COVID-19 Resources

Professional Service Agreement

Beware of Legal Risks When Hiring After Layoffs

When poor business conditions result in reductions in the workforce, there eventually comes a time when business improves and it is necessary to hire additional staff. Businesses hiring after layoffs should take steps to shield themselves from legal risks, both internal and external.

Internal Risks

Employers hiring after layoffs may be at risk of being sued for unlawful wage disparities by employees who stayed with the company through tough times. If new employees are paid more than workers who accepted pay cuts and additional work, there might be not just lower morale but also a claim of disparate treatment.

If there are differences in pay, the employer should be able to justify the differences. This may mean preparing job descriptions for the new hires reflecting the added responsibilities that distinguish their positions from the existing positions. If more will be expected of the new hires, that should be explicit in the new hires' job descriptions. Also, consideration should be given to whether some of the current employees are qualified to fill these new positions.

External Risks

External risks include the potential of a lawsuit based on how the new positions are advertised. If an employer posts a job ad only on the Internet, there might be a disparate impact claim brought by older workers or minorities who typically have less access to computer resources.

Those workers who were laid off may have an expectation that there will be a hiring preference for them. Employers need to clearly communicate how the recall or rehire process will be implemented.

Finally, interviewers need to familiarize themselves with questions that are permitted and those that are prohibited in the interview process, keeping in the mind the changes in employment laws such as the Americans with Disabilities Act (ADA).

SESCO Management Consultants is available to assist with hiring issues. You may contact us by phone at 423-764-4127 or by email at .