Publication date: March 18, 2026
🕒 5 minute read 

Workforce reductions are among the most difficult decisions an organization can make. While layoffs are often driven by legitimate business needs—such as restructuring, economic shifts, or cost containment—they carry significant legal, operational, and cultural implications. A poorly executed layoff can create compliance risks, damage morale, and impact an employer brand long after the transition is complete. Beyond the immediate business implications, layoffs can adversely affect people’s physical, mental and financial health. Thoughtful planning and disciplined execution are critical to protecting both your organization and your people. With clear planning, objective selection criteria, and compassionate communication, organizations can navigate workforce transitions responsibly while minimizing legal risk and preserving culture. 

What is a Layoff? 

A layoff is an employer-initiated employment separation driven by a business need, not individual performance. Unlike a layoff, standard terminations are generally the result of policy violations, failure to improve, etc. Common reasons to conduct layoffs include: 

• Financial constraints or cost reduction 
• Restructuring or reorganization 
• Elimination of roles or departments 
• Mergers/acquisitions 
• Reduction in force (RIF) 

The decision is based on the position, not the person. Layoffs may be either permanent, where a position is eliminated, or temporary with the potential to recall individuals. 

Common Employer Missteps During Layoffs 

It’s easy to overlook important elements when reducing headcount. Here are frequent risk areas, where employers may stub their toe: 

⚠️ 1. Inconsistent Selection Criteria 

• No documented rationale such as seniority, department, shift, skills, etc. 
• “Last minute” subjective decisions based on preference rather than defined criteria 

⚠️ 2. Disparate Impact Risk 

• Failing to analyze whether protected groups (race, gender, age, etc.) are disproportionately impacted 
• No documentation of demographic review 

⚠️ 3. Poor Communication Planning 

• Employees finding out via email or system lockout 
• Failing to identify all stakeholders inside and outside (e.g. vendors, clients, etc.) of the organization who may be impacted and need notification 

⚠️ 4. Inadequate Documentation 

• No business case memo 
• Lack of termination paperwork consistency 

⚠️ 5. Wage & Hour Errors 

• Not paying final wages timely (some states have different rules regarding these payments) 
• Not accounting for accrued bonus, commission, or paid time off (PTO) payout requirements 
• Delaying benefit notices such as COBRA 

⚠️ 6. WARN Act Oversight 

• Failing to evaluate federal or state Worker Adjustment and Retraining Notification (WARN) Act thresholds 
• Not considering aggregated layoffs over a 30–90 –day period 

⚠️ 7. Reposting Eliminated Roles Too Quickly 

• This undermines the “business necessity” rationale and increases legal risk. 

⚠️ 8. Overlooking the Survivors 

• Remaining staff left uninformed, anxious and confused 
• Not being transparent about why, when, how many, etc. 
• Not providing resources and reassurance to those that remain 
• Managers unprepared to answer questions 

Layoff Execution Checklist 

A planned, thorough, and well-executed process is the best way to minimize risk, reputation and disruption. Follow these steps before, during and after layoffs to guide your thinking and action steps. 

A. Before the Layoff (Planning Phase) 

1. Business & Strategy Decisions

☐ Define and document business rationale (financial, restructuring, redundancy) 
☐ Determine scope (department, location, organization-wide) 
☐ Confirm whether layoffs are temporary or permanent 
☐ Consider alternatives (reduced hours, hiring freeze, voluntary exit program) 

2. Selection Process

☐ Define objective and non-discriminatory selection criteria (e.g., role redundancy, performance history, skill alignment, dates of hire)
☐ Create documentation of selection methodology 
☐ Ensure personnel files and performance reviews are current and contain any documentation that supports your decision about whom to lay off and whom to keep 
☐ Conduct disparate impact analysis to ensure your selection process is free from discrimination by comparing all Equal Employment Opportunity (EEO) data for possibly selected employees and remaining employees to ensure selections are not disparately impacting members of a protected class 
☐ Review decisions with legal counsel if risk is elevated 

3. Legal & Compliance Review

☐ Evaluate federal WARN Act applicability (and state mini-WARN laws) which require employers with 100 or more employees advanced notice of covered business closings and covered mass layoffs. Read more about WARN requirements here
☐ Review any collective bargaining and employment agreements to make certain the organization complies with layoff procedures and employee notification requirements outlined in union contracts or employee agreements 
☐ Confirm final pay timing requirements by state and prepare ‘last-day’ payroll checks in states where it’s legally required 
☐ Review policies and compensation plans to confirm payout obligations for bonuses, commissions, PTO, etc. 
☐ Prepare Consolidated Omnibus Budget Reconciliation Act (COBRA) notices (or work with a third-party administration) 
☐ Gather unemployment notice 
☐ Draft separation agreements (if offering severance), ensuring Older Workers Benefit Protection Act (OWBPA) compliance for employees 40+ years of age (if applicable)

