Virtual Layoffs and Employee Rights – What are the Best Practices?

Laying off employees in today’s business and legal environment can often feel like a minefield and a potential public relations nightmare for employers. Layoffs are by their nature a complex and sensitive process with significant legal implications, especially when employees are working remotely. However, terminating employees virtually has proven to be even more difficult for […]

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Laying off employees in today’s business and legal environment can often feel like a minefield and a potential public relations nightmare for employers. Layoffs are by their nature a complex and sensitive process with significant legal implications, especially when employees are working remotely. However, terminating employees virtually has proven to be even more difficult for employers. To avoid going viral for all the wrong reasons, employers should handle virtual layoffs with strict adherence to all legal requirements, ensuring the process is fair, transparent, and compassionate.

Below are some best practices for employers with a focus on legal considerations and compliance, effective communication, and risk mitigation.

1. Compliance with Legal Obligations

Understanding the Legal Landscape

Although at-will employment allows employers to freely terminate their employees, employers must ensure compliance with all applicable state and federal laws before initiating layoffs or risk later litigation.

In the event a written employment agreement exists, employers should carefully review their obligations under the terms of the agreement before proceeding with termination.

Wage and hour laws must be strictly followed at all times and employers should remit all earned compensation and benefits to employees on the date of termination.

Employers should likewise be certain layoffs do not violate any laws related to discrimination. For example, although terminating a remote employee is entirely reasonable and legal, employers should be careful if an employee works from home due to disability or based on another protected class. It is foreseeable a remote employee could argue termination was discriminatory if termination was based on remote status.

For large-scale layoffs, employers should also be aware of and comply with all aspects of the Worker Adjustment and Retraining Notification (WARN) Act, which mandates advance notice under certain conditions.

Consultation with Legal Counsel

Engage legal counsel early in the process to assure legal compliance and to minimize the risk of future litigation.

Documentation and Record-Keeping

Meticulously document the reasons for layoffs, the selection criteria used, and the steps taken to comply with any legal requirements. Documentation should include detailed records of all communications and decisions made during the process. Proper record-keeping can provide an effective defense in the event of later legal challenges and demonstrates a thorough and systematic approach.

2. Developing a Legally Sound Layoff Plan

Objective Selection Criteria

Develop objective, non-discriminatory criteria for selecting employees for layoff. This could include factors like job performance, seniority, and skills alignment with the company’s present and future needs. Ensure these criteria are consistently applied to all employees to avoid claims of unfair treatment or discrimination.

3. Communication

Personal and Confidential Communication

It is almost always preferable to terminate an employee face to face. However, employers are now increasingly choosing virtual terminations. If termination is to be virtual, have the video feature on and have the employee’s direct supervisor and a human resources representative present to answer any questions that may arise. Provide a clear basis for the termination and allow questions, but also convey firmness with the decision. This respects the employee’s dignity and provides a more compassionate and respectful delivery of difficult news. Follow up with a formal written notice that outlines the terms of the layoff and any severance package or benefits provided. Avoid terminating employees by email, text, or other electronic means.

Clarity and Transparency

Clearly explain the reason(s) for the layoff, focusing on legitimate business needs and the criteria used for decision-making. Transparency helps to maintain trust and demonstrates that the process was conducted fairly.

4. Support and Resources

Severance Packages

If appropriate, offer a fair severance package which may include financial compensation, continuation of benefits, and assistance with finding new employment. Clearly outline the details of the package in both verbal and written communications to the affected employees.

Outplacement Services

In some situations, consider outplacement services to support laid-off employees in their job search. These services can include resume writing assistance, job search coaching, and access to job listings, all of which can help mitigate the impact of the layoff.

Legal Rights Information

Inform employees of their legal rights, including eligibility for unemployment benefits and any state-specific protections they may have. Providing this information helps employees understand their options and reduces the risk of legal disputes. Human resources should be actively involved in the layoff planning and process and should communicate all relevant information to terminated employees.

5. Handling Remote Work Specifics

Access and Security

Plan for the secure removal of access to company systems and data for terminated remote employees. This step is critical for protecting sensitive company information and ensuring compliance with data protection laws. Develop a clear procedure for this process that respects the dignity of the affected employees.

Equipment Return

Establish a clear process for the return of company equipment, such as laptops and phones. Provide detailed instructions and cover the cost of shipping to ensure a smooth and fair process.

6. Maintaining Compliance Post-Layoff

Communication with Remaining Employees

In the aftermath of layoffs, communicate promptly with the remaining workforce to explain the situation and outline the company’s plan moving forward. Clear and effective communication helps to maintain trust and morale and reinforces a commitment to transparency and fairness.

Continuous Legal Review

Regularly review and refine layoff procedures based on feedback, legal developments, and best practices. Stay informed about changes in employment law to ensure the company can respond proactively and remain compliant. Regularly update employee handbooks to clearly reflect all company procedures related to layoffs, compensation, data protection, and the nature of at-will employment.

7. Ethical and Fair Practices

Non-Discrimination

Ensure that the layoff process is free from discrimination and bias. The selection criteria should be based on legitimate business needs and performance metrics, not on race, gender, age, or other protected characteristics. Adherence to all state and federal law is mandatory.

Confidentiality

Maintain confidentiality throughout the layoff process to protect the dignity of the affected employees and prevent unnecessary distress among the remaining workforce. This also helps to prevent potential legal issues related to privacy violations.

Conclusion

Laying off remote employees often involves navigating a seemingly complex series of legal requirements and considerations. By focusing on legal compliance, clear and transparent communication, and fair treatment, employers can more effectively manage this difficult process. Ensuring that the layoff process is legally sound and ethically conducted helps reduce the potential for later litigation and preserves reputation. Ultimately, handling layoffs with care and respect reflects the organization’s commitment to treating all employees with dignity and fairness.

Robert Hinckley, Jr., is Managing Shareholder of Buchalter’s Denver office.

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