Meta, Salesforce, Twitter, Zillow, and Peleton are just a few of the significant companies recently making headlines for massive layoffs. Layoffs are unpleasant for everyone but can sometimes be a necessity.
AIM HR attorneys Tom Jones and Sarah Piscatelli join Pete Wright to discuss what employers and HR need to consider regarding layoffs.
Episode Transcript
Pete Wright:
Hello everybody, I’m Pete Wright. Welcome to Human Solutions. The talk of layoffs has made headlines everywhere over the past few months. Meta, Salesforce, Zillow, Peloton. Let’s not forget Twitter. There’re just a few of the significant companies making headlines for massive layoffs. Today we’ve got Tom Jones and Sarah Piscatelli, Aim HR Solution’s employment lawyers to talk about the legal components of a layoff and how you can plan to make this challenging situation go as smoothly as possible. Tom, Sarah, welcome back to the show. Sarah, welcome. You’re a first timer. So glad to have you here.
Sarah Piscatelli:
Yes. Thank you. It’s great to be here.
Tom Jones:
Thank you.
Pete Wright:
Outstanding. So we’re talking about layoffs today. And I don’t think we can start a conversation about layoffs without reviewing at least a few of the layoffs that are making headlines right now. Meta has just announced they’re cutting. This is Facebook’s parent. They’re cutting 11,000 jobs. Twitter, 3700 jobs. I think that marks more than half of the staff. Lyft, 700 jobs. Stripe, 1100 jobs. Coinbase, 1100 jobs. Shopify a 1000 jobs. Netflix 450 jobs. Microsoft a 1000 jobs. Snap a 1000 jobs. Chime 160 jobs. Tesla 10% of salaried employees. The announcement says, ‘note, this does not apply to anyone actually building cars, battery packs, or installing solar. You’re all safe. Everyone else is on the block.’.
And of course, when we talk about Tesla, we have to talk about Elon’s Twitter. The news of the layoffs at Twitter are dominating the headlines right now. He’s laid off a bunch of people and then realized, oh my gosh, we’ve laid off too many people that are actually doing the work. We need to hire them back. Why won’t you come back? Viral photos of people sleeping in their sleeping bags on conference rooms floors, to avoid being laid off. Things are going crazy right now as attorneys in the employment space, please tell me there is an end to this insanity. Is there a way we can make this easier for people? Where would you like to start? Sarah, you’re new. Why don’t we start with you?
Sarah Piscatelli:
Start with me. Okay, great. First, we have heard from some members that are conducting live. Just a few. Luckily it isn’t a big wave. And our advice is usually to plan it very, very carefully. When you’re planning people for the selection, be sure, one, you have a good business reason to be making layoffs. You have a need to cut costs. Sometimes it is an elimination of a particular service or function of the company, and you should have a well documented reason for the layoff in general. Then you move to looking at the legal ramifications. If it’s a larger company, a hundred or more employees, and it’s affecting 50 or more people and one third of the workforce, then there are a warrant act requirements. It’s a 60 day requirement. A 60 day notice requirement that comes from the Federal Warren Act. And then moving on to selection criteria.
Who’s going? Who’s going, who’s staying? And obviously avoid any discriminatory reasons for entering into that. You can’t just lay off everybody whose over a certain age. Again, it has to be very well documented. What the business needs going forward? Then decide what selection criteria are you going to use. Is it lost in first out? Clearly, most companies want to keep the best people. Right? The best performers. And the more objective the criteria is, the better. You can look at recent performance reviews. Break it down into certain functions. These people know how to operate a certain machine, others have no experience on it. And really carefully look at your workforce and make decisions based on these objective criteria.
Pete Wright:
When you’re looking at these things and you start hearing some of these headlines of these big layoffs that are happening right now. Are there red flags? Any red flags that you see that you’re thinking, okay, this is going to go to court, whatever. I’m hearing this thing. There is a reasonable reason for challenge. You mentioned the Warren Act. It sounds like we need to dig into a little bit of what the Warren Act allows and what might give us some red flags in layoff situation. Tom, do you want to take it from here?
Tom Jones:
Sure. So this log got passed back in 1988 and requires, as Sarah said, anybody with a hundred more employees is subject to it. And you have to provide up to 60 days advanced notice. The only real penalty for failure to provide notice is that you owe the worker wages. This is what’s going on with Twitter right now. So if you lay people off violation of the law and they sue, they could be paid up to 60 days back wages class action because there’s so many people being impacted by this on the part of the Twitter management. But any one of those companies that fails to comply with the law is going to be caught.
