In January 2026, employer layoff plans hit their highest January total since the tail end of the 2008 global financial crisis, according to the outplacement firm Challenger, Gray and Christmas. United States employers announced 108,435 layoffs for January 2026, up 118% from January 2025. Whatever unpredictable factors—including continued economic uncertainties, the rise of Artificial Intelligence (“AI”), and unusually severe weather across much of the nation—may be to blame, employers need to have game plans in place in order to best administer these layoffs. Such game plans should not only include compliance with evolving federal and state employment laws, but also “best practices” in order to alleviate some of the “separation anxiety” that naturally comes with administering mass layoffs.

Summary of Applicable Federal and State Employment Laws

            At minimum, employers should ensure that they are complying with all applicable federal and state employment laws when they are administering mass layoffs (or any type of employee layoff). While this list is non-exhaustive, several federal statutes of which employers should be aware include the Worker Adjustment and Retraining Notification Act (“WARN”), the Consolidated Omnibus Benefits Reconciliation Act (“COBRA”), and the Older Workers Benefits Protection Act (“OWBPA”) within the Age Discrimination in Employment Act (“ADEA”).

            The WARN Act requires employers with 100 or more full-time employees to provide any affected employees, or their representatives, with at least 60 days’ written notice of mass layoffs or plant closings, defined as hitting certain employment loss thresholds. COBRA requires, among other things, that employers with 20 or more employees notify their healthcare plan administrators of a qualifying event, such as a mass layoff, within 30 days of the event. After the administrator receives notice of the qualifying event, it then has 14 days to notify the employees of their rights to continuing healthcare coverage.

            If an employer with 20 or more employees offers an employee age 40 or older a severance agreement containing a release of age-related claims following a single-employee layoff, the ADEA requires that the employer provide the employee at least 21 days to consider the severance agreement, as well as an additional seven days following execution to revoke the agreement. For group layoffs, defined as layoffs affecting two or more employees, the OWBPA requires an employer to provide employees with at least 45 days to consider the severance agreement, along with an additional seven days following execution to revoke it. The OWBPA also requires the employer to provide employees subject to the layoffs with the following information: (1) the decisional unit or department that is being affected by the layoff and severance program, (2) eligibility factors for the layoff and severance program, (3) the time at which the layoff is taking place, (4) the job titles and ages of all individual employees within the department being laid off and eligible for severance, and (5) the job titles and ages of all individual employees within the department who are not being laid off or are not eligible for severance.

            In addition to these federal laws, many states have “mini-WARN” or “mini-COBRA” statutes and additional notification requirements that employers should be aware of. For example, Minnesota requires a 15-day revocation period, rather than a seven-day revocation period, which must be provided to all laid-off employees regardless of age.

            Many states also have strict requirements regarding when and how an employee must receive their last paycheck. For instance, if a Massachusetts employer fails to pay an employee all of their guaranteed compensation on the date of the employee’s termination, the employer faces liability for treble damages, costs, and attorneys’ fees. Such “guaranteed” compensation includes not only all wages earned by the employee, but also any guaranteed bonuses and any accrued, but unused, vacation time or personal time off (“PTO”). These provisions apply regardless of the employer’s size or the reason for the employer’s failure to pay the guaranteed wages on time. Many states, such as Pennsylvania and Massachusetts, also require employers to provide specific, written information to employees about how to apply for unemployment benefits.

            Because these statutes are complex and applicable state laws contain additional and/or varying requirements, employers should proactively contact their attorney to ensure compliance when considering layoffs.

Additional Best Practices

            In addition to following the above legal requirements, employers should implement the following “best practices” when administering layoffs when feasible.

  • Contact Counsel to Ensure Compliance with the WARN Act: Because the WARN Act is technically complex, employers should contact counsel to ensure that they are properly counting separations. For instance, employers subject to the WARN Act include those with 100 or more employees, excluding part-time employees; or those with 100 or more employees who, in the aggregate, work at least 4,000 hours per week, excluding overtime. Counsel may also be able to assist employers in “staggering” any planned layoffs in order to avoid WARN’s 60-day notice period.
  • Consider Providing Employees With A Small Severance, in Exchange for a Release of Claims: Although no federal or state law requires an employer to provide a terminated employee with any type of severance, offering terminated employees a small severance payment (i.e., the equivalent of 2–4 weeks’ pay) as consideration for a release of claims can help them avoid potential employee lawsuits. This is particularly helpful in avoiding costly class action claims after multiple employees have been terminated or laid off.
  • Provide Employees Written Notice of Their Separation: While written notice is generally not a requirement under most circumstances, employers should strongly consider sending employees a brief “separation letter.” The letter should include: (1) the date of the termination or layoff,  (2) the date the employee can expect their final paycheck, (3) Human Resources contact information, (4) a brief explanation of COBRA and unemployment benefits, and (5) a thank-you for the employee’s service. These separation letters go a long way in not only providing employees with a list of helpful resources, but also in fostering employee goodwill. These letters will also be valuable pieces of evidence in demonstrating legal compliance if an employee decides to file a lawsuit as a result of their termination.
  • Consider Streamlining Notification, Wage Payment, and Other Requirements to Comply with the Strictest State Laws: As noted above, states have differing requirements for how to handle employment separations. Because mass layoffs often affect offices and employees across state lines, employers should consider implementing blanket practices that comply with the strictest state law requirements being affected, i.e., paying employees their guaranteed wages on their last day of work, etc., even though not all of the affected states may have this requirement. Complying the strictest applicable state laws will not only streamline payroll processes and the processes for drafting severance agreements and separation letters, but also help combat any former employees’ complaints of discrimination.

            As mass layoffs remain a reality, employers need to remain proactive. Work closely with your legal counsel and Human Resources representatives to develop best practices, stay on top of evolving state and federal law, and avoid pitfalls that will cause “separation anxiety” as an employer.