Legal Ease Dealing With Layoffs By Richard D. Alaniz, Alaniz Law & Associates T
here are as many opinions about how the U.S. economy is doing and what the future holds as there are stars in the sky. The stock market has been on a roller coaster ride and the tariff battle that the Trump administration is engaging in has created serious concerns about inflation and general price hikes.
Inflation, higher interest rates and in the case of drug
store chains, uncontrolled organized theft have caused store closures around the country. Over 45,000 retail chain stores are scheduled to close or have already closed. This includes Family Dollar, which is closing 677 locations, Conn’s, which has closed 553 stores, Foot Locker, which plans to close at least 400 locations, and Macy’s with 150 store closures. Drug store chains have not been spared, including CVS with 586
store closures, Rite Aid with 408 store closures, and Walgreen’s with 800 store closures. The job losses are in the thousands. When you include the additional of thousands of federal jobs that are being lost, it makes for a very uncertain future.
The economic turmoil that results from all of these factors is causing serious concerns among economists that we may see a recession in the not-too-distant future. Some say that if there is a recession it will be short-lived. Whether short- lived or extended, a downturn in the economy could force employers make the difficult decision to reduce staff along with other cost-cutting measures.
If the need to reduce staff reaches your workplace, there are a number of issues that must be carefully evaluated before taking action.
First, you must decide whether to furlough
employees or implement a layoff/reduction in force (RIF). While the terms are sometimes used interchangeably, there is a difference. A furlough is an involuntary temporary period of a reduced schedule or time off. It is generally unpaid, but most employees use accrued vacation and leave time. A layoff or reduction in force (RIF), on the other hand, is intended to be permanent in nature. The effect is termination of the employment relationship.
Several significant issues must be addressed in deciding upon a possible layoff or reduction in force.
provide a big picture summary of the reasons for the layoff, its extent, as well as the monetary impact, or more specifically, the cost of the layoff and the savings anticipated.
The
documentation should include a description of the planning and analysis done in considering the need for a layoff and the proposed selection process for those to be laid off as well.
One topic of potential legal concern in the selection process is the possibility that you are disproportionately selecting to layoff employees in a protected class.
One
example is a selection process that produces a group of selectees, a large portion of whom are age 40 and above. This could constitute a prima facie case of age discrimination under the Age Discrimination Employment Act (ADEA).
Once a selection for layoffs have been made, the next concern is whether the numbers are such that it triggers the
46 ❘ April 2025 ® An important
and basic first step should be to examine and document the business case for a layoff/RIF. Such documentation would be critical evidence in the event of any legal claims.
It should
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