By Hillary Pettegrew, Esq.
Many colleges and universities are being forced to reduce staff to stay afloat. But layoffs carry risks if they are rushed or poorly planned. These risks include lawsuits, reputational damage, and broken trust with employees and the broader community.
Why this Matters
Even in crisis, institutions are bound by laws, contracts, and collective bargaining agreements. Layoffs handled without care invite legal action and long-lasting cultural fallout. Leaders who take the time to plan with legal, financial, and human considerations in view can help protect their institutions and treat employees fairly.
"Layoffs handled without care invite legal action and long-lasting cultural fallout."
STEP 1: CALL COUNSEL FIRST
Skipping legal review can be a costly mistake. Before moving layoff plans forward, consult experienced employment counsel—ideally someone who has guided schools through reductions in force.
Key areas to cover:
Federal, state, and local employment laws, especially those prohibiting discrimination
Wage-and-hour rules under the Fair Labor Standards Act (FLSA) and state equivalents
Union rules under the National Labor Relations Act (NLRA)
Severance, retirement, and benefits under the Employee Retirement Income Security Act (ERISA) or state systems
Immigration laws that may affect employees on visas
The Worker Adjustment and Retraining Notification (WARN) Act and state equivalents, which may require written notice before mass layoffs
A thorough legal check also means reviewing faculty handbooks, employee contracts, discrimination policies, severance policies, and appeal rights. These documents often dictate the process; and if layoffs proceed in violation of laws or a school’s policies, terminated employees are likely to sue.
STEP 2: TEST THE ALTERNATIVES
Layoffs should never be a first resort. Stakeholders want to know you tried other options first.
Common alternatives include:
Salary freezes or temporary reductions
Hiring freezes and leaving vacant positions unfilled
Reassignments, reduced hours, or job sharing
Voluntary unpaid leave
Suspending employer retirement contributions
Some institutions offer voluntary separation or early retirement incentive programs. These require careful design, including setting criteria, calculating severance formulas, and ensuring funding is in place.
Furloughs are another option, but they must be structured in compliance with federal and state wage laws.
Document every option the institution considered and the reasons why options were rejected. That record demonstrates fairness and strengthens your defense if layoffs face scrutiny.
"Layoffs are not just financial events; they are cultural shocks. How the news is shared will shape perceptions long after the budget crisis passes."
STEP 3: BUILD THE RIGHT TEAM
Layoffs affect every corner of a campus. Establish a planning team that includes senior representatives from:
Administration
Finance
Human Resources
Risk Management
Academic Affairs (if faculty are involved)
Communications or public relations
Union leadership (if applicable)
This team, with legal counsel at the table, should develop a written layoff plan that includes:
Business justification (for example, reducing operating costs by 10%)
Objectives (consolidating departments or streamlining functions)
Scope (how many positions or what percentage)
Time frame
Selection criteria that are neutral, non-discriminatory, and transparent
Clear criteria reduce claims of unfairness. Standard measures include job category, length of service, skills needed, or performance evaluations. Vet all for potential unintended effects on specific employee groups.
STEP 4: LEAD THE COMMUNICATION
Layoffs are not just financial events; they are cultural shocks. How the news is shared will shape perceptions long after the budget crisis passes.
Develop a comprehensive communication plan for employees, students, alumni, donors, and media.
Draft a written summary explaining the financial situation and why layoffs are necessary.
Prepare a social media strategy for addressing negative posts.
Identify credible spokespeople who are senior enough to carry authority and direct enough to build trust.
Train managers tasked with delivering news. Careless words such as “I didn’t agree with this decision” can spark mistrust and even legal action. Provide scripts, FAQs, and coaching to help them be compassionate yet clear.
STEP 5: HANDLE TERMINATIONS WITH CARE
Selecting and notifying individual employees is the most painful part. To manage it responsibly:
Ensure legal counsel reviews the list of termination candidates.
Respect seniority or “bumping” rights in union contracts.
Consider visa implications for foreign-born employees.
If offering severance in exchange for waivers, follow the strict requirements of the Age Discrimination in Employment Act (ADEA).
Termination meetings should be planned and consistent:
Delivered by the immediate supervisor, with HR present
Supported by written documentation, including COBRA information, unemployment guidance, and career counseling options
Managed with compassion and in a professional tone, giving clear reasons and no off-the-cuff remarks.
If meetings are virtual, ensure the platforms are secure and that the managers are well prepared.
STEP 6: SECURE THE PROCESS
Beyond people, institutions need a clean process for collecting property—laptops, phones, keys, IDs, and parking passes. Alert security teams if you anticipate any risk of aggression.
At the same time, leaders must care for those who remain. Survivors often feel demoralized and burdened with added duties. Acknowledge the strain. Offering support, even small gestures like recognition and communication, helps protect morale and retention.
The bottom line: Layoffs may be unavoidable in today’s financial climate. But schools can control how they happen. Incorporating legal checks—thorough planning, transparent communication, and humane treatment—will help reduce risk, preserve culture, and protect your school so it can weather the storm with integrity.
Adapted from a United Educators’1 Checklist: Employee Layoffs Driven by Financial Pressure by Hillary Pettegrew, Esq., June 2021
https://www.ue.org/risk-management/