Reducing Risk During Layoffs

Reducing Risk During Layoffs (downloadable pdf) by the Nonprofit Risk Management Center via the Minnesota Council of Nonprofits. When downsizing is necessary, nonprofits can reduce their liability in the process of laying off one employee or several paid staff.


Consider All Options

When economics dictate that a staff position be cut, it’s critical that the nonprofit have a well­supported business reason to select which employees are to be terminated. The risk is that you’ll be vulnerable to claims that discrimination played a part in deciding who was to be let go. Whenever a nonprofit is considering layoffs, alternatives should be also considered. Can the objectives of the reduction­in­force (RIF) be accomplished through a hiring freeze, a salary freeze, reducing hours, or a status change from full­time to part­time? Document that you’ve considered alternatives to the RIF. Take the time to spell out in a written memorandum to the board, the business reasons for the necessary layoffs, as well as your justification for those employees selected for termination.

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