Start by figuring out how much you’ll need to reduce headcount to get your financials to where you’d like them to be, and where that headcount will be coming from. Will you be eliminating a certain number of positions, a certain percentage of payroll, or using some other metric? Will the layoff be company-wide or limited to specific departments?
Next, establish the objective and job-related criteria that will be used to decide who will be kept and who will be laid off. These criteria could include knowledge and skill sets critical to the organization, past performance reviews, seniority, or a combination of relevant factors. Document how these criteria were applied in case you’re called upon to show that your processes and decisions were fair and not based on protected classes or characteristics.
Finally, double-check your decisions for possible unintentional bias. For instance, if a particular manager has nominated a disproportionate number of women or employees age 40 and older for the layoff, you’d want to be sure that they were relying on the agreed upon criteria rather than any “gut feelings.”
This Q&A does not constitute legal advice and does not address state or local law.
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