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COVID-19 is causing an economic domino effect. Businesses are starting to estimate potential profit losses. Some businesses might consider ways to reduce costs – including downsizing.

Companies that choose to lay off employees must be cautious. Termination in any situation has legal implications for both employers and employees. If you own or manage a business, take the right steps when planning and conducting layoffs.

Selecting employees for layoff

Employers cannot choose which employees to lay off mainly based on whistle-blowing acts, a disability or another protected class. If you do not use an appropriate method to determine who to dismiss, your business could face a lawsuit for discrimination or retaliation.

Before announcing layoffs, create an objective method for employee selection. With clear rules to guide the process, your business will be able to explain its decisions if a former employee files a formal complaint.

Avoid the risks of employment law violations

As an employer in Illinois or Wisconsin, you can take certain actions to protect your business, including:

  • Managing information: Rumors about layoffs can lead to misinformation and morale problems. Transparency can help reduce anxiety. However, ensure that the information you share is accurate.
  • Reviewing your limitations: Layoffs are still subject to labor law, company policy and employment contracts. Regardless of the extent of downsizing, your legal obligations still apply.
  • Explaining benefits and final payment: Employees need to know what to expect financially. Provide as much information and resources as possible to help employees understand severance, health care coverage, retirement account options and more.

Layoffs are a sensitive matter for businesses. If you are not fully confident in your company’s plan, it is advisable to review the plan with a legal professional to reduce liability.