us that one easy way to drive laid-off employees to their lawyers is to lie to them. One of his clients who’d been with her company 14 years got a note one day from her supervisor asking her to attend a new project meeting. When she did, she found the meeting room vacant but for her boss and an HR rep. They canned her on the spot and then security escorted her out of the building as a part of a general layoff. Now she’s one of Nemer’s clients, suing her old employer just months after getting a standing ovation during an all hands meeting.
- Be clear to blame the economy, not the employee. Admit that the company has hit hard times and that the layoff has nothing to do with the employee’s performance. Do not lie or make excuses. Laying off one of Nemer’s clients, one company HR rep asked for her resignation. She refused and asked what she’d done wrong. “Nothing” said the rep, who then admitted Nemer’s client was part of a general layoff. Another of Nemer’s client’s only joined a company after months of recruiting. Then, just yet a few more months later, they told him the company didn’t have a role for him anymore. “You recruited me for this role!” Nemer’s client told the CEO. Lies, damned lies. They’ll get your name at the top of a double-spaced PDF.
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