How to Lay Off Employees Legally: What You Need to Know


There might be a time when you have to make the difficult decision to fire your employees. This is a tough move even if you feel it’s necessary. You want to make sure you do your research to find the best way to fire an employee.

This can have a huge effect on their lives, so make sure you make them feel comfortable even if you are eager to get rid of them.

But before you fire them, you must learn how to lay off employees legally. If you don’t follow the procedure for legal termination, this can lead to serious consequences for your business.

Here’s the procedure on how to legally fire an employee:

  1. Plan Ahead

Make sure that you first plan ahead on which employee(s) to fire. This should never be a hasty decision or one that’s done out of emotion. You can refer to this guide on how to make rational decisions for firing an employee.

You want to think about how the firing can affect the company. Will it lower morale? Will it be difficult to replace this employee? Can this termination bring any negative press to your company? Make sure you consider these possibilities before you fire an employee.

  1. What to Do Beforehand

Before approaching your employees you want to know of any labor laws that you might break. For example, employees over 40 are part of a protected class. As such, how you fire them gets governed by the OWBPA.

Your company might also have to follow the guidelines under the WARN Act. This act was made to protect workers before they get terminated from employment. For example, you might have to give them a 60-day notice before firing them.

Different states might also have additional laws for terminating employees. The WARN Act also has additional requirements depending on your jurisdiction. You might also want to prepare a severance pay beforehand.

You can expect pushback from the employees you terminate. Make sure you give them reasons as to why you are firing them. There’s a possibility they might accuse you of wrongful termination. You want to state to them that the reasons you are firing them are lawful.

  1. Help Them Out

Employment termination can have devastating effects on the employee’s finances and stability. Make sure you speak to them about how to apply for unemployment insurance. You want to also let them know about COBRA coverage to help them keep their health insurance.

If they apply for unemployment insurance, your company will be subject to an unemployment tax by your state.

Even if you fired an employee for their negligence or poor performance, it’s always best to end a relationship on good terms. Encourage them to find new work and wish them well on their journey.

That’s How to Lay Off Employees Legally

Know that you know how to lay off employees legally, you can see that it’s a strenuous process. To avoid any hassles, you should speak to your business attorney before making any firing decisions.

They can research the laws to make sure you are compliant and help you prepare for terminating employees. This is always a difficult part of running a business, so you want to make sure everything goes according to law.

Make sure to share this guide with your fellow business owners. You can learn more about starting or buying businesses on our website.

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