In the United States, employers have a great deal of leeway in conducting layoffs. This doesn’t mean every layoff is legal, however. Employers may not discriminate based on certain protected characteristics such as race or gender in deciding who loses their jobs, for example.
Employers also may not lay off an employee if it would violate an employment contract. And, larger employers may have to give employees notice of a layoff in advance.
Key Takeaways From This Article
- Employers can't make layoffs in a discriminatory fashion. For example, they can't decide to lay off a disproportionate number of older employees to minimize health care costs.
- The federal WARN Act requires employers to give advance notice of mass layoffs. However, the law doesn’t protect employees from layoffs, nor does it require employers to pay severance.
- You have certain rights after being laid off. These may include your right to advance notice of your layoff, the right to continue your group health insurance plan, and the right to receive your final paycheck in a timely fashion.
Laws that Protect Employees From Layoffs
A number of federal and state laws grant certain rights to employees that may protect them from layoffs. At the federal level, those laws include:
- Title VII of the Civil Rights Act. This law prohibits workplace discrimination on the basis of race, color, sex, religion, and national origin.
- The Age Discrimination in Employment Act (ADEA). This law protects workers 40 and older from age-based discrimination.
- The Family and Medical Leave Act (FMLA). This law gives employees 12 weeks of job-protected leave every year to care for themselves or a family member with a serious health condition.
- The Occupational Safety and Health (OSH) Act. This law sets workplace safety standards and prohibits employers from firing or retaliating against employees who raise safety concerns.
- The Worker Adjustment and Retraining Notification (WARN) Act. This law requires large employers to give advance notice of mass layoffs and plant closures.
In addition, most states have their own laws that offer additional protections. Contact your state's labor department for more information.
Employers Must Not Discriminate in Layoffs
Most employees in this country work at will, which means they can quit or be fired at any time, with or without cause, as long as the employer doesn’t fire them for an illegal reason.
One illegal reason is discrimination based on a characteristic protected under federal or state law, such as race, sexual orientation, or national origin. Employers that use the layoff process to discriminate against employees based on a protected trait can be sued.
For example, if an employer uses a layoff as a pretext to get rid of most of its female employees, that would be illegal. Whether the job action is called a termination or a layoff, it is illegal to make job decisions based on protected characteristics.
Employment Contracts May Offer Protections
Some employees have written employment agreements that guarantee continued employment for a period of time, such as one year. If you have a contract like this and you are laid off for reasons that aren’t stated in the contract, you might have a legal claim for breach of contract.
Even if you don’t have an individual employment contract, you might have other contractual protection against layoffs. If you are a union member, your collective bargaining agreement might spell out the circumstances in which you can be laid off, or the process that your employer must follow in deciding which employees lose their jobs. Talk to your union representative to find out.
The WARN Act: Advance Notice of Mass Layoffs
The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100 or more employees to give at least 60 days' notice before conducting a mass layoff that will last for more than six months.
The law defines a mass layoff as a reduction in force in which at least 500 employees at a single job site will lose their jobs, or in which 50 to 499 employees lose their jobs if they make up at least one-third of the employer’s work force. However, the WARN Act doesn't require this 60-day notice when the layoff was necessary because of a natural disaster or business circumstances that the employer couldn't reasonably anticipate.
Employers must also give 60 days’ notice of plant closings: the shutdown of a single employment site, operating unit, or facility, in which at least 50 employees lose their jobs.
Many states have their own versions of the WARN Act.
The federal WARN Act requires only that employers give notice; it doesn’t protect employees from layoffs, nor does it require employers to pay any severance. A few of the similar state laws require employers to pay a small amount of severance.
Your Rights in a Layoff
Even if you don’t have the right to keep your job, you might still have certain rights in a layoff. In addition to the right to notice under the WARN Act and similar state laws, you have the right to any severance promised in your employer’s policies, your employee handbook, or your employment contract.
For example, if your employee handbook states that employees who are terminated will receive severance of one week’s pay for every year of employment, you are entitled to that severance pay when you are laid off.
In addition, you have the right to receive your final paycheck relatively quickly after you lose your job. Some states, such as California, require employers to provide the final paycheck immediately upon termination. Other states give employers more time: For example, Vermont requires payment within 72 hours, while New York requires payment by the next regularly scheduled payday.
You may also have the right to continue your group health insurance plan under the federal COBRA law. (For more information, see our article on getting COBRA after leaving a job.)
Additional Resources for Workers Who Have Been Laid Off or Fired
If you've been laid off, the following resources could help you pick up the pieces:
- Tips for Avoiding Foreclosure, from the U.S. Department of Housing and Urban Development (HUD)
- Evictions Guidance, from HUD
- Health Coverage Options If You're Unemployed, from Healthcare.gov
- Credit Counseling and Debtor Education Information, from the U.S. Department of Justice
- Information about Filing for Bankruptcy, from Nolo
- Learn about applying for Social Security disability benefits or Supplemental Security Income
- Help with Paying Utilities and Other Bills
- Requesting a Student Loan Deferment