November 09, 2022

Gerald Hathaway Discusses Layoff Considerations With The Hollywood Reporter

In “Elon Musk’s Mass Twitter Layoffs Spur Legal Headaches,” The Hollywood Reporter turned to labor and employment partner Gerald Hathaway for insight on best practices for layoffs.

Hathaway said that if Elon Musk’s losses claim is accurate, something had to be done, but he hopes other cost-saving measures were explored. “All layoffs are messy, and all involve moving targets,” Hathaway noted. “A badly implemented layoff can cost a company more than was expected to be saved. I suspect this layoff is not being badly implemented, the unusual public attention being paid to it notwithstanding.”

Hathaway also stated, “It is perfectly fine to place employees on paid leave during a Worker Adjustment and Retraining Notification (WARN) Act notice period. Compliance with WARN, even with a paid leave for 60 days, is much cheaper than noncompliance.”

Regarding the merger agreement Musk filed with the Securities and Exchange Commission (SEC), Hathaway explained that “there were no contractual rights created by such statements for the benefit of employees,” even though it’s unclear whether the SEC might take action if severance offers don’t meet that bar.

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