Layoffs and reductions in force

What employers need to know about layoffs

Layoffs occur when an organization reduces its workforce because of financial pressures, restructuring, technological changes or business closures. While the reasons vary, employers must follow clear legal requirements to avoid penalties, protect employee rights and reduce organizational risk.

When considering layoffs, it is essential to understand the legal requirements and best practices involved. In the United States, federal, state and local rules apply and govern how the different types of workforce reductions should be carried out. For example, whether a layoff is temporary or permanent, how benefits are impacted and what obligations exist for rehiring, severance and continued communication.

Effective layoff management includes planning, documentation and clear communication. When layoffs are handled improperly, companies may face federal, state or local violations, steep fines, discrimination claims, reputational damage and low workplace morale. HR teams play a central role in ensuring layoff decisions align with legal standards and organizational policies.