If you’re like other companies that are scrambling to stay afloat in this economy, you might be considering downsizing. Letting someone go is always a difficult decision, so make sure you are acting rationally and intelligently when you’re forced to downsize. Layoffs create risks for businesses. Employees may view a lawsuit as a way to minimize the impact on their personal finances. The savings you’ll generate on your payroll and benefits costs may be negated by legal costs. Follow these guidelines to make sound decisions and avoid the costs of litigation:

When employees leave a company, managers and HR professionals should follow a process to ensure the protection of the company’s intellectual property. Any confidentiality agreements that were signed at the time of hire should be presented to departing employees, and they should be reminded verbally of their obligations to maintain the confidentiality of records, electronic files, and information learned while working at the company.

A recent poll conducted by the Society for Human Resources Management reveals what companies are offering to laid off employees. Survey respondents were asked to select their top three most likely actions.

Severance Pay
The law generally does not require you to provide severance pay to departing employees. However, many employers do agree to provide such payments as part of company policy and in exchange for a release of claims against the company.

When planning a layoff, make sure you check both federal and state laws to ensure compliance with WARN. New York State recently passed its own WARN Act, and may other states have done the same. New York’s WARN Act, like many other states, is far more expansive than the Federal WARN Act. So before you terminate, take the time to review both the Federal Act and the laws in your state so you don’t mistakenly violate any labor laws.