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Leslie Bonacum
Neil Allen

Tis The Season: CCH Offers Tips To Employers Faced With Layoffs

(RIVERWOODS, ILL., December 13, 2001) – The holiday season also is often year-end budget time – the time of year when many employers make the difficult decision to eliminate jobs, according to CCH INCORPORATED (CCH), a leading provider of human resources and employment law information ( And this year, given the weakened economy, it’s likely that employers who have not faced the lay-off challenge in many years will need to reduce staff.

"While letting employees go is never a pleasant experience, preparation and forethought can make the process less traumatic for everyone involved," noted CCH employment law analyst Jennifer Carsen, JD.

Researching the applicable laws and putting together a coherent strategy is time and money well spent. Wrongful termination claims – even groundless ones – can damage employers’ finances and reputation. It’s also very important for those who remain on your payroll to know that you’ve handled the reductions in a considered, informed and fair manner.

To help companies make sure they manage reductions successfully, CCH suggests they consider the following:

  • First, examine whether costs can be cut through alternative personnel measures, such as unpaid leave, mandatory vacations, attrition or hiring freezes. If this is not an option, see if voluntary, non-coercive separations (such as early retirement) are possible. The fact that management explored other options before cutting jobs can be reassuring to all employees.
  • Review federal, state and local anti-bias laws. Examine carefully your list of proposed terminations to make sure that you are not inadvertently targeting people in "protected categories" such as age, race, sex or religion. Remember that union members, also, are protected by the National Labor Relations Act.
  • Make sure that you have a legitimate business justification for each layoff. Examine and evaluate the list of proposed cuts, and document everything well.
  • If you want terminated employees to sign an agreement waiving future claims, you must offer in exchange something of value to which they’re not already entitled. Keep in mind that employees over age 40 have special protections in conjunction with waivers under the Age Discrimination in Employment Act of 1967 and the Older Workers Benefit Protection Act of 1990. If the rules aren’t followed, the waiver will be invalid.
  • Generally, the law does not require severance pay, although employees may be entitled to it for various reasons (employment contracts, established policies or practices). Of course, even if severance is not required, offering it can soften the blow of an unexpected layoff. Consideration may be given to years of service. Also, make sure your severance policies aren’t discriminatory.
  • If you have 100 or more employees, you may be subject to the requirements of the federal Worker Adjustment and Retraining Notification Act (WARN Act). The Act is designed to protect employees by requiring advance written notice in the event of certain foreseeable plant closings or large reductions-in-force. State or local laws may also apply.
  • Be up front and fair with employees; help maintain the dignity of employees who leave. Don’t fire them over the phone. Don’t "eliminate" a position and then immediately hire someone new for that slot. Allow discharged employees to apply for other positions within the company, if possible, and keep them in mind for new openings in the future. Employees who have been dealt with honestly and fairly are less likely to leave bitter – and are less likely to sue. It’s equally important that those who stay employed with your company know you treat people fairly.


CCH INCORPORATED, Riverwoods, Ill., is a leading provider of employment law and human resource information, software and e-learning for HR professionals. The company’s Human Resources Group is among the nation’s most authoritative sources of employment law, including information on benefits, compensation, worker safety and human resources management. Its publications and services include Human Resources Management, Pension Plan Guide, Employee Benefits Management and Shared Learning™ interactive training. CCH is a wholly owned subsidiary of Wolters Kluwer North America. The CCH Human Resources Group web site can be accessed at

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