Pete Wright:
Well, I mean many of the headlines are, ‘we’re cutting off access to all of your resources. You’re not working here anymore, but we will pay you for 60 days.’ And that is because of the Warrant act? Okay.
Tom Jones:
Absolutely. Absolutely. Because that’s the penalty. And a couple of attorneys had filed sort of shots across the lawsuits, and I think once the legal team at Twitter realized what was going on, they had to backtrack and say, “No, we’re going to pay these people.” I think through February or end of January or something like that. And that would cover the 60 days.
Pete Wright:
Right. Now, how does covering the 60 days as part of the Warren Act, how does that fly with a severance? Is that the same thing? How does the language work there? What do teams need to think about?
Sarah Piscatelli:
Sure. Yeah. Well, because that’s required by law, then it really is not severance. Because severance would have to be additional considerations. Something that the employer doesn’t require anyway. So that’s another factor. I’m glad you brought up severance. Because when employer is planning a layoff, they might say, “we’ll have a severance plan and we’ll give you one week for every year you work.” Something like that. But in order to support, certainly the employer is looking for a release of claims in exchange for paying some severance. That 60 days isn’t going to cut it because they’re required to give that anyway. But suppose you’re not subject to the Warren Act, and you want to bring in a severance plan just to ease the pain as you’re letting people go. Then one, I’d say consultant attorney right away, because it’s hard to get a valid release of claims on age claims. The Age Discrimination and Employment Act.
And then what comes under that, is the Older Workers Benefit Protection Act has a lot of requirements. One is that the person has additional time to review the release before they sign it. It’s generally, if it’s an individual, they have 21 days, but if they’re part of a group, they have up to 45 days to take a look at it and decide whether they want to release their claims. But it’s hard to get a valid release of age claims. There’s a lot of particular language that needs to go into it too. So when you have a workforce, any people over 40, you should have an attorney draft the agreement. When the person’s part of a group, they have 45 days and there’s these additional material that has to be given into them. You’re essentially arming them for a lawsuit by giving them all the demographics of everybody in the group that’s affected by the layoff.
Tom Jones:
As you think about it, because almost every workforce out there has people over 40 years old. So in some percent of them are likely to be impacted. So it’s a long process to figure out who should be let go. What the criteria are. Because it’s going to cost a lot of money, a lot of time, planning to prepare for all that. So Massachusetts has this one other provision too, which is that when you lay someone off, you have to give them a notice that they have the right to go file for unemployment insurance and that explains how to do it. So you don’t want to forget that as well as part of the process. Not that there’s a significant legal consequence to not doing it, but you want to make sure that you’ve given the person that on the way out the door.
Pete Wright:
Are there other groups we need to be aware… I mean we’re sort of singled out a group over 40. But are there other groups? How does this play into disabled workers, pregnant workers? Are there any other consequences of laying off people in these groups?
Tom Jones:
I mean, anyone in a protected class is likely to raise flags for the Mass Commission against Discrimination or the Equal Employment Opportunity Commission. But if you’ve got a team of people that you lost the contract and so you no longer need these people, these 10 or 15 people, and one of them happens to be pregnant and one happens to be disabled, you’ve got a bonafide reason for doing so. You’re okay. As long as you can bring that under the umbrella of what your actions are. But if for some reason you’re going to treat that person differently, you want to lay that person off and not somebody else, you raise flags for the investigating agencies and you likely invite a lawsuit.
Pete Wright:
We’ve been seeing so many of these headlines and they’re dramatic. I’m watching these headlines like I don’t know who shot JR. I really am riveted by what’s going to happen next. And so many of the headlines, the things that are most salacious, really come in the form of, there are a lot of people, and the announcement was dramatic. The announcement was like better.com before the holidays last year, announcing over Zoom, a bunch of people are being laid off. Obviously Twitter, we’ve mentioned. There are salacious headlines around layoffs that I feel like are adding an extra layer on top of what makes this layoff hard, complex, painful. Guidance for leaders in positioning the layoff in a way that is clear, transparent, when to start talking and when to stop talking.
Sarah Piscatelli:
Yes. That’s a great point. Because even after the layoff, those remaining, those are their friends that are walking out the door. Right? This survivors’ guilt. You want to keep everybody’s heads in the game. It’s a good idea to have a really coherent message. Why this layoff was necessary. I don’t think it’s ever smart to say there won’t be anymore. But sometimes after it’s done, it’s usually all done in one day. Then you go make either some sort of announcement depending on the company culture, sometimes just speak to the managers and advise them on how to speak to their group. And just encourage people. We’re moving forward. This is for the good of the company. It’s unfortunate. Be human about it. And another thing too, Tom was talking about the unemployment notice. I was thinking the day of the layoff, you have to plan carefully for that.
