In this episode, Attorney Nasir Pasha and Attorney Matt Staub delve deep into the complexities of mass layoffs and offer valuable insights, real-life examples, and practical advice to employers grappling with the aftermath of such challenging situations.
Nasir and Matt emphasize the critical importance of effective communication when executing mass layoffs. They stress the need for meticulous planning and the development of a clear communication strategy. Drawing from both successful and problematic examples, the hosts highlight the significance of involving HR professionals, legal advisors, and financial experts to ensure a comprehensive and empathetic approach.
A key legal consideration discussed is the Worker Adjustment and Retraining Notification (WARN) Act. Nasir and Matt provide a comprehensive overview of the federal WARN Act requirements, emphasizing that employers with at least a hundred full-time employees must provide a 60-day notice to affected employees under certain circumstances. They also shed light on state-specific WARN Act regulations, including California’s lower employee threshold.
Discrimination in mass layoffs is another critical area examined. They tackle the challenges associated with making fair termination decisions in larger organizations, stressing the need to establish objective criteria such as job performance and seniority while avoiding subjective factors that may give rise to discrimination claims. Nasir and Matt underscore the importance of maintaining proper documentation and objective evaluations to support termination decisions.
Severance packages, an integral part of mass layoffs, receive significant attention. Nasir and Matt explore the benefits of offering severance, particularly the release of employer liability. While providing general guidelines, such as one week of salary per year of service, severance agreements for executive-level employees may differ based on individual employment contracts.
Full Podcast Transcript
NASIR: Fifty-year low of unemployment.
MATT: The Goldman Sachs CEO had roughly 3,200 employees terminated.
NASIR: Hopefully it’s not spontaneous.
MATT: You know, if someone’s going to be upset, they’re going to be upset.
NASIR: Matt, you’re right. It’s relatively simple to figure out whether you trigger a WARN Act or not.
MATT: Nothing good is probably going to happen.
This is Legally Sound Smart Business where your hosts – Nasir Pasha and Matt Staub – cover business in the news and add their awesome legal twist. Legally Sound Smart Business is a podcast brought to you by Pasha Law PC – a law firm representing your business in California, Illinois, New York, and Texas. Here are your hosts, Nasir Pasha and Matt Staub.
NASIR: All right. Welcome. Fifty-year low of unemployment. That’s what we’re going to talk about today; also, the other side of the coin which is all the layoffs that are going on in the tech sector but especially in the last few months here in 2023, and in particular how to handle those layoffs from a legal perspective.
MATT: Yes, it’s no secret to anyone that’s been paying attention to the news. There’s been a great amount of layoffs – mass layoffs particularly in larger companies. It felt like this was a pretty appropriate topic from the legal standpoint on both ends of the employer-and-employee spectrum to see what exactly is out there and what people can do.
NASIR: Right. We’ve been debating whether to cover this particular topic because we’re in a very weird economy right now – at least from my perspective. Despite the unemployment being at a 50-year low, we are seeing lots of news about layoffs.
So far, it seems to be a lot in the tech sector, but one of the reasons we wanted to cover this is I think we anticipate that this may start expanding a bit. Hopefully not, but when you’re dealing with terminating an employee versus a large group, there are different issues that need to be considered.
MATT: Yes, exactly.
That’s one of the key points in all of this – comparing big companies versus small or medium-sized companies.
For big companies, it’s a whole other consideration for what needs to be done. For smaller companies, there are still some legal aspects that need to be handled, but it’s more the non-legal side of things that I think usually comes into play. You’ll see that in some of the stories that we’re going to talk about with this, but step one is looking at the business itself, seeing the size of it, and making the calls from there.
NASIR: When it comes to layoffs, besides 2020, we’re talking about a different kind of layoff where things have settled down a bit in 2022, and that’s really when layoffs started to occur in the tech sector.
MATT: Yes, I think that’s typically the way it goes.
You see the Googles, the Facebooks – sorry, the Metas.
NASIR: Meta, yes.
MATT: Any of those big tech companies are typically the first wave of layoffs. You’ll see a mass amount at that point, and that sets the tone for the next 6, 9, or 12 months for what to expect from some of the smaller companies. It puts that flag out there and a fair warning on what’s to come in the next year.
