Layoffs Without Lawsuits: Avoiding Litigation When Terminating Employees
Managers who approach their employees carefully in the wake of economic job eliminations may avoid legal problems later.
Phillip M. Perry (Apr/May 09)
(page 2 of 2)
Treat People Well
people well during termination is the right thing to do from the human
point of view. It's also smart legally. Fact is, people who are angry
about how they were treated on the way out the door often sue their
"Discharged employees often go to lawyers because
something in the circumstances of their termination made them angry or
seemed unfair," says John J. Myers, chair of the labor and employment
law department at Eckert Seamans Cherin & Mellott in Pittsburgh,
Pennsylvania. "Treat the departing employees with dignity. I also
counsel to give employees complete explanations as to why you are
terminating, as opposed to staying vague and elusive. Hopefully they
will then understand why you are doing what you have done, and that
reduces the likelihood of going to court."
suggest going the extra mile and taking a proactive stance in helping
employees move on. Consider arranging for outplacement to get people
focused on the future and getting on with their lives. People left
unassisted are more likely to file a lawsuit as they brood on what
Offer Severance Agreements
way to help ensure you do not become the target of wrongful discharge
lawsuits is to ask departing employees to sign documents that release
your firm of any liability in exchange for a severance packages.
times RIFs (reductions in force) are done without severance packages
and corresponding releases," says Harkins. "This is usually a mistake
because most people are not looking for huge packages. They just want
some transition money to take care of their families until they come up
with something in a few months. Provide some transition pay and you are
less likely to be the target of litigation."
One approach is to
offer "notice pay," a week or two until the next payroll date, with no
need for the employee to report to work. "If an employer can afford it,
and even for a small amount of money, it is usually worthwhile to
obtain a general release of legal claims," says Harkins. "Legal
consideration to support a valid release is anything of value that the
employer is not otherwise required to provide. So even a day's pay can
justify a release of any discrimination or other wrongful discharge
After the Layoffs
you're facing the necessity of downsizing your own work force, you're
probably feeling a good deal of stress. No one wants to make a decision
that will disrupt the lives of so many people, especially in today's
environment where jobs are hard to come by.
Layoffs can also
affect the morale of people left behind. "Employees retained in a
layoff are apt to feel `survivor guilt,' especially if they don't know
why they were retained when their colleagues were let go," says
Jacobsen. "That's why it is so important to explain to them the reasons
that they were kept, and what they will be doing in the new, `pruned'
organization. In all probability, their jobs will change some to cover
part of the work of the people who were let go. They need to understand
that not all of the work that was done prior to the layoff will be done
in the post-layoff business."
To manage survivor guilt, meet
weekly with the retained employees for the first month or more to find
out how things are going for them. What's working and what's not? By
solving or helping them solve problems they are experiencing
post-layoff, you will ease their stress and build your relationship and
credibility with them.
"One way to reduce survivor guilt is to
get the remaining employees involved in the mission of cost cutting, or
thinking of more efficient ways to do things," says Harkins. "People
often work off stress by feeling they are getting the business back in
Also, try to stay in touch with the group that has
departed. "The knee-jerk reaction is to not have your employees stay in
contact with laid off people," says Harkins. "That can be
counterproductive because some of those people might reapply or they
might be able to recommend someone when business picks up. You never
want to burn a bridge in anything that deals with human resources."
happen. They are a fact of business life. Fortunately, they don't last
forever. You want to respond to the recession in a way that builds
bridges to the future. That means conducting a layoff ethically and
professionally. "Unless you plan to close your business, you want to
maintain a reputation as a good place to work," says Jacobsen. "When
you survive a recession and start hiring again you want to be able to
recruit the best people. And the best people will remember how you
conducted your layoff."