When coronavirus furloughs become layoffs: What HR leaders should know

Two managers discuss how to handle coronavirus furloughs that may become layoffs.

When stay at home orders began in March, many employers hoped for a quick resolution to the coronavirus crisis and a swift return to business as usual. But now, four months later, the pandemic continues to rage on. In early July, Arizona reshut its bars, California re-restricted indoor restaurant dining, and New York halted plans to reopen restaurants.   

The prolonged shutdowns in many parts of the U.S. has required many employers to rethink their workforce needs—again. Organizations that furloughed employees at the beginning of the pandemic are now having to make the difficult decision to turn some or all of those furloughs into layoffs. In fact, the University of Chicago’s Becker Friedman Institute predicts that 42%, or 11.6 million, of all jobs lost through April 25 due to the coronavirus will become permanent

For companies that find themselves in this situation, there are a number of legal, financial, and reputational issues to consider as you proceed with any necessary workforce changes. Here are four major areas to pay attention to if you need to permanently lay off your furloughed employees. 

1. Prepare timely WARN notices

For companies with 100 or more full-time employees, the federal Worker Adjustment and Retraining Notification (WARN) Act requires 60-days notice before a layoff—unless the layoff is a temporary furlough that lasts six months or less due to an unforeseen circumstance. 

The coronavirus crisis, of course, qualified as an unforeseen circumstance, so many employers put workers on temporary furlough in March without notice. If your organization was one of these, you now need to give 60-day notices to those furloughed employees whom you will not be able to bring back to the workplace within six months of when that furlough began. 

For example, if you furloughed employees on March 19, you will need to give WARN notices by July 20 to those employees you anticipate you will keep on furlough beyond Sep. 19 or lay off permanently.

“Employers who’ve made workforce changes really do need to keep an eye on forecasting, asking, ‘Where do we think we’re going to be 30, 60 and 90 days from now?’” said Sabrina Shadi, attorney and partner at law firm BakerHostetler. “It’s obviously a very difficult thing for people to be able to do.”

To do your best to forecast workforce needs for your organization, keep an eye not only on your business but the federal, state, and local responses to manage the spread of the coronavirus. If coronavirus cases are spiking in your area and businesses are closing instead of opening up, you may need to consider the possibility that employee furloughs will be prolonged. 

Many states also have mini WARN Acts, which often have stricter requirements regarding the size and type of businesses affected by WARN notice requirements and the time periods by which these notices need to be provided.

Related: How to conduct a layoff, furlough, or recall legally during the coronavirus crisis

2. Make furlough and layoff selections fairly and legally

When conducting layoffs or furloughs, employers must ensure that the workforce change does not disproportionately affect any protected groups. The same rules apply when you’re turning some furloughs into permanent layoffs. Keep in mind that characteristics protected by the U.S. Equal Employment Opportunity Commission (EEOC) include “race, color, religion, sex (including pregnancy, sexual orientation, or gender identity), national origin, disability, age (40 or older) or genetic information (including family medical history),” according to . 

As you decide which employees will be laid off, make sure the criteria you use are objective, fair, and measurable. If, despite using nondiscriminatory selection criteria, you find that some protected groups are disproportionately affected, adjust your list. The EEOC recommends considering “alternative layoff criteria, such as employees’ profitability, productivity, or expertise.”

Some states have protected classes in addition to the federal ones, so make sure to follow your state laws. In addition, any union contracts or individual employment contracts regarding employee terminations will also need to be considered when making layoff decisions.

Related: Top 10 Legal HR Questions on the Coronavirus Pandemic, Answered

3. Offer outplacement services and other career transition support

Employees displaced by a layoff during the coronavirus crisis are entering a tough job market where opportunities have shrunk considerably in number and variety. Many working in some of the hardest hit industries, such as travel and hospitality, may have to look for new careers in completely different sectors that have more job openings. 

Considering this, it is now more important than ever to support exiting employees as they make career transitions. Offering outplacement packages that include effective, meaningful services such as one-on-one career coaching and personal resume review can help employees land new jobs significantly faster by equipping them with targeted career advice as well as short- and long-term career development plans. Displaced employees who are offered outplacement are much more likely to retain a positive view of their former employer and much less likely to share negative sentiments about their former employer with others, whether in person or online. 

In addition to outplacement services, many organizations conducting layoffs during the coronavirus crisis are choosing to extend health care benefits and provide generous severance pay to give affected employees a softer landing. Providing exiting employees with positive references, whether through LinkedIn recommendations or more formal letters, can also help retain positive relationships and, if circumstances allow in the future, leave the door open for the hire of boomerang employees.

Related: How to get leadership support for outplacement benefits

Intoo’s outplacement solution offers exiting employees unlimited, one-on-one career coaching with a professional career development expert. Our coaches keep new job seekers motivated and focused with an individualized strategy for landing their best new job—which is why Intoo’s outplacement solution users find new jobs 2.5 times faster than the national average.