We’re not going to talk too much about the cause of this. I think everyone is in touch with the news, but one of the things that was very apparent in all of this is, because of technology changes, because of culture changes, because everyone is working from home, for example, especially in the tech sector, the communications around mass layoffs have both resulted in frankly humorous results and also a lesson in bad practices on what not to do when it comes to laying off a massive workforce. /p>
MATT: Yes, that’s the story everyone sees.
In every story we see in the news, there’s someone that made the wrong decision. You rarely see an instance of some CEO making the right decision, and that’s some story in the news. That’s boring. No one wants to read that.
There’s plenty of stories of executives making the wrong call or doing something blatantly or publicly. There’s quite a few examples of that, but I think what you mentioned is the first key point – the remote worker aspect of it has definitely affected how terminations are done.
Going back to what I was saying before, the big company versus small company, even when there wasn’t remote working – you know, pre-COVID – from a logistical perspective, for a big company, it’s still difficult to lay off a bunch of people at one time.
NASIR: Yes, hundreds – let alone thousands. It’s incredibly difficult. It’s a logistical challenge.
MATT: But now, not only do you have that, but you also have the remote worker aspect. Whether it’s 100 percent remote, 80 percent remote, or whatever percentage, it definitely throws a monkey wrench into how you’re going to approach this.
I’ll look at the smaller companies. You could call someone in and sit down with them, but now mostly everything is done via phone, via Zoom, or what-have-you. People have different opinions on that stuff, but it’s the practicality. It’s like, “Well, it has to be done at this point.” If you’re not coming to the office every day, and your boss told you to come into the office on what usually is a Friday – although we don’t necessarily agree with that – then that’s probably not a good sign at the end of the day.
NASIR: Yes, I was having a conversation – a client was asking what day of the week to terminate somebody. I think we went over this. We have a whole episode on how to terminate somebody, or how not to terminate somebody. A lot of the lessons from that can definitely apply to this topic in particular, but one of the things for sure is, when it comes to communication, it’s not about you. The more you make it about you, the more you are going to definitely fall into these traps.
One of the classic examples that occurred, I think this was a forwarded meme – for lack of a better word – from better.com when he fired all of his employees through a Zoom call. At that time, by the way, when you say, “The boss fired everybody via Zoom,” maybe two years ago, that had some stigma around it, but now, it’s like, “Well, what’s the alternative?”
Like Matt said, are you going to bring him into the office for the sake of firing them? If you’re going to do that en masse, nowadays, people aren’t even in the same city as they used to be because of telecommuting and working from home. Zoom actually may be a better alternative than just over a phone call, or a letter in the mail, or an email.
MATT: Yes, I actually watched that video this morning. I know you had done a play-by-play of it.
NASIR: We should play it right now. Let’s take a look. I haven’t seen it in a while myself. Let’s play it in the podcast. I’m going to take a look at it now.
How not to terminate somebody. Well, let’s first talk about the first good thing that he did – he got right to the point. What did he say?
GUEST: “Your employment here is terminated – effectively immediately.”
NASIR: Right. What he should not have said is made this about himself.
MATT: “This is the second time in my career I’m doing this, and I do not want to do this. The last time I did it, I cried. This time, I hope to be stronger.”
NASIR: They don’t care. That is probably the last thing you should have said. No one cares how you feel.
When you terminate somebody, you have to be compassionate, yet still to the point. Don’t make it about yourself. Anything you say at that point is not going to benefit you for the most part. Keep it short, keep it direct, and make it simple.
In that case, the CEO talks about how this is so hard for him. He had to do this only once before, and the last time he did it, he cried. This is such a self-centered way to approach it. You’re just asking for trouble.
Why are we talking about this? Why is communication important in how you terminate somebody from a legal perspective? It’s because this is all risk management. When we talked about this before – whether it’s a contract dispute or dealing with anybody – how you deal with them and the way that you deal with them – because they are human beings – has a direct impact on legal liability. Hands down.
Similarly, when it comes to terminating an employee, treating them like a human being, but putting that aside for a second, you want to take a look at it from a simple dollars-and-cents perspective. It is in the business’ best interest to treat them as human beings. That’s the bottom line.
