When layoffs arrive 'quickly and less thoughtfully'

Layoffs can take two or three months when orchestrated well, but pressure to move quickly in a weakening economy can leave companies at odds with employees and at greater risk of giving improper notice, The Wall Street Journal reported Nov. 28. 


"If the economic outlook changes dramatically and very fast, then cuts have to come more quickly and less thoughtfully," Andy Challenger, senior vice president at Challenger, Gray & Christmas, told WSJ. "That's when it can go poorly."

The federal Worker Adjustment and Retraining Notification Act, or WARN Act, requires companies with 100 or more employees to give at least 60 days' notice before layoffs occur if they affect at least 50 full-time employees at a single location or at least a third of workers at one site when there are fewer staff cuts. 

Given that the rate of layoffs will likely increase as the economy weakens, so too will the number of lawsuits alleging employer WARN Act violations, David Santacroce, professor with University of Michigan Law, told WSJ. "There seems little reason to believe that will change."  

Unemployment claims are still historically low in the U.S., but trending up from the month and year prior. Employers announced 33,843 job cuts in October, up 13 percent from September and up 48 percent from the same month a year prior, according to Challenger, Gray & Christmas.

As health systems find themselves in untenable financial positions and looming risk of an economic recession, job cuts and layoffs in hospitals and health systems are increasingly likely. In a report released Oct. 18 from Kaufman Hall based on response from 86 health system leaders, 46 percent said labor costs are the largest opportunity for cost reduction — up significantly from the 17 percent of leaders who said the same last year.

Job cuts at hospitals may seem counterintuitive given the nation's widely known shortages of healthcare workers. But as hospitals weather one of their most financially difficult years, some are reducing their administrative staff, eliminating vacant jobs and reorganizing or shrinking their executive teams to curb costs.  

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