Make sure that you’re ready to collect equipment. All of the other things that you do when somebody’s leaving. Have Cobra notices ready. If you do them yourself, be ready so that they can continue with their health insurance, any other kind of insurance conversions, life insurance, etcetera. Be sure to prepare all of that. And just as a practical matter, be sure you have boxes. Whatever it is you need to do to make that less painful. And it’s terribly painful. It’s a difficult thing for anybody to have to go through. Certainly the person on the receiving end. But even the coworkers who remain. Try to have a positive announcement about where the company is moving forward.
Tom Jones:
Yeah. Picking up what Sarah said to sort of have an honest presentation for people. In preparing for this, I was looking through the list of euphemisms for layoffs, separations. They have all these things like right size, suggesting we were the wrong size before we let you go. You will no longer be a go forward employee at the company. Or so and so got the sack, so and so got the chop. There’s one from Australia called DCM. Don’t come Monday.
Pete Wright:
Oh. That sounds particularly Australian, honestly. I could have had that.
Tom Jones:
Maximize synergies without you.
Pete Wright:
Without you. Right.
Tom Jones:
Yeah. And so I mean, employees aren’t stupid. They’ve read the newspaper, they hear the news. They know recession may be coming. They certainly know there’s concern. Just like the high tech sector now. Everyone knows there’s something going on with a lot of the companies. So treat them honestly and as adults seems the best way to do it. And picking up a lot what Sarah said, you want to be frank with people not mean. But you want to be honest and clear with people what’s going on.
Pete Wright:
From an HR perspective, is there any sense that there is a company or even a cultural company, cultural responsibility for helping the laid off employees find a softer landing? We know we’ve got Warren Act going on. We have severance potentially going on. But in terms of retraining or job counseling. What are the sorts of things that companies can do to help ease this particular blow?
Sarah Piscatelli:
We do have a great resource run by the state. And Tom probably knows more about this than I do. It’s called Rapid Response. And that helps you. If you notify them, tell them what you’re planning, who it’s affecting. They have resources for exactly that. To help without placement. And to get people back on track and to situate them. Tom, have you any experience with Rapid Response?
Tom Jones:
Absolutely. They’re great. A lot of the employees there are formerly laid off workers from other organizations. So they have that empathy coming in there. They can help people upgrade their resumes, prepare them, help them. A lot of these folks who have been let go in certain industries haven’t looked for a job in 10, 20, 30 years. And so all of a sudden they’re out of work. And they haven’t seen the world as it is today. So it’s very, very good at educating them. A couple of other things we have in the state that are good. One is this work share program, that may cushion the blow in the sense that…
What some companies do is they go part time, instead of laying people off. Maybe you can reduce the work week. And get people doing 20, 25 hours instead of 40. So that at least it keeps them employed. Which kind of holds on to some of the workers as well.
Pete Wright:
Sure.
Tom Jones:
Keeps that relationship so you don’t lose them. It’s a thought. And other companies are exploring this idea of going to a shorter work week.
Pete Wright:
Yeah.
Tom Jones:
A four day work week or something is an alternative. But there’re no laws regarding that. But there are about Rapid Response and the Workship program.
Pete Wright:
And so you mentioned these are Massachusetts based programs. Check your local jurisdiction. Right? Your state is likely going to have some sort of a resource wherever you are listening to this. Some sort of resource where you can help your employees ease the blow of a layoff and find a softer landing after they receive the chop or DCM. I feel dirty just saying those things. Tom, why’d you introduce that into my vernacular?
Tom Jones:
Well, treat people as they know.
Pete Wright:
They know.
Tom Jones:
Don’t make them try and guess what you’re doing. Make them understand.
Pete Wright:
Yeah.
Tom Jones:
And that goes back to your point. You’re treating them honestly and appropriately. It’s a difficult time. And Sarah’s point is great about their friends going out the door. You’ve had work colleagues for years, all of a sudden you can’t be with them. Maybe you give people time to say goodbye. Maybe you create some venue for people to be able to communicate. I don’t know. And so sometimes think companies try and over-manage these issues and don’t treat people as if they were human.