MATT: Yes, you’re exactly right.
If you’re looking at it from the liability perspective, either way, if you get terminated, you’re probably going to be upset. That’s not a surprise. But are you going to be more upset or less upset the CEO is basically making it about them? You’re going to walk away even more upset.
Like you mentioned before, that’s one of the reasons that – we’re recording actually on a late Friday – this is the worst time because they sit on it all weekend and think about it. They go home, and it’s just not ideal.
NASIR: Yes, think about the alternative.
From your perspective, if you’re fired on a Monday, Tuesday, Wednesday, or Thursday, if you’re going home to an empty household because the rest of your family is going to school, your spouse is possibly working too, now you’re at home – what else are you going to do but look for another job? Or have fun or take a vacation.
But if you’re going home for the weekend to your family, give them the news that you are now in a bad financial situation possibly, and still have to spend the weekend around everybody, having fun and so forth, it’s a much different kind of setup.
Yes, I never liked the whole “fire on a Friday” concept.
MATT: I was thinking about this earlier. We deal with this all the time with our clients. For the most part, we don’t know the employees being terminated. We have an extra layer of buffer there. I can see where the people that are actually doing it want to push it as far as possible because there is a relationship there. That’s just human nature. I get that, but it’s a tough thing to do.
Again, you mentioned our episode about terminations. We talked about that there, so I won’t go in too deep on this, but there is definitely a wrong way to do it. I’m not sure if there’s necessarily a right way to do it.
NASIR: There’s no perfect way.
MATT: Yes, but there’s definitely a wrong way to do it. I think there are plenty of examples.
NASIR: What about PagerDuty? I thought that was a mistake.
MATT: That’s what I was looking at right now. I think it was seven percent of the workforce. She had a Martin Luther King Jr. quote in there.
NASIR: Just by saying that, that looks bad, but I actually looked up the quote, and now I understand why. Again, it becomes about herself.
NASIR: I’ll read you what she put in her message.
”I am reminded in moments like this of something Martin Luther King said, that ‘the ultimate measure of a leader is not where they stand in the moments of comfort and convenience but where they stand in times of challenge and controversy.’”
What’s interesting about this is that, at first, I’m like, “Wait. Is she talking about the employees? Or is she talking about herself?” I realize I’m pretty sure she’s talking about herself because she’s referring to herself as a leader – as if she had to make that difficult decision.
MATT: I think so.
NASIR: It’s so self-centered.
I don’t know if this is along the same lines, but the Goldman Sachs CEO had roughly 3,200 employees terminated. He said, “I wish I would have done this sooner.” Again, that’s not something you want to say. You’re asking for some sort of legal recourse at that point.
NASIR: You can say that maybe to the shareholders. Perhaps that’s who he was talking to, but that’s not necessarily a good PR message.
MATT: If we’re looking at it from the perspective of the employer – which we typically do – what are the important things to consider? One is timing. We’ve already touched on that a handful of times. You know you’re going to do it. Hopefully.
NASIR: Hopefully it’s not spontaneous, yes.
MATT: Yes, timing is very important. We’ve talked about even timing it down to the day of the week, but I would say this is something that should be thought about months in advance. Unless something catastrophic happens and it’s a rushed decision, this is something that should be well thought out, and well developed, and you have some plan in place. It factors in the remoteness of employees and how many there are and all of that, but the timing of when you’re actually going to do it. We’ll touch on this later, but there are legal aspects to this, too – legal timing.
I think timing is very key in addition to how the actual message is communicated.
NASIR: Yes, like you said, develop a very clear communication plan and evaluate that. Especially if you’re in a large organization, this needs to be a group effort. I feel like, in a lot of these CEO communications, you can tell they are drafted without checks and balances within their organization because they got to their position for a reason.
It’s like, “Look, I’m the CEO. I can handle this. I’m good at communications,” and so forth, but some of those characteristics that may be great for running a company aren’t necessarily great in how to communicate this type of event. Honestly, I think that’s the separation.
First of all, if you are a CEO listening out there, you have got to understand what your strong suit is, and it may be communication, but that does not mean that you are the best communicator in this particular instance.
