4 things employers should consider when laying off employees

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Eliminating jobs is not something employers enjoy doing. Unfortunately, it can become necessary when a company is shifting priorities, changing its structure, or dealing with serious financial limitations.

If you are in a position where you have to lay off employees, understand that it won’t be easy and it must be done thoughtfully. Below are some important things to consider before you make the layoff announcement. They can protect you as an employer as well as help soften the blow for the terminated workers.

Separation agreements

Minnesota employers are not legally obligated to provide severance; however, they may be contractually obligated if there is some commitment regarding severance in an employment agreement. Even if you aren’t obligated to provide severance, there are some good reasons for doing so. The primary one is that severance can be offered in exchange for a release of claims. A release of claims will allow you to avoid the comparatively higher costs of litigation.

Avoiding discriminatory decisions

Minnesota employers can terminate at-will employees at any time and for any reason, so long as the reason is not discriminatory. If you are contemplating a layoff, obviously you should not intentionally target workers who belong to a protected class, but also review those persons selected for the layoff to make sure you have not unintentionally created the appearance of discrimination. (Currently, the protected classes in Minnesota are: race, color, creed, religion, national origin, sex, sexual orientation, marital status, familial status, status with regard to public assistance, membership or activity in a local commission, disability, and age.)

Compliance with financial obligations

When you discharge workers, state laws require you to pay them their last paycheck for wages and commissions, as well as other wage supplements and accrued vacation time (if defined as “wages” in your PTO policies), immediately upon the employee’s verbal or written demand. In other words, have the final paychecks prepared and ready to go.

Offering ways to help the employee

Finally, employers can soften the blow by offering valuable help to newly discharged workers, such as notifying employees of other open positions within the company, extending health benefits or other resources to help them during the transition period, and offering vocational services. None of this is required by statute but can create good will between you and your former employees.

Above all, employers should be honest with their employees, think carefully about executing the layoffs, and ensure compliance with state and federal employment laws to mitigate the chance of litigation. Consider seeking the support and guidance of an experienced employment law attorney if you expect to soon be engaged in the lay-off process.