Workforce reductions: A HR guide to furloughs, layoffs and the WARN Act

When organizations face financial pressures, operational changes, or shifts in strategic direction, they may need to adjust the size or structure of their workforce.

Before deciding how to proceed, employers should understand the different approaches available, the legal implications of each, and the role HR plays in ensuring fair, compliant, and well‑communicated decisions. Here we outline the primary types of workforce reduction and what employers need to consider when evaluating their options.

Types of workforce reduction

When cuts to compensation and benefits and other alternatives to reductions in force (RIFs) are not feasible, an employer may need to decide on a type of separation from employment.

Furlough vs. temporary lay off

A furlough is temporary and can be a defined period or an indefinite period. It often involves a reduction of hours and pay or time off with employees remaining on the payroll and continuing to receive benefits.

A layoff involves an actual separation from employment, which is sometimes temporary. A layoff of longer than six months is deemed an employment loss under federal law. Layoffs may be advisable for reasons of budget or due to the discontinuance, curtailment or redirection of a division, project or program.

Permanent mass layoffs

Sometimes a mass layoff is an employer’s best course of action. For example, the shuttering of a location allows the business to consolidate resources and shift focus to better respond to market conditions.

The employer must determine if mass layoff advance notification laws apply and plan accordingly, based on the projected employment losses at the work location.

Terminate for cause

During a reduction in force, an employer may need to decide on whether to terminate an employee for cause (e.g., poor performance), or to lay off the employee. When making this determination, it is critical for an employer to base its decision on objective measures and facts and have adequate documentation to support the decision in case of legal challenges, such as discrimination or wrongful termination

The role of HR in layoffs

HR plays a critical role in managing layoffs and workforce reductions, ensuring compliance with employment laws and ethical standards.

During layoffs, HR must assess the suitability of roles selected for layoff, communicate decisions clearly and compassionately, and ensure adherence to legal obligations required under a union collective bargaining agreement.

HR should also monitor for potential discrimination and ensure that decisions are made based on fair and objective criteria.

Additionally, HR can explore alternate measures – such as furloughs, hiring freezes and reduced work hours, or voluntary separations – before resorting to permanent layoffs, and should lead the development of compensation and retention strategies consistent with organizational goals. Effective communication with employees and any unions. If applicable, is essential throughout the process to maintain trust and transparency.

HR is also responsible for helping managers prepare for difficult conversations. This involves shaping clear, compassionate messaging and ensuring employees receive the right information about last working days, final pay, benefits continuation, COBRA, unemployment eligibility and any available transition support. 

On the administrative side, HR must coordinate with payroll, benefits, IT and legal to ensure proper offboarding. This includes securing company equipment, handling system access, issuing required notices and maintaining accurate documentation. When layoffs involve large groups, HR is also tasked with communicating with state dislocated worker units and chief elected officials, as required by the federal WARN Act.  

The WARN Act

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law that requires certain employers to provide 60 days’ advance notice before conducting mass layoffs or plant closings. The law applies to employers with 100 or more full-time employees, although part-time employee counts may affect coverage. 

Under the WARN Act, employers must notify: 

• Affected employees 
• State dislocated worker units 
• The chief elected official of the local government 

Notice must clearly state the expected date of separation, whether the layoff is permanent or temporary, and the rationale behind the employment loss. Failure to comply can result in significant penalties, including back pay and benefits for each affected employee for up to 60 days. 

There are limited exceptions to WARN Act notice requirements, such as natural disasters, unforeseeable business circumstances and certain temporary projects. Even when exceptions apply, employers must still provide notice as soon as possible. 

Understanding WARN Act thresholds, timing, exemptions and documentation requirements is critical to avoiding costly violations and ensuring employees receive adequate time to prepare for transitions.

Mini-WARN Acts

Many states have their own versions of the WARN Act, often called Mini-WARN Acts, which impose additional or stricter requirements. States such as California, New York, New Jersey and Illinois require longer notice periods, broader employer coverage or additional information in the notice. 

Mini-WARN Acts may apply to employers with fewer employees than the federal threshold, meaning businesses not covered under federal WARN may still have state notification obligations. Requirements can include: 

• 30–90 days of notice 
• Lower employee thresholds 
• Different definitions of “mass layoff” 
• Additional reporting to state agencies 

Because state rules vary widely, HR teams should review both federal and state regulations to determine which laws apply. Relying solely on federal WARN Act criteria can easily lead to compliance gaps and missed notice requirements. 

When is a layoff a “mass layoff”?

Not every job reduction qualifies as a “mass layoff.” Under the federal WARN Act, a mass layoff generally refers to a reduction in force that: 

• Is not the result of a plant closing,
• Occurs at a single site of employment,
• Within a 30-day period, and
• Affects 50 to 499 employees, representing at least 33% of the workforce at that site, or
• Affects 500+ employees regardless of percentage

State Mini-WARN Acts often define mass layoffs differently. Some use lower thresholds for triggering events Others include broader categories of employees, such as counting contractors, part-time staff or remote workers when determining employer coverage under the law. 

Understanding these distinctions is essential for determining when notices must be issued. Employers should conduct careful workforce counts and analyze patterns of layoffs across 30- to 90-day windows to avoid “rolling layoff” violations, where multiple small reductions collectively trigger WARN obligations. 

HR teams should document business reasons, workforce numbers and decision timelines used in determining whether to conduct layoffs to reduce compliance risk and ensure accuracy if audited by federal or state agencies.