If you are not a CEO but maybe someone that supports that person that is going to deliver that message, understand that this is something that you have to rein in as you develop this process. We are not about not only getting legal involved but HR professionals and from a financial perspective getting that plan together coherently is incredibly important.
MATT: No doubt. I think something that goes a long way is offering some assistance or help moving forward. I don’t know how you want to define it, but basically saying something to the effect of, “Obviously, this is not ideal for you, but we’re here for you to help.”
Again, depending on the situation, you have to provide certain disclosures, but in general, offering something or extending some sort of arm out there and offering to help in whatever way you can, that really goes a long way. That’s not a legal thing. That’s a personal thing. From what we’ve seen, people react pretty positively to that.
If someone’s going to be upset, they’re going to be upset. You can’t change that, but people that are neutral or on the fence, offering some way to help – one way or another – really does go a long way. This is likely going to be one of the worst days of their year – maybe the worst day, depending on what happens. Whatever you can do to assist them moving forward, there might be a little bit of time taken long term, but it’s worth it for the potential blowback from a disgruntled terminated employee.
NASIR: It’s perfectly okay to do that. I think some employers may – for whatever reason – be reluctant to have any communication after termination because they’re worried about other repercussions of that but understand that it’s entirely normal to provide support and resources post-termination.
It’s more common in bigger companies – what they call outplacement services – basically finding a way to find another position for that person. Even on a smaller level, it’s like, “I have to let you go, but I’m happy to give you a good reference or give you a referral.” Even little things like navigating the unemployment benefits process.
We saw a lot of that in 2020 because the unemployment benefits rules were a little bit different as they made adjustments during COVID. Especially in a mass layoff situation, there’s going to be a lot of people there that have never been fired before or have never faced this particular situation. Something as simple as understanding how to apply for unemployment benefits but also health insurance and things like that is perfectly okay. Frankly, it’s advisable to facilitate that communication and provide those resources to those employees.
Like I said, it goes a long way. You don’t want to be cold and have people resent you long term. The sooner they find a new job, the quicker they will forget about this whole situation. Whatever you can do to move that along is going to pay dividends in the long term.
NASIR: Right. Let’s start exploring some of the legal risks when you’re doing any mass layoff in particular to that. We can talk about things like the WARN Act and discrimination. We talked a little bit about healthcare benefits and paid leave. Why don’t we just talk about this WARN Act, Matt? Why don’t you start that off?
MATT: Yes, there are both federal and state WARN Acts, but I’ll touch on the federal because that’s the starting point.
Basically, we’re looking at a situation where there is a “mass layoff.” Who’s a covered employer in this situation? We’re talking about an employer with at least a hundred full-time employees. Again, these are big companies. Small companies and medium-sized companies, this isn’t going to apply to you because you’re not going to hit that threshold.
What’s the requirement? You have to provide 60-day notice to the employees that are going to be laid off. What triggers the WARN notice? We are talking about 50-plus employees at one employment site that are terminated within a 30-day period. From full-time employees, 50 to 499, at least 33 percent of the employees are going to be terminated. Above that, I think percentages are thrown out. Again, we’re talking about bigger companies at that point.
The bottom line is the notice. It needs to be provided at least 60 days prior. Or else, there are potential repercussions.
My thought on this is it’s not a difficult thing to comply with at the end of the day. I understand why employers wouldn’t want to give a 60 days’ notice to employees that are going to be laid off because nothing good is probably going to happen during that period, but there are legalities behind it.
If you fit into those categories I just mentioned, you have to provide that notice – both on the federal and possibly the state level, too. For California, I think it’s 75 employees – not a hundred – but the federal one is important. You have to do that. There are specific guidelines you have to follow. You’d be surprised how many big companies have apparently failed to follow this based on the lawsuits that have surfaced in the last couple of years.
NASIR: Right. Almost famously, Tesla is facing a lawsuit regarding a mass layoff they did in January of 2022. I believe that’s still going on, if I recall.
NASIR: Matt, you’re right. It’s relatively simple to figure out whether you trigger a WARN Act or not, especially if you’re a big company. For example, if it’s 500 or more employees that you’re terminating, there’s no percentages, it becomes pretty obvious.
