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Cutting and Recalling Staff in Times of Crisis

4 May 2020 4:59 AM | Christine Strak (Administrator)

As the coronavirus pandemic forced millions of Americans to suspend their normal daily activities and stay at home, huge swaths of the economy—airlines, hotels, restaurants, stores and even doctors’ offices—lost billions of dollars in income. The widespread commitment to public safety has had a catastrophic impact on the economy. As of late April, 30 million Americans had filed for unemployment benefits—the most dramatic rise in claims ever recorded. Virtually all of the job gains made in the decade since the Great Recession were erased in a matter of weeks.

Despite the passage of historic economic relief legislation that includes hundreds of billions of dollars in forgivable loans to businesses that keep their employees on payroll through the downturn, there’s mounting evidence that the job cuts are far from over. A research brief issued by the Federal Reserve Bank of St. Louis in late March estimated that more than 47 million Americans could be laid off by the end of the second quarter of 2020.

For many organizations, staff cuts provide a first line of defense against financial devastation. But business leaders contemplating layoffs, as well as when to recall employees, must work through myriad strategic considerations and navigate a complex tangle of federal and state laws governing pay, benefits and notice requirements. The decisions they make now will affect the ability of their businesses to recover as the economy rebounds.

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