Laidoff and Unemployment Benefits

jbanda · May 2003

We are Mfg. company in Texas and it seems like we are going to experience our first laidoff, we are contemplating to cut about 20% of our workforce.This is my first on this matter and I have many questions, any help will be greatly appreciated.

Can I select employees by seniority and/or performance?

how long do you have to be laid off before unemployment benefits start?

Is there any kind of medical insurance (other then cobra) while on unemployment?

If business picks up again we will like to re-hire most of the employees, what do I need to do?

Thanks,

Don D · May 2003

J: That's quite a list of questions. Let me try to start with a few thoughts. In a layoff, a company can select employees by shift, by location, by job category, by seniority or by performance, or a combination of the above. For example, you can layoff all of third shift, all the assemblers on line B or just the group who sands finished furniture. Or, you can keep all operations running and layoff only the most recent 25 to join the company, by hire date, regardless of their job. If you're talking about a permanent reduction in force, you would be wise to carefully study the overall plan before pushing the button and consult with a labor attorney.

Unemployment benefits typically start the week after the waiting period. In most states, maybe all, the first week during the benefit year is a waiting period for which no check is received. If the paperwork flows swiftly and there are no issues, a check can generate from the state officials as early as the end of the second week. A call to the claims office will nail this down for you. They will also send a claims representative to your location to hold a group meeting.

COBRA is typically the insurance option available to employees who leave a job for any reason unless they find another job offering insurance.

If you later decide to call back people, you are not bound to do it in any order unless your policy says so or you have a union contract. You'd be wise to call them back in reverse order of the layoff, however, calling back first the one with most seniority if you laid off by seniority. If not that, call them back in the order of the particular jobs you need to start up first.

One thing to consider also is a call to your labor board or state DOL group or workforce investment act office (look in the white pages under government or call the chamber of commerce). Most if not all states have funded teams who will react to your situation, if you think its going to be a permanent thing or impact your business significantly and the lives of your workers. These are usually called Rapid Response Teams. They will assemble, come out to your place and talk to you and your workers about all sorts of things to make life easier during a layoff. These are very helpful at trying times like this and you will have a great burden of yours satisfied by these people too. Arrange this now or just as soon as you know a layoff is coming for sure.

You sound rather new to this and it's going to be a bit trying since you haven't done this before. I hope you can get the guidance of others here on the Forum or maybe a personnel manager 'down the road' who you know. And don't forget that you might want to get permission from the company to consult with a labor attorney. Tell him you want no more than one hour's worth of advice and no research. They often run charge meters like taxis, but not all of them will.

I can tell you are concerned and genuinly want to help your workforce. The best advice I can give you is this, "You are not all things to all people." By that I mean you simply cannot take the entire burden upon yourself and you, none of us, are not equipped to handle all of the issues for all of your employees. You can do your part and you can lead the effort, as I'm sure you will. But, assemble your total team to deal with this, get the help of the state (who are paid to do that), touch base here on The Forum and tell your people you may not have the answer but you will certainly get them one. You'll sail through this with only minor bumps and next time it won't be as difficult for you.

Sorry to be lengthy. Good luck. x:-)

jbanda · May 2003

Thanks for the info., it will be very helful, we are going to see if business picks up, we are also going to cut other expenses (reduce ee's hours, voluntary resignation, etc. ) before we decide to do a laid off.

Thanks,

HR in Okla · May 2003

Thanks Dandy Don, for your advice. It helps me too as we are facing "downsizing." I've been fighting all the way to try to get the dept. directors to look at this fairly. One wants to lay off a subordinate because of her salary level, but secretly it's an excuse because he doesn't like her. I have fought for her several times when he wanted to let her go. She does a great job hiring and managing in an area where high turnover occurs. It's much more stable since she's handled it. Bottom line is, boss says "cut your budgets." When I tried to talk to him about it, he said, "I won't tell the directors how to run their departments. If he experiences problems because she's gone, we'll deal with that later." Talk about wanting to pull my hair out.

I am trying to get them to make decisions based on seniority and performance, but they just want to get rid of people who are female, over 40 or handicapped!

Okla. is an at-will state, but I can't sleep nights over this one.

Don D · May 2003

The man doesn't have the good sense to know that a jury will interpret 'lay off the highest paid' as 'lay off the old folks'? There are far too many ways to do it right, to mess around with the few stupid ways to do it wrong.

HR in Okla · May 2003

Guess what else? The employee in question is married to an attorney. I don't think she'll sue, but it may take that to get some of the people here to listen to me.

Margaret Morford · May 2003

Don't be afraid in a lay-off situation to keep your best workers. I normally start with the assumption that the longest tenured workers are the best because they have the most experience. I'd ask each manager to decide who he/she would like to keep and who he/she will have to lay off first. If the choices don't fall along seniority lines, then the next question is, "Why does Joe get to stay when he has less time here than Mary?" If the answer is that I've written Mary up for corrective action in the last two months, I think that's defensable. If the answer is Joe's last performance appraisal is much better than Mary's, I think that's defensable too. (As long as the supervisor doesn't have a pattern of giving men higher performance appraisals than women.) If the answer is that Joe is cross-trained to do these two different functions and will take on both and Mary only knows how to do this one job, then again I think you can justify legally keeping Joe over Mary. Then look at the whole lay off plan to be sure it doesn't impact unduly any protected classes - like all the older employees.

Seniority is the easiest way to lay off and the least controversial, but it doesn't necessarily help you run your business! Keep the best workers as long as you have a legal defense for doing so. Don't chicken out and only use seniority when your business is already struggling. With that said, I'd always review my final plan with an employment attorney.

Unemployment benefits vary from state to state. In some states if you pay an employee severance that is equivalent to six weeks of pay, the unemployment office will not start benefits until the 7th or 8th week. Call your state and find out what the process is. Then structure your severance so that it's most advantageous to your employees.

Last, but not least, when some companies lay-off, they will trigger the employee's COBRA period, but still allow them to get their insurance at the employee rate. So you start their 18 to 36 months running, but you give them a break and do not make them pay the COBRA rate during their severace period. You don't have to do this, but you get a ton of good will from doing so and don't have to worry about your employees who need insurance during the severance period. The down side to doing this is that all your laid-off employees will run out and get everything done medically and dentally (I'm not sure that's a word, but you get my meaning) before their severance period runs out.

Also be prepared for your WC claims to go up the minute people get an inkling that a layoff in in the offing.

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

njjel · May 2003

If you feel your layoff may only need to be for a short period of time you may want to consider asking for volunteers to take off the summer. We did this when we experienced funding cuts and had 4 employees take the summer off and 4 employees volunteer for a reduced work/pay schedule for the same period of time. With these reductions we were able to not have to let anyone go, funding came in and they were all brought back to full time work. Good luck!

Laidoff and Unemployment Benefits

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