Layoff and reduction in force
A layoff or reduction in force (RIF) ends or pauses employment for business reasons rather than performance or conduct, for one employee or a group.
A layoff can be temporary, with a planned recall, or permanent, when the position itself is cut. The business reason matters for federal layoff notice, which counts an employment termination other than a discharge for cause, voluntary departure, or retirement. The notice law also counts a layoff of more than 6 months and an hours cut of more than 50% in each month of any 6-month period. Laid-off employees may qualify for state unemployment benefits, and benefits charged to your account can raise your state unemployment tax rate.
Which rules does a group layoff trigger?
A group layoff can bring federal rules a single separation does not. The Worker Adjustment and Retraining Notification Act (WARN Act) covers employers with 100 or more employees, excluding part-time employees, or 100 or more employees who together work at least 4,000 hours a week, excluding overtime. The Age Discrimination in Employment Act (ADEA) covers employers with 20 or more employees for each working day in each of 20 or more calendar weeks of the current or prior year, and protects employees 40 or older. States can add rules.
| RULE | WHEN IT APPLIES | WHAT FOLLOWS |
|---|---|---|
| WARN mass layoff | Employment loss at one site in any 30-day period for at least 50 employees and 33% of employees, or at least 500 (part-time excluded) | At least 60 days’ written notice to affected employees or their representative, the state, and local government, with limited exceptions |
| WARN plant closing | A site or unit shutdown causing employment loss for 50 or more employees (part-time excluded) in any 30-day period | The same 60-day written notice |
| ADEA waiver, one employee | You ask an employee aged 40 or older to release age claims in exchange for severance | At least 21 days to consider and 7 days to revoke after signing, among other conditions |
| ADEA waiver, group program | You ask for releases in an exit incentive or other termination program offered to a group | At least 45 days to consider, 7 days to revoke, and written disclosure of eligibility factors, job titles, and ages |
| State unemployment | Laid-off employees claim benefits under state law | Benefits charged to your account can raise your future rate through experience rating |
- 29 U.S. Code § 2101 - Definitions; exclusions from definition of loss of employment
- 29 U.S. Code § 626 - Recordkeeping, investigation, and enforcement
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.