According to Challenger, Gray and Christmas, an outplacement services company, layoffs in October 2025 hit the highest level in more than 20 years. We have recently seen announced job cuts from within our footprint, including in West Virginia and Virginia. There have also been numerous announcements around the country of layoffs and RIFs from Amazon, Citi, and eBay. There is no doubt that workforce reductions are on the rise. This article discusses the best practices and legal considerations for employers evaluating reductions to its workforce.[1]

1. A Thoughtful Process

The decision to shutter a business or reduce the size of the workforce should be made carefully and thoughtfully. While the outcome may be unavoidable due to economic or other business pressures, employers can take steps to handle the situation with dignity and respect for the employees who will be impacted. The first step in this process is to remember that a layoff or RIF should not happen quickly. Instead, it is a methodical process that can sometimes require weeks or months of planning.

2. The Reason

Once the need for layoffs or a workforce reduction is clear, the next step is to articulate the reason or business rationale for the decision. Whether it’s a loss of business, a corporate restructuring, or some other reason, the reason(s) should be documented in writing and at the outset of the process, supported by facts and relevant statistics. Employers can find themselves in legal hot water – and at risk for lawsuits under federal and state anti-discrimination statutes – when the rationale changes over time and/or when the employer only develops its rationale after-the-fact when legal challenges arise.

3. The Structure

A business next needs to understand what the business will look like post-workforce reduction. At this stage, the employer should consider all applicable employment contracts and policies as well as collective bargaining agreements, which may dictate or limit the decisions the employer can make. These documents may also set forth affirmative employment rights or protections for employees that must be factored into the timing and decisions made.

4. The Criteria

The employer now needs to decide how it will determine who is impacted by the layoff. In cases of plant closure or closure of an entire branch or department, the decision can seem straightforward since all employees working at the location will be impacted; however, the matter can be complicated if the employer has alternative locations and intends to offer some employees positions at one of its other locations. In other cases, the employer may simply need to reduce its workforce, but it will retain its basic structure.

In either instance, the organization must identify the criteria it will employ to make decisions, which can include seniority, job redundancy, performance, and geographic considerations. The criteria should be business-driven and selected on the front-end before applying the criteria to the impacted positions, departments, or people. It is best to memorialize the criteria in writing at the time the criteria are selected.

Here, again, employers risk legal claims when they are inconsistent in their use of the selection criteria. Employers should avoid the temptation to alter their criteria in order to “select” a problematic employee. Instead, these employees should be addressed on the merits and through normal disciplinary processes. Alternatively, the employer should not first select the people to be laid off and then develop a post-hoc justification for their selection. When an employer alters its allegedly objective criteria to select certain employees for layoff, or when an employer is inconsistent in its stated criteria, these can raise concerns of discrimination in violation of federal and state law, which can lead to individual claims under Title VII, the ADEA, ADA, or other applicable anti-discrimination laws.

When employers are not objectively applying the selection criteria, liability can also arise after the layoff has been implemented. If a position has been eliminated, it should remain eliminated unless business needs change. If immediately post-layoff, the employer posts a job that was recently eliminated and/or hires new employees to perform the same job duties as were performed by laid-off workers, a lawsuit could be forthcoming, as it raises concerns that the employer’s stated reasons for the layoff were actually a pretext for unlawful discrimination.

5. Analyzing the Impacted Employees

Once the criteria and the impacted employees are identified, but before those decisions are finalized, the employer should assess the risks posed by the employees.

From an individual perspective, the employer should know whether any of the selected employees previously engaged – or are engaging – in protected activity, including making a complaint of harassment or discrimination, seeking a workplace accommodation, or taking job-protected leave. While engaging in protected activity does not operate to shield these employees from being impacted by a layoff or reorganization, the risks (particularly of claims of retaliation) are greater. Employers need to identify these risks on the front-end so they can make decisions about potential mitigation.

More globally, the employer also needs to ensure that its criteria have not had a disparate impact on members of a protected class. If such impacts are identified, the employer may need to consider altering the criteria upon which layoff decisions are made. If the employer does not want to alter its selection criteria, the employer should document its business reason(s) for its decision despite the apparent disparate impact.

6. Offer Severance in Exchange for Release

Where possible, the employer should consider whether to offer severance or other post-employment benefits in order to obtain a release from impacted employees. A decision to offer severance should be part of a uniform policy or process and made applicable to all impacted employees, typically pursuant to a set formula (e.g., x number of weeks of severance based on years of service).

When drafting the release, employers must be mindful of state-specific limitations that may limit the scope of other terms often included in such agreements, including non-disparagement, confidentiality, etc. The employer should also ensure that any such restrictions are only as broad as necessary to protect its legitimate business interests. In this case, the employer could have slightly different language depending on the position (level of authority and exposure to information) impacted.

There are also special rules that apply when dealing with employees over 40. Specifically, the Older Workers Benefit Protection Act (OWBPA) and Age Discrimination in Employment Act (ADEA) require certain steps and time periods be followed when waiving age claims as part of a severance agreement. It is a best practice to work with legal counsel to ensure your severance agreements comply with applicable law.

7. Timing

As noted at the outset, layoffs are not instantaneous processes; they take time and careful planning. This is true not just because of the steps needed to implement a legally compliant layoff, but also because certain laws impact the timing of a layoff. The federal Worker Adjustment and Retraining Notification (WARN) Act or state WARN laws (Mini WARN) require the employer to provide advance notice of layoffs to employees, a union (if one exists), state dislocated worker units, and local government officials. Employers will be subject to paying monetary penalties for failing to provide the requisite notice. WARN applies to employers with 100+ employees and requires 60 days’ advance notice (or be subject to paying back pay and benefits during that 60-day period) when there will be a plant closure (affecting 50+ workers), a mass layoff (50+ employees constituting 33 percent+ of active staff, or 500+ employees), or a reduction in work hours of >50 percent for six months.

Thirteen states, including California, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, New Hampshire, New Jersey, New York, Tennessee, Vermont, and Wisconsin, have mini WARN Acts, which apply to employers with fewer than 100 employees.

Aside from WARN laws, employers need to have thought through their obligations under other state laws, including unemployment and wage payment laws, when assessing the timing of the layoff.

8. Communicating the Layoff

Employers need to develop a communication strategy, including identifying who will communicate the layoff and what they will communicate. Employers should ensure that the messaging is consistent with the stated reasons for the RIF/layoff in the first place. Managers should stick to a script that covers the reason for the decision, provides the severance agreement and explains its terms and timing of it, and explains what happens post-termination. These conversations should not delve unnecessarily into a discussion of performance unless performance was a criterion in selection.

CONCLUSION

The decision to conduct a layoff is a weighty one. While they are often inevitable from the employer’s perspective, they should be conducted with dignity and respect for the impacted employees. Further, because of the substantial legal risks involved, the employer should consider partnering with legal counsel throughout the process.

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[1] This article generally discusses best practices across unionized and non-unionized workforces. For unionized workforces, employers must ensure they have read and complied with all terms of the Collective Bargaining Agreement (“CBA”), which likely provide greater rights than under existing law. The CBA may also dictate the criteria for a layoff. Whether the CBA or National Labor Relations Act (“NLRA”), there may be other obligations to share information and/or work with the union in implementing the layoff. If you are an employer engaging in a layoff of a unionized workforce, you should consult with legal counsel.