Generally speaking, no law prohibits employers from laying off workers. Unless an employee has a contract that limits the employer's right to fire, an employer is free to lay off employees as the needs of the business dictate. Employers may not discriminate in deciding which workers to lay off (by getting rid of mostly female employees or older workers, for example). Employers also may not use layoffs as an excuse to get rid of employees for illegal reasons. For instance, it would be illegal for an employer to select an employee for lay off because the employee had complained of hazardous working conditions.
Other than these restrictions, employees are not legally protected from layoffs. However, they are entitled to notice of an impending layoff, if their employer and the layoff is relatively large. This right comes from the federal Worker Adjustment and Retraining Notification (WARN) Act.
Who the WARN Act Covers
Only large private employers have to comply with the WARN Act, and only if an impending plant closing or mass layoff will result in job loss for a specified number or percentage of employees.
Federal, state, and local government employers aren't covered by the WARN Act. Private companies are covered if:
- they have 100 or more employees, not counting part-timers (those who average fewer than 20 hours a week or have been employed for less than six months), or
- they have 100 or more employees -- including part-time employees -- who work a combined total of at least 4,000 hours a week.
All employees who may reasonably be expected to lose their jobs or have their hours cut by more than 50% for more than six consecutive months in a covered layoff (see below) are entitled to notice under the WARN Act. Part-time employees are also entitled to notice.
Which Layoffs Are Covered
Not every reduction in force triggers the WARN Act's notice requirements. An employer must comply only if it plans to conduct a:
Plant closing: the permanent or temporary shutdown of a single employment site or one or more facilities or operating units within a single employment site, which results in job loss for 50 or more employees (not including part-timers) during a 30-day period.
Mass layoff: a reduction in force that results in job loss at a single employment site, during a 30-day period, for (1) 500 or more employees (not including part-timers), or (2) 50 to 499 employees (not including part-timers), if the laid off employees make up at least one-third of the employer's active workforce.
Staged plant closing or mass layoff: a plant closing or mass layoff (as defined above) that occurs in stages over a 90-day period. This rule is intended to prevent employers from getting around the WARN Act's requirements by making a series of smaller layoffs.
If a layoff is covered by the WARN Act, the employer must give written notice of the layoff 60 days in advance. Notice must be given to affected employees, bargaining representatives of union members who will be affected, the state's dislocated worker unit, and the local government where the layoff will take place.
Learn more about Wrongful Termination and Layoffs.
Some states also have layoff and plant closing notice laws. Some states provide assistance to laid off workers, require employers to pay a small amount of severance, or require continued health care coverage at the employer's expense. To find out about your state's requirements, contact your state labor department.