Conducting a Layoff: A Roadmap for Employers

The slowing economy of 2024 has seen layoffs across multiple industries. For many smaller businesses, this may be the first time they’ve had to eliminate positions, raising questions about where to begin and how to stay compliant with the law. Below is a guide to help employers navigate the layoff process and avoid legal pitfalls.

Understanding the Basics

The Massachusetts Department of Unemployment Assistance (DUA) oversees unemployment benefits and enforces related laws. It’s important to remember that the DUA typically makes the final decision regarding eligibility for benefits. Employers may challenge an individual’s benefit award through the DUA’s internal appeals process, and if unsatisfied, they can appeal to the District Court.

Steps for Conducting a Layoff

1. Selecting Employees for Layoff

When determining which employees to lay off, ensure that solid documentation supports the decision. Whether the reason is poor performance, attendance issues, or the loss of a contract, the rationale must be legally sound. Avoid selecting employees based on their membership in a protected class. If layoffs affect employees in protected classes, clear documentation should demonstrate that their selection was not due to their protected status.

2. Informing Employees

While it is up to the employer to notify the employees, there are some points to consider. Informing a small group together enables you to convey the same message simultaneously. On the other hand, speaking with employees one at a time may provide them with a more respectful and private setting where they can ask questions.

3. Last day at work

If not already designated, there are many things to do once you determine an employee’s final day.

• Final Pay: Employees must be paid through their last day, including any accrued but unused vacation time. If immediate payment isn’t possible, consider paying for an additional day to allow time for processing.
• Unemployment Information: Provide employees with a pamphlet explaining how to apply for unemployment benefits. Although employers have 30 days to distribute the pamphlet, it’s best to do it that day. The pamphlet is available in multiple languages.

Consider a WorkShare Program

Massachusetts offers a WorkShare program as an alternative to layoffs. This program reduces working hours across a department or company, allowing employees to collect partial unemployment benefits to offset lost wages. It’s particularly beneficial for employers expecting a short-term downturn in business, enabling them to retain their workforce for when business picks up again.

Utilize the Massachusetts Rapid Response Program

If the WorkShare program is not a viable alternative, consider contacting the Massachusetts Rapid Response program. This initiative provides assistance to employers and employees dealing with layoffs and seeking strategies for returning to work.

Offering a Release of Claims

If you anticipate that a layoff might lead to contentious situations, or if you wish to provide severance as a goodwill gesture, consider offering a release of claims. It is a contract through which the employer agrees to pay a certain amount in exchange for the employee giving up legal rights against the company. It’s advisable to consult with legal counsel to ensure the release is appropriately tailored to your situation, as one size does not fit all.

Any AIM member who  would like to discuss layoffs or any other HR related question may contact the AIM helpline at 1-800-470-6277 or at helpline@aimnet.org.

You can also check out the Human Solutions podcast on terminating employees.