Considering Layoffs? Weigh the Hidden Costs and Compliance Risks

If your organization is contemplating layoffs, it’s critical to approach the process with care and foresight. While reducing headcount can yield immediate savings in wages and benefits, it may also create unexpected costs and risks that offset those savings.

For instance, many employers now provide severance packages in exchange for employees signing a release of claims against the organization. While this can help mitigate legal exposure, it also cuts into projected savings.

Other financial and operational impacts may include:

• Higher unemployment insurance rates

• Time and resources required to “offboard” laid-off workers

• Decreased productivity among remaining staff

There are also legal obligations to consider. Depending on your size and location, your organization may be subject to federal or state notice requirements under laws such as the Worker Adjustment and Retraining Notification (WARN) Act. And don’t overlook compliance with COBRA continuation coverage rules for affected employees.

Layoffs are never simple — but they can be managed responsibly with proper planning.

Contact us to discuss strategies for minimizing risks, maintaining compliance, and managing the financial impact effectively.

About Bruce & Company, P.S.C.

Founded in 1976 by Gregory T. Bruce, Bruce & Company, P.S.C. is a full-service accounting firm proudly serving clients regionally, nationally, and globally, with our central office located in Madisonville, KY. For more than four decades, we’ve delivered trusted expertise in tax, financial planning, and auditing. Our knowledgeable team is dedicated to providing personalized service and practical solutions to help individuals and businesses achieve their financial goals. Contact us to learn more about how we can support you!