I get that it can become more complicated, especially if you have what are called rolling layoffs, because what happens sometimes is you have people that are making financial decisions and saying, “Look, we are not in a good financial state. Let’s do a first round of cuts. Let’s at least cut all the individuals that are so-called non-essential, et cetera, that are first to go.” The determination of whether to make a first, second, third, or fourth cut is sometimes not known right away. Because of that, whether or not the WARN Act applies can be a little bit confusing. That’s a little bit understandable from my perspective.
MATT: Yes, I don’t want to make it seem like this is really simple. There are a lot of rules and guidelines that go into what triggers it, what doesn’t, and what needs to be done. It’s not just a very easy black-and-white thing. There’s a lot of different components to it.
In general, I was trying to explain how it works, but the way you should look at it is, if you are contemplating a mass layoff, you just need to look into what the actual regulations are before you do it because, the last thing you want to do is terminate a bunch of people, and then later have them come back.
I don’t know if Tesla did it, but I think Twitter had a class action lawsuit. I think Intel might have, but some of these bigger companies had it. It’s not difficult for these employees to bring a class action lawsuit – to group everyone together – because, again, the actual compliance is not really difficult at all.
Going back to what we said earlier, you need to have the plan in place. Once you have that, even if you decide 30 days out that you need to do it, it’s definitely worth waiting that extra 30 days and giving them the actual sufficient notice in order to do so because it’s going to be – I believe the penalties are – back pay and benefits for up to 60 days, depending on how many days. You don’t want to deal with that, obviously.
It’s definitely worth doing it the right way and providing adequate notice – both on the federal and state level.
When it comes to the other nuances of how the notices are supposed to go, if you are even considering the fact that you may have to comply with a WARN notice, this is definitely not something you do by yourself. It’s not even something that most HR professionals or HR departments are trained to handle. These are sometimes once-in-a-lifetime events that a trained attorney or experienced attorney in this particular area is really necessary. I know we say that in general, but in this case in particular.
From a WARN notice perspective, it’s either you comply or not. From a discrimination perspective, this is a little bit harder to manage in certain companies. This is what I mean.
Picture a large company. You have to reduce your workforce by – let’s say – a thousand employees. Now, how do you do that? It’s unlikely that you want to lay off a thousand employees in one department. Or perhaps it’s one location. We talked about a single site of employment closing – if that’s 50 employees or more, then that triggers the WARN Act, for example. But I’m talking about if you need to reduce across the board a thousand employees, how do you decide which employees are going to be let go?
Typically, in most organizations, they have multiple layers of management, et cetera. From the top down, it’s like, “In this department, we need to reduce your employment cost by 10 percent; in this department, 20 percent; in this department, 50 percent.” It flows down until you get to a point where there’s actually people making decisions on which people. Of course, they’re going to talk to the supervisors of those individuals.
That’s where you’re going to run into problems because, if you have a team of five people, and the manager is deciding which of those five is going to be terminated, and they decide to terminate the person that maybe they just filed a complaint about in HR, or they are from a completely different race than the other four individuals and the manager, and they terminate that person. These things that are maybe looked at on a one-to-one basis for termination – you know, this risk analysis from a termination – are often missed when you’re doing it through a mass layoff because it’s hectic and time-sensitive to actually make decisions. When it comes to discrimination lawsuits, it’s incredibly common to have this occur in any kind of mass layoff situation.
MATT: Yes, that’s the tricky component to this, but it’s not indifferent from where you have a department of five people, you’re terminating one of the five, and “how do you make that decision?” but I think it gets heightened because there’s more people being terminated. There’s more coming into play, but you are exactly right.
Again, you have a department of five people. Let’s say they all have the same position. You’re going to do a mass layoff. You’re going to lay off one of the five or two of the five. You’re talking about different genders. You’re talking about different nationalities and different races. Different ages, too. Any of those protected classes, it’s definitely something.
I know the ones that we’ve done in the past, it’s analysis that needs to be done because we need to look at that. You want to make sure in general – this is not the legal advice – it is not disproportionately against one of those protected classes versus the other. That is not the end all, be all, but that is a general guideline. You cannot live by that rule, but—
NASIR: It’s a way to discover whether or not there are individuals within your organization that may be making decisions that are based upon race, for example, and to question that. That’s the thing too. When you’re terminating one person, then there’s typically some deliberation. There are multiple people involved and so forth, but because of the nature of mass layoffs, and because often it’s just coming from the top, communication is actually very protected until the decision is announced.
