Can we lay off a department and require reapplication?
Q. I recently read about an employer laying off an entire division and then making those employees reapply for newly reconfigured jobs in that division. This sounds like a good way to get rid of deadweight and lower our payroll. Are there any legal problems with this? Will those who don’t reapply still be eligible for unemployment compensation? — A.S., Pennsylvania
A. Laying off an entire division may limit the risk of claims from individual employees that they were singled out for discriminatory reasons. But they could still make such claims if, for instance, a majority of the laid off employees are in the same protected class. The key is to be able to demonstrate that there were legitimate business reasons for the restructuring.
Make sure the “newly configured jobs” are not just a restatement of the old jobs orchestrated to get rid of certain employees. Also, document the objective job-related reasons that you chose to restructure and for your subsequent decisions to rehire certain employees over others. You may have notice obligations under the Worker Adjustment and Retraining Notification (WARN) Act if you’re covered under the law and if 50 or more employees are affected.
To be eligible for unemployment compensation, an employee must be able and ready to return to work and should actively search for work. An employee who refuses to accept suitable work generally is not eligible for unemployment compensation. If all of the employees are told they will be rehired, then they would not be eligible for unemployment compensation if they decline to accept the new positions. If, as is more likely, individual employees may or may not be rehired, then they may well be eligible for unemployment compensation if they decide not to reapply.
