In these difficult economic times, many companies are considering layoffs and even plant closings.
Companies facing such difficult decisions should be prepared to meet legal requirements and to try to forestall lawsuits when they take action.
One consideration is whether the layoffs will be subject to the federal Worker Adjustment and Retraining Notification Act. This law is applicable to businesses that employ 100 or more full-time employees and businesses that employ 100 or more employees (counting full-time and part-time employees) who altogether work at least 4,000 hours per week (excluding overtime).
These companies must give 60 days' notice to affected employees and the state Department of Labor and Workforce Development of plant closings and mass layoffs. A plant closing is defined as the shutdown of an employment site that results in job loss for 50 or more employees during any 30-day period.
A mass layoff is defined as job loss during any 30-day period for 500 or more employees, or for 50 to 499 employees if they make up at least 33 percent of the employer's active work force.
There are exceptions to the 60-day notice period for faltering companies, unforeseen business circumstances and natural disasters. In those cases the company must give as much notice as is practical.
Employees can file lawsuitsWorkers can bring individual or class-action lawsuits and can recover lost wages and certain fringe benefits during the period that the company failed to give required notices as well as attorneys' fees.
Tennessee has a similar statute that covers companies with 50 to 99 employees. That law, however, doesn't contain any provisions for a private lawsuit.
After determining whether it falls under these laws, a company should next review the demographics of the employees to be terminated, especially compared with the current demographics of the workplace as a whole.
The company must look at whether the reduction in force will have a disproportionate effect on any group of employees, particularly any protected class (such as workers 40 and older, women, African-Americans, etc.).
The company needs to look at the employee handbook to determine whether any provisions affect a layoff. For example, a handbook might say that employees will be laid off in order of least seniority.
Certainly, if there is a collective bargaining agreement with a union, the company needs to look at it closely. Also, some employees may have contracts with the company that could affect the decision whether to lay them off.
This is not the only information a company needs to consider or the only decisions that will need to be made. A company facing a sizable layoff would be well advised to consult with a lawyer in this tricky area.
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