With rising tariffs, increased use of artificial intelligence (AI), and loss of immigrant workers, many businesses are facing one of their toughest decisions: layoffs.
Industries experiencing a hard hit include logistics, construction, and manufacturing. How you handle employee layoffs can make a significant difference for both the departing employees and your company’s future.
What legal landmines should I watch out for?
If you are laying off 50 or more employees or at least 33 percent of your workforce at a single location and employ at least 100 full-time equivalent employees, the federal WARN Act applies. That means you have to provide the affected workers with 60 days’ written notice of the layoffs.
The rules in New York and New Jersey are even stricter.
The New Jersey WARN Act applies to employers with at least 100 employees, regardless of whether they are full-time or part-time, and requires:
- 90 days’ notice; and
- severance pay at the rate of one week for every year of service.
The New York WARN Act applies to employers with at least 50 full-time equivalent employees and to layoffs of at least 25 full-time employees or to relocations of entire operations at least 50 miles away. New York WARN also requires 90 days’ notice to the affected employees.
Important! You will incur severe penalties for missing the notice period or failing to apply the rules at satellite locations.
How do I choose who gets laid off?
Use objective criteria tied to your business’s goals:
- Skills and knowledge most relevant to your business model going forward
- Performance metrics and attendance records
- Job classification (not just title — what they actually do)
- Seniority
Watch out for disparate impact on any group, but particularly on older and disabled employees. A poorly planned layoff can open the door to discrimination claims, even when unintentional.
How do I communicate layoffs without crushing morale?
The way you deliver the news can either protect or wreck your company culture.
Do:
- Be direct but human
- Explain the why (cost pressures due to global economic factors, automation, restructuring)
- Have answers regarding severance, benefits, and final pay
Don’t:
- Ghost your team or avoid the hard conversations
- Allow managers to “wing it”
- Rely exclusively on AI tools or templated scripts
Tip: Southwest Airlines softened the impact of layoffs by pairing them with voluntary exits and retraining options, building trust even in tough moments.
What do I owe departing employees?
Federal law does not require severance pay, but if you’re in New Jersey, one week for every year of service is mandatory.
Even outside of legal requirements, offering a thoughtful severance package can:
- Lower legal risks
- Protect your reputation
- Make the transition smoother for everyone involved
Typical support includes:
- Salary continuation
- Extension of healthcare coverage
- Outplacement services
What about the employees who stay?
Survivor’s guilt is real. Layoffs affect everyone, not just the people leaving.
Management should:
- Communicate next steps clearly
- Reassure the team (especially high performers)
- Offer support for the emotional fallout
- Keep listening — use periodic check-ins, surveys, and have open-door policies
If layoffs are on your radar, don’t just think about compliance. Think about credibility. Think about how your team, past and present, will talk about your leadership when the dust settles.
Handled well, a tough moment can strengthen your culture. Handled poorly… you know the risks.
Want help reviewing your layoff plan or WARN compliance?
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This blog is for informational purposes only. It is not offered as legal advice, nor is it intended to create an attorney-client relationship with any reader. Consult with competent local employment counsel to determine how the matters addressed here may affect you.
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