4. Financial & Benefits Decisions

☐ Determine severance formula. We often see ‘X’ weeks per year of service, where the variable (‘X’) is dependent on level of role or Fair Labor Standards Act (FLSA) classification. 
☐ Decide whether to add extra benefits in addition to compensation such as:

• • Extend benefits temporarily (confirm with your HR team, benefit agent or insurance carrier about rules for this)
  • Pay COBRA premiums
  • Provide outplacement support
  • Forgive pay, PTO, relocation or sign-on claw backs, or tuition advancements
  • Job referrals or network introductions
  • Letter of recommendation/professional references
  • Partial accelerated vesting
  • Retention of equipment
  • Continued payment of association membership dues
  • Note: Many Employee Assistance Program (EAP) providers or Retirement Plan Financial Advisors will support transitioning employees 

☐ Determine lump sums vs. compensation continuation (weigh pros and cons for each of these options) 

5. Process, Communications & Documentation Planning

☐ Prepare communication strategy and cadence. Identify all stakeholders and determine the cadence of when to inform and which medium to use. Take note of any employee leaves of absence or out-of-office dates around the dates this plan will be put into motion and determine a plan. 
☐ Prepare talking points for HR, executive leadership, managers involved, other managers not involved, other internal and external stakeholders (e.g. vendors, clients, etc.)
☐ Build the communications timeline/cadence. Recommended stakeholders that should receive separate communications include: 

1. 1. Key leaders who may need to assist with messaging e.g. direct supervisors of impacted employees – could be individual or group meetings 
   2. Impacted employees – individual meetings 
   3. Direct reports of impacted employees – team meeting 
   4. Teammates of impacted employees – team meeting 
   5. All-hands meeting and/or prepare organization-wide announcement with FAQs. 
   6. Key vendors, clients, and other external stakeholders. Don’t forget major donors for mission-driven organizations. 

☐ Plan logistics (date, time, locations). Consider order of layoffs, flow of traffic, collection of personal effects, collection of company equipment, removal of IT access 
☐ Determine transition of work responsibilities 
☐ Prepare separation documents. At a minimum, severed employees should receive: 

1. 1. Standard separation letter that every separating employee normally receives outlining reason and date of separation as well as information about their last pay check, benefits/COBRA, references, return of company assets, etc. 
   2. Unemployment notice
   3. OPTIONAL: If offered, a separation agreement. A separation agreement is a legally binding contract between an employer and an employee when an employer is offering severance pay or other benefits in exchange for certain legal protections, typically a release of claims. There can be a lot to these, so please seek the counsel of your strategic HR advisor and/or legal counsel for more information. 

☐ Consider preparing external statements to donors, the press, customers and other stakeholders, as needed

B. During the Layoff (Execution Phase) 

Individual Meetings with Affected Employees 

☐ Conduct private, respectful, direct, yet compassionate conversations with two people present (usually manager, plus HR). Keep message concise, clear and quick. Avoid debating the decision and avoid statements implying future rehires, timelines, etc. unless absolutely certain 
☐ Provide written materials such as separation letters or severance agreements 
☐ Explain next steps (collect personal effects, return of separation agreements, who to contact with questions, etc.) 

Company Communication 

☐ Notify remaining staff same day in this order (management team → direct reports → affected teams → broader organization → external clients, vendors, contacts or stakeholders) 
☐ Explain: 

• • What happened 
  • Why it happened 
  • How decisions were made 
  • What it means going forward, providing clarity on employees’ most pressing questions and concerns: 
    • Is our organization secure? Is my job secure? Are there more layoffs coming? Will I be affected? Should I start my job search? 
    • How will work get done that those affected were responsible for? Is my job changing? 
    • Who’s in charge now? Am I getting a new boss?

After the Layoff (Stabilization Phase) 

☐ Follow standard termination checklist for payroll, benefits, COBRA, equipment, etc. as normal, unless separation letter or agreement dictates otherwise
☐ Conduct post-mortem analysis 
☐ Monitor timelines for severance agreements/COBRA elections etc. 

“Survivors’ guilt” is real. What employees need most after a RIF is stability, clarity, consistency, present leadership, and honesty. They want confidence that there is a plan. 

• Hold team meetings
• Clarify reporting lines
• Ensure workload is being appropriately redistributed
• Reaffirm organization values, direction and strategy
• Watch for morale decline or “survivors’ guilt”
• Provide EAP resources 

 This checklist is intended for general guidance. Layoffs carry significant legal and compliance considerations. Employers should consult with a senior HR advisor and/or legal counsel to evaluate federal, state, and local requirements prior to conducting layoffs. 

Navigating a layoff is never simple, but it can be done with integrity, clarity, and compassion. By approaching workforce transitions with disciplined planning, objective decision-making, and thoughtful communication, organizations protect not only their legal and financial health but the dignity and trust of their people. If your organization is preparing for a reduction in force or wants to ensure your processes are compliant, consistent, and human‑centered, our team is here to help. Connect with us to review your layoff strategy, strengthen your documentation, or guide your leaders through a smooth and compliant separation process, so you can move forward with confidence.