Layoff

An employer-initiated job loss driven by business conditions, not employee performance.

A layoff is when an employer eliminates a position or reduces its workforce for business reasons — cost cuts, restructuring, declining revenue, or a shift in strategy. Unlike a firing for cause, layoffs are not triggered by the employee's performance or conduct. This distinction matters legally: laid-off employees typically qualify for unemployment benefits, while those fired for cause often do not.

Layoffs can affect a single person or thousands simultaneously (a 'mass layoff' or 'reduction in force'). Companies with 100 or more employees are required under the federal WARN Act to provide at least 60 days' advance notice of mass layoffs affecting 50+ employees at a single site.

Layoff vs. Fired: Why It Matters

  • Unemployment eligibility — laid-off employees generally qualify; fired-for-cause employees often don't.
  • Severance — companies are more likely to offer it in a layoff, though it's rarely legally required.
  • References — a layoff is typically neutral; a termination for cause can follow you.
  • Non-compete enforcement — some states reduce enforceability when an employee is laid off.
  • Legal framing — if your employer calls it a 'restructuring' but it feels targeted, consult an employment attorney.

What to Expect When You're Laid Off

  • A formal meeting, often brief, with your manager and/or HR.
  • A severance offer, usually in exchange for signing a release of claims.
  • COBRA paperwork — you have 60 days to elect continuation coverage.
  • Final paycheck — timing depends on state law; accrued PTO may be included.
  • Outplacement services — larger companies often provide career coaching or resume assistance.

Before You Sign the Severance Agreement

Severance is typically offered in exchange for a release of all legal claims against the employer. Employees over 40 must be given at least 21 days to review an agreement and 7 days to revoke after signing under the Older Workers Benefit Protection Act. You are never required to sign on the spot. If you believe the layoff was discriminatory or retaliatory, consult an employment attorney before signing anything. Once you sign a valid release, you waive the right to sue.

WARN Act Rights

The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100+ employees to give 60 days' advance written notice before mass layoffs affecting 50 or more workers at a single site. If your employer violates the WARN Act, you may be entitled to back pay and benefits for up to 60 days. Some states have 'mini-WARN' laws with broader coverage and longer notice requirements.

Example

A company facing declining revenue announces a reduction in force, eliminating 12% of its workforce. Affected employees receive 8 weeks of severance, COBRA continuation information, and outplacement services.