Showing Employees the “Back-Door,” a New Reduction in Force Strategy

Massive company layoffs have swept across the country in 2023. Companies in the tech industry—whose employment rates boomed during the global pandemic—are cutting jobs and conducting hiring freezes at an alarming rate.

All publicity is good publicity, as the saying goes. But that saying does not ring true when it comes to layoffs and the negative impact it can have on a company’s reputation and internal morale. To avoid the bad press of a layoff, companies have increasingly taken the easy way out by conducting so-called “back-door” layoffs.

A “back-door” layoff allows a company to take active steps to push its employees to quit while simultaneously achieving its goal of performing job cuts. Companies are utilizing a common tool of persuasion to convince employees that quitting was their own idea.

Employers are driving employees to quit by rolling back their remote work options, forcing employees to relocate, increasing performance demands, failing to offer cost of living raises amidst high inflation, and other not so subtle changes in job conditions in hopes of naturally decreasing the workforce.

On its face, a “back-door” layoff may sound more like a smart business decision rather than a tactic to avoid providing potential severance packages to laid-off employees. But a “back-door” layoff usually provides only a temporary fix. In the long-term, it decreases employees’ trust in a company’s ability to be transparent about its needs and goals. It can quickly backfire by resulting in challenges regarding employee retention.

Moreover, sudden changes in job conditions may be perceived as acts of targeted illegal employment discrimination. And just because an employee voluntarily resigns, they are not foreclosed from bringing a claim of “constructive discharge,” by alleging they only quit because of the conditions of the workplace. In the extreme cases, an employee may be able to support a constructive discharge allegation if their working conditions become so unreasonable that a reasonable person would have likewise resigned from their employment.

Carrying out a mass layoff to address overstaffing and financial distress can be an overwhelming process. Employers must consider its legal obligations under the Worker Adjustment and Retraining Notification Act, review payroll related laws, and make sure any severance agreements that are provided comply with applicable federal and state laws. As complicated as that process can be, being open and honest about the reasons for a reduction in force may very well be a safer legal option than this new “back-door” layoff trend.

For more information on how appropriately handle a layoff, please contact Jaycee Booth or another member of the Labor & Employment Practice Group.

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Associated People:

Jaycee Simon (Booth)

Practice Area:

Labor & Employment