Pete Wright:
Well, for example, you hear the stories, the reports coming in saying, “I found out I was laid off when I tried to log into my Gmail and Slack accounts and realize that my account had been terminated.” That was the first time you found out you were laid off. That might be a sign that the company doesn’t have a compassionate and transparent vibe about the layoff. That’s a hard way to learn.
Tom Jones:
Right.
Sarah Piscatelli:
Yeah. That’s a clue.
Pete Wright:
Yeah. Yeah. That’s also a euphemism. It’s a clue.
Tom Jones:
And in today’s world, you know what people are going to do? They’re going to go out on social media-
Pete Wright:
Yeah.
Tom Jones:
… and they’re going to explore that whole issue in great detail.
Pete Wright:
Right. Well, and that’s the most interesting thing. You look at Meta and Twitter, these are platforms designed for people to go online and complain about what’s going on in their lives. And here you are laying off half your staff. 11,000 members of Meta. It’s interesting to watch this unfold. And I think that’s part of the goldfish bowl that we have to witness these layoffs. That’s why we are able to see so many of the red flags. So I don’t particularly love saying, use their experience as a warning for your own layoff. That’s not a great vibe. But at the same time, we can learn a lot from experience. So let’s make sure we do.
Tom Jones:
Yep.
Pete Wright:
Final question. What’s the difference between a layoff, a reduction in force and a furlough?
Tom Jones:
A furlough is a mandatory temporary leave of absence. Typically, it could be for a week or two that maybe the company washed a contract and they have a new one coming in, but it’s clear you’re going to come back to work. The expectation is you’re going to return to work within a very limited period of time. Might even be a one day a week for a very, very short period of time. A layoff is generally considered no work available for a longer period of time. Could be months. But there’s still an expectation I’m going to try and bring you back. A RIF, a reduction in force, that’s it.
Pete Wright:
Permanent.
Tom Jones:
There’re literally no expectation that we’re going to bring you back. It’s possible. But to your point, you said earlier about Twitter trying to bring some people back to work. Certainly possible that could occur. But everyone collectively calls them layoffs. But there are distinctions within the three.
Pete Wright:
Right. I think at Twitter it was just a mistake. We laid off the people who were doing important work and we need the back. But that doesn’t sound like that was part of the categories.
Tom Jones:
But it does highlight the fact we know what Sarah’s especially been talking about. Preparing.
Pete Wright:
Yeah.
Tom Jones:
Thinking things through. Maybe you have scenarios internally within HR. You kind of walk through it and say, “What are we going to do?”
Pete Wright:
In your experience, how long does it take to prepare for a significant layoff?
Sarah Piscatelli:
I would say at least 30 to 60 days. It isn’t overnight. You really do need to take your time and make sure you’ve taken care of everything you need to take care of. And really, the selection process is just so key. And if you do end up with a group that turns out everybody in your group, the group that’s going, I don’t know what you call them, what euphemisms you have for that. [inaudible 00:19:05]
Pete Wright:
I think surviving.
Sarah Piscatelli:
… employees. But if they all end up being women over the age of 40, well go back to the drawing board because this is a problem. They will all file claims.
Pete Wright:
Yeah. Right. Right. Well, it is a very challenging situation. We live in challenging and complex times. We are not underplaying the significance of any of these layoffs with euphemism. We wish you all the very best in getting through these seamlessly. Whether you’re on an HR team looking to do this for your own organization or if you are making your way out into the world right now. Thank you very, very much. Tom Jones, Sarah Piscatelli, so glad to be able to talk to you about this issue today.
Sarah Piscatelli:
Thank you, Pete.
Tom Jones:
Thank you, Pete.
Sarah Piscatelli:
Thanks.
Pete Wright:
As always. You can find notes about this show at aimhrsolutions.com. And we’re thinking about doing a little bit of training on this issue in the new year. Tom, do you have details on that? Or should we just send people to the website?
Tom Jones:
The people to the website. We’re in the process of developing some ideas for training that help. Exactly what we’re talking about. Help people walk through the process, identify what steps they have to make sure they cover. And so we’ll be doing that come the new year. It’s not all finalized.
Pete Wright:
Okay. All right. So keep in touch on the website aimhrsolutions.com. We sure appreciate you visiting there. For more, you can listen to the show right there on the website or subscribe to the show Anywhere Finer Podcasts are served. On behalf of Sarah Piscatelli and Tom Jones, I’m Pete Wright. We’ll see you right here next week on Human Solutions. Simplifying HR. For people who love HR.
