During these tough economic times, companies often look to downsizing as a cost-saving measure. Whether it’s one or a thousand employees, companies need to pay attention to a few rules before implementing a lay-off. Depending on the size of the lay-off, a company might need to comply with the Worker Adjustment and Retraining Notification (WARN) Act.  Generally speaking, the WARN Act requires timely notification to the affected employees and to some government agencies that a “mass layoff” will take place.

For those employers targeting a smaller cross-section of their employees, some general things to consider are the following:

(1) “Last one in, first one out”. In other words, fire the employee that was most recently hired. The employee is less likely to question why he or she is being targeted. This analysis gets a little more complicated, however, if you have to take into consideration other factors such as performance and work-related liability issues.

(2) Conduct yearly performance reviews. Performance reviews not only create self-serving documents for a business, they provide good information upon which an employer can rely when laying off a more seasoned employee.

(3) Review each potential candidate for liability issues. Has the employee targeted for the layoff complained about sexual harassment, discrimination and/or retaliation? Has he or she complained about unpaid wages or filed a workers’ compensation claim? Usually, direct layoffs of workers with potential claims will lead to a lawsuit.

(4) Create a severance package to get the laid-off employees to waive any and all claims that they might have against the company. This can eliminate the company’s liability altogether. Try to keep the severance terms consistent among all employees to avoid any claim of favoritism or disparate treatment.

(5) Contact a good employment lawyer. It never hurts to seek legal counsel when terminating an employee. After all, isn’t a little time with counsel more cost effective than a year (or more) of litigation?!