There have been over 1.1 million layoff announcements made this year, according to Challenger, Gray & Christmas. This is, by far, the greatest annual total in the Challenger survey’s eight-year history. In our current economic state, chances are good that you, too, may be faced with making the tough decision of who stays and who goes. Be sure to make your selections wisely.

SHOCKED...

Carlton Sinclair, who was 60 years old, planned on working another five years so that he could collect his full pension and health insurance benefits. But two months before his pension vested, he received the surprise announcement that he was going to be laid off.

“Since we’ve been forced to cut corners and you received the lowest performance evaluations in the department, I’ve decided to let you go,” manager Keith Vetter explained to Sinclair.

“But my performance has never been a problem. In fact, I’ve always gotten good reviews. You’ve even commended me for my meticulous work,” argued the employee.

“Carlton, you were aware that there was also some concern about you not meeting schedules or getting the hang of the new billing process,” Vetter countered.

“But after we talked about it, I worked hard to make sure that I stuck to the schedules and learned what I needed to.”

“I know you tried. But sometimes it’s just not good enough. I looked at everyone’s records, and I’ve made my final decisions,” Vetter said firmly. “I need you to clean out your desk by Friday.”

...AND DISMAYED!

After getting the bad news, the employee sat down and did some calculations. He figured out that he would receive only about half of the benefits he would have been entitled to had he been able to work until age 65.

Then, as Sinclair was preparing to leave, he came across a memo that listed all those who worked in the department. Employees were sorted by name, birth date, date of hire, salary, whether they smoked, premature births of children, surgeries, and their benefits program information. He was shocked to see that he was flagged as “high risk.”

Armed with this memo, he sued the company for interfering with his pension benefits in violation of the Employee Retirement Income Security Act (ERISA).

A court awarded the employee more than $135,000 in interest, wages, and benefits. In light of the suspicious memo, there was clear proof that the employer was aware of the effect that terminating the employee would have on his retirement benefits. Not only that, but there was no record of Sinclair’s alleged poor performance.

Action Tips

If the time comes to lay off employees, do not follow in the footsteps of Vetter. Instead, consult the following suggestions to help you handle layoffs as legally and diplomatically as possible.

• Use objective, legal criteria. When selecting whom to lay off, steer clear of basing your decision on protected characteristics, such as age or disability. Instead, focus on performance. But just make sure that, unlike Vetter, you have the documentation to back up your selection.

• Don’t sugarcoat the reasons for dismissal. Being less than truthful now could come back to haunt you later if an employee fights the termination in court.

• Squash the office grapevine. Avoid letting employees learn of a layoff through the rumor mill. Instead prepare all employees that a layoff is imminent; inform them as soon as your layoff selections have been made.

• Communicate in person, rather than by voice mail or e-mail. Get right to the point, and be straight with employees. Also, remember to take the time to clarify the severance package, if there is one.

• Explain your company’s rehire policy, if one exists. Give employees a realistic outlook for their chances of rehire. Avoid giving them false hope because you feel bad about having to lay them off.

• Allow terminated employees to leave with dignity. Unless there is a true security threat or it is standard procedure for all employees, don’t have them escorted off company premises by security.

• Also, don’t allow them to linger for weeks as they clean out their workstations and look for new jobs. Instead, offer to stay late so they can pack their things after their colleagues have left.

• Let employees vent. Listen to their gripes. If you don’t, they may turn to a lawyer. But don’t let the employees’ complaints go unabated; your silence could be viewed as implicit agreement.