Legal Definitions - layoff

A layoff occurs when an employer ends an employee's job for business reasons, rather than due to the employee's performance or conduct. This often involves eliminating positions or reducing the overall workforce, and it can be either temporary or permanent. This process is also commonly referred to as a reduction in force.

A mass layoff is a specific type of large-scale workforce reduction defined by federal law, primarily the Worker Adjustment and Retraining Notification (WARN) Act. This law requires certain employers to provide advance notice to employees before a significant plant closing or mass layoff. Generally, a mass layoff under this act involves a substantial number of employees losing their jobs at a single location within a specific timeframe, meeting certain numerical thresholds (e.g., 500 full-time employees, or 50 full-time employees if they constitute at least 33% of the workforce at that site). The purpose of the WARN Act is to give affected employees and their families time to adjust to the prospective loss of employment, seek new jobs, and, if necessary, obtain training.

Here are some examples illustrating the concept of a layoff:

• Example 1: Temporary Layoff Due to Project Completion

  A software development firm completes a major client project ahead of schedule. With no immediate follow-up projects for that specific team, the company temporarily lays off 15 contract developers for three months until new work is secured. The company assures them they will be rehired once new projects begin.

  Explanation: This is a layoff because the employer initiated the termination of employment for business reasons (lack of immediate work), not due to the developers' performance. It is a temporary reduction in force, highlighting that not all layoffs are permanent.

• Example 2: Permanent Layoff Due to Company Restructuring

  A regional bank decides to merge several of its back-office operations into a single centralized hub. As a result, 75 administrative and support staff positions across various branches become redundant and are permanently eliminated. The affected employees are offered severance packages.

  Explanation: This scenario represents a permanent layoff. The employer is ending the employment of numerous staff members due to a strategic business decision (restructuring and consolidation), which leads to the elimination of their positions. It's a reduction in force driven by changes in the company's operational structure.

• Example 3: Mass Layoff Under the WARN Act

  An automotive parts factory employing 800 full-time workers at its sole production facility announces it will cease all manufacturing operations in two months due to a significant decline in demand for its products. The company provides 60 days' advance written notice to all employees, as well as to state and local government officials.

  Explanation: This situation qualifies as a "mass layoff" under the WARN Act. The employer is terminating the employment of a substantial number of full-time employees (800) at a single site due to a plant closure. The 60-day advance notice provided by the company demonstrates compliance with the WARN Act's requirements for such large-scale workforce reductions, giving employees time to prepare for their job loss.