Downsizing

When economic reasons demand that you eliminate an employee’s job, either temporarily or permanently, you automatically have a sound business reason for terminating the employee. Few courts will question your judgment in this regard. But if you lay off some, but not all, of your workers, be sure that your selection process does not discriminate on the basis of age, sex or race, or violate some other public policy.

Laying people off in order of seniority (that is, keeping the people with the greatest length of service) is most likely to be seen as fair by your employees. It’s also the easiest to defend in court. Generally, if you use this method, you won't have to provide any other evidence as to why certain workers were chosen for layoff.

Given the choice, however, most employers would prefer to keep their best workers and lay off those who are less productive, regardless of seniority. If you have done regular performance reviews, you can eliminate the positions of those employees whose performance has been documented as less than satisfactory. If there is no documentation, you can't eliminate a person’s position for purely merit reasons without facing possible liability.

If you have to lay off one of two or more equally qualified employees, you should be prepared to show that the "downsized" workers reflect the demographic mix (race, gender, and age) of your workforce as much as possible.