You see this very goofy situation. I knew somebody who was at a big organization. They were going through layoffs. Their team leader was continuously giving assurances to them. “You guys are protected. I know they’re going through another round of layoffs, but I’ve been reiterating that our team is particularly protected.” The day of that particular conversation, that team leader was terminated. You can imagine, in that situation, she didn’t know that she was on the chopping block.
Because of these deliberations or considerations, giving a call to your attorney, “I’m going to meet with this individual tomorrow. I’m going to terminate this person because of X and Y reasons. I wanted to get your advice,” there’s none of that. How are you going to have that kind of conversation on a thousand employees? It’s not practical.
That means that you have to make an extra effort to figure out how to address that which is really difficult.
MATT: Yes, but we kind of did the analysis in reverse here because step one is looking at exactly what we’ve been talking about and making sure there’s nothing discriminatory. Step two is actually the procedural aspect of the WARN notice – if you have to give that notice to the employee.
MATT: If we’re talking mass layoffs from the legal aspect, this is the big one. There are obviously other considerations in play, but that’s the big-ticket item that you have to worry about. Again, it’s only for larger employers. If you have 10 employees and you’re terminating half of them, I guess you could view that as a mass layoff, but not from the perspective of the WARN Act.
Here is a quick tip on how to actually avoid discrimination. First, it’s ideal to establish a clear objective criterion. Now, you can’t do this well unless you have retained frankly objective evaluations of your employees because, if you are going to terminate the lowest performers, you have to have documentation of their performance. Ideally, their job performance should probably be the number one objective criteria – as objective as it can be, of course.
Things like seniority and other skills on paper are things that you can document and justify the termination. Then, you have to avoid the subjective factors coming into play. In other words, instead of having the individuals that necessarily are working with those individuals’ day-to-day perspective, you have one level above that that then assesses.
“I recommend these individuals – based upon what’s on paper – to be terminated.” Then, you go to that one level up – the supervisor or direct reports – and you advise them. “These are the people that I’m thinking about terminating. Is there any reason why we should change this?” They may say, “This person went to so and so college, but they are really horrible.”
Those are subjective, but that’s some feedback that maybe you want to make some decisions that are different than what’s on paper. Really, there’s not much else to it than that in order to avoid any kind of discriminatory actions. Unfortunately, sometimes you fall into a situation where someone is terminated and they believe unjustly, “Why me and not the other person?” They may come up with their own reasons.
Even if it’s not the actual reason, if you have failed to document their poor performance or even their mediocre performance or their performance that is not stellar compared to others, then you might get into trouble when it comes to justification of their termination.
MATT: Yes, we’re right at the finish line of this episode. I knew you’d lead me into an Office reference.
MATT: It was one of the first couple of episodes when Michael has to fire someone. Dylan, right?
NASIR: Right. That was one of the first episodes.
MATT: Yes, he’s like, “Creed? Fire him.”
MATT: That’s exactly what you just said. “Why me?”
MATT: Then, actually, Michael got turned on it.
NASIR: Yes, he actually changed his mind. Or did he? Yes, he actually ended up firing him.
MATT: Well, he spoke to Creed first.
MATT: Then, the other conversation I just mentioned. It went both ways.
NASIR: It is funny because – those who have terminated individuals are probably aware of this – it’s a very common conversation you have. There’s this negotiation – not everybody but this negotiation to try to avoid the termination. In theory, it should never be a negotiation, but in that episode, of course, Michael changes his mind which I think is funny.
He has also entered into situations. I think there was one where someone quit then he said, “No, you don’t quit. You’re fired.” Of course, it’s horrible because, from an employer’s perspective, you have unemployment insurance, but also he mentioned something about severance.
We should talk about severance, actually. Oftentimes, in large and small companies, it’s not uncommon to have severance packages as part of the layoff process. Of course, this is an open secret, but the biggest benefit of any kind of severance package is what? The release of liability of the employer.
