Layoff for Small Business

Are you considering layoffs for your small business?  Layoffs are a common consideration in today’s tough economy.  Here are some things to think about before you conduct layoffs for your small business:

  • Consider Your Options – Many companies are avoiding layoffs by looking to other pay & staff reduction strategies.  Consider an across the board pay reduction for all employees, reduced staff hours or a required time off without pay schedule.  Employees are often understanding of such measures in lieu of layoffs.
  • Be Fair – Make sure you aren’t selecting lay off candidates with a disparate impact on protected class employees.  Layoff considerations should be based on company operational and financial needs.  Consider utilizing a seniority based system for determining layoff candidates.
  • After the Layoff – Laid off employees may be eligible for unemployment, so be prepared for this.  Make sure you are in compliance with COBRA or similar state programs.  Consider whether or not you are going to offer severance payments to laid off employees, and if you are going to require a release for severance payments.
  • Know Your State’s Employment Rules – Specifically, final pay rules.  Employment regulations and rule can vary wildly from state to state.  Make sure you are versed in your state’s rules.
  • Communicate – Be sure to immediately communicate to all remaining staff the reason for the lay off and express your regret for the situation.  Confirm that the decision was to keep the company in solid financial shape and stable through this tough economy.
  • Continue to be Proactive – Don’t forget to continue with goals to move your business forward.  Even in a staff reduction situation, you should continue to develop your policies, programs & staff development.

Jill Critchfield is a professional Human Resources Consultant.  Through her business, Pacific HR, she has provided HR services to over 150 small and mid-sized businesses in Portland, Oregon since 1999.

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