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3 legal hazards of laying off employees

As a business owner, nothing is more exciting than watching your enterprise grow and thrive. When your bottom line looks good and your clientele is solid, it may be necessary to hire new staff in order to continue meeting demands. Conversely, it is frustrating when you realize you need to downsize your staff to continue making a profit and keep your business afloat. 

Laying off employees is not just stressful. It is often a legal quagmire that business owners must navigate carefully. The following are three hazards you should avoid if you find yourself looking to downsize the staff of your company. Managing these risks can help the process go smoothly.

1. Lack of objectivity

When it comes to laying off employees, one of the most important considerations is objectivity. It is vital that you determine which positions to eliminate based on objective criteria. An employee whom you let go may argue that you discriminated or singled out him or her if you do not make these decisions based on financial criteria. Establish a clear set of objective criteria before you start layoffs.

2. No policy in place

It is wise to implement clear and objective criteria in the form of policies that govern your process. If you do not already have one, you should draft an official policy outlining the procedures to follow when layoffs take place. According to the Society of Human Resource Management, such a policy should indicate the conditions in which layoffs are permissible and the criteria which will determine selection.

3. Failure to document

One of the worst mistakes any business owner can make is failing to document important events and details. This is especially true when a situation involves an employee or termination. Layoffs are no exception. It is vital that you document every part of the process, including the criteria applied to select the positions that you decide to terminate.