NASIR: That is what you’re paying for. I know that sounds crass because, obviously, if you’re letting someone go, you want to give them a parachute out, so they can have a soft landing, but the reality is that is a way to hash out any kind of issues that there may be.
If you have individuals that are refusing to sign a severance, well, maybe there’s an issue surrounding that, and maybe they want more. They’re like, “Look, I have some issues I’m going to bring up unless I get paid more.” That happens all the time. In fact, it’s probably advisable to have some kind of package of severance when you’re doing a mass layoff.
MATT: It ties into your previous point about the discrimination. Severance should be applied equally based on everything.
NASIR: Objectively, yes.
A lot of people ask us, “How much severance?” There’s an unwritten rule or standard that we often see which is one week of salary per year. That typically changes when you get to the executive level. There is an expectation of something more. But then, of course, if the termination is high risk, then that rule is often deviated. Again, this is a rule of thumb – not an actual rule.
MATT: Yes. Well, unless you have guidelines and some sort of handbook or something like that, but that’s pretty uncommon to see.
NASIR: Or it could be in their employment agreement sometimes, for executives especially.
MATT: Yes. If we’re talking top-tier level, it’s a little bit different, but usually we will see set guidelines that have to be adhered to. It’s a good point, too. It definitely is another factor. I’m sure we talked about that in the termination episode. I think we did.
NASIR: I’m certain.
Some of the other couple minor items before we finish up, again, it’s not unique to mass layoffs, but things like COBRA and giving them access to health insurance afterwards. That’s something that’s mandated by law – communicating that and providing that information is pretty important. Again, it is part of having that soft landing.
Some of the things that you have to deal with that is perhaps unique for mass layoffs is when people are on leave. Typically, in general, it is frowned upon to terminate somebody that is on medical leave, attorney leave, FMLA, or whatever because that can look like it’s being discriminatory towards that person for taking leave which would pretty much be an automatic lawsuit.
But in a layoff situation, when you are terminating a thousand people, there’s going to be a certain percentage of that population that is going to be on leave. Just because they are on leave doesn’t mean that they are necessarily protected from being laid off. The unfortunate part is that, if the employee is laid off during certain FMLA leaves, some of their job protection rules do not apply anymore, and it is possible to do that.
Again, this is something that you should be careful with as far as how to handle that a little bit differently.
MATT: Yes, just another consideration.
I was going through my notes. I don’t know if this qualifies as a mass layoff or not, but my favorite layoff story of the year so far was Google, I believe. I think this was in January. They show up to work, and either their badge worked, or it didn’t. They were all confused. It was like, “This must be a malfunction.” They would walk in, and security escorted them out if their badge didn’t work. That’s how they found out they got terminated.
NASIR: We actually did a real skit about that exact situation. Remember?
NASIR: I think it was Trang. Her card wasn’t working – as if she was being laid off.
We did “what are the worst ways” or “ways not to fire somebody” or something like that.
MATT: Yes, I don’t know if that falls under the category of mass layoffs. I can’t remember how many, but that was probably the worst.
NASIR: It is goofy. Who thinks of these things? “We need to terminate everybody. How should we do it? Why don’t we turn off their key cards and then lock the door? That’s perfectly normal.”
MATT: Well, two or three offices ago, the bottom floor was this Italian market. I guess they basically did that to all of their employees. The employees showed up one day.
NASIR: It was closed down.
MATT: Yes, it just shut down, they didn’t pay them, and that was that. It does happen.
NASIR: It does happen, yes.
MATT: It’s unfortunate, but I guess if you’re going out of business, at that point, you probably just don’t care.
NASIR: All right. I think that’s our episode. Hopefully these mass layoffs continue to stop or continue to be isolated at least. Again, from what I’m hearing, even if there are these mass layoffs in the tech sector, the tech sector is still doing pretty well. I think they’re just transferring to other jobs, but let’s see. Hopefully, things continue to stay well.
MATT: Yes, we don’t like to talk about this topic.
NASIR: What do you mean? You love it. You wanted to talk about this. “Let’s talk about people’s misery!” I think that’s what you were saying last week, right?
MATT: That’s true, yes. That’s a good point. I forgot about that.
NASIR: All right, guys. Thank you for joining us.
MATT: Yes, keep it sound, keep it smart.