Considerations for Rehiring Laid-Off Employees

Can you rehire a laid-off employee?

Yes. There are no laws prohibiting employers from rehiring laid-off employees. Rehiring a laid-off employee can save you time and money, since they are familiar with your business practices and additional resources won’t be needed to train them. However, rehiring a former employee does involve certain considerations, such as if the employee was disgruntled at the time of the layoff. A good rule before deciding whether to rehire a laid-off employee is to classify them as either “eligible for rehire” or “not eligible for rehire.”

“Classifying an employee as ineligible for rehire tends to be an individual determination based on the employee’s performance or conduct history, however, rather than a classification applied to employees affected by a mass layoff or reduction in force,” said Julia Judish, special counsel at Pillsbury Winthrop Shaw Pittman LLP.

Considerations before laying off and rehiring an employee

Whether you have to lay off employees due to restructuring or for reasons beyond your control (e.g., the coronavirus pandemic), there are three elements to consider if you intend to rehire staff.

Employee rehire availability

Many of your former employees will seek employment elsewhere after the layoff. In this case, your former employees may not be available to work for you when you are ready to rehire. Additionally, because of the layoff, they might not want to be rehired.

“To the extent employers can afford to keep trained and valued employees on the payroll rather than laying them off, that’s the best way to avoid a potential loss of talent and institutional knowledge,” said Judish.

Communication and incentives

The way you handle an employee layoff can play a major role in your ability to rehire talented employees. Clear, honest communication is key. Don’t make empty promises to employees that the layoff is only temporary and that you will rehire them once your business situation has improved. For employees you do rehire, consider adding incentives with your offer to return to work.

“If a temporary layoff is unavoidable, the employer should handle the layoff with clear communication, attempt to ease the impact on affected employees with separation packages, and, if possible, develop incentives for employees to return when their jobs reopen,” said Judish.

Costs vs. benefits

Reducing the size of your staff may be necessary for your company, but you should conduct a cost/benefit analysis, especially if you want to eventually bring your staff back.

According to Kara Govro, principal legal analyst at Mineral, employers weighing whether to conduct a layoff or furlough should consider the administrative work involved in terminating and then rehiring someone, as well as the possibility that the individual will not come back to work for your business and the loss that knowledge and experience can mean for your operation.

What is a temporary layoff?

According to Govro, a temporary layoff is when you “fully terminate an employee, but with the expectation that you will bring them back in the relatively near future, generally six months or less.” Companies may conduct temporary layoffs to save money, increase efficiency or restructure the organization.

A temporary layoff is different from a furlough, which is when an employee is still employed by the company, but is required to temporarily reduce their work hours or take unpaid leave.

As Govro stated earlier, a temporary layoff is a separation of employment. An employer may be required to treat a temporary layoff like any other type of termination of employment. For example, they may need to provide the employee with a notice of Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) rights, fulfill other legal notification requirements, or pay out accrued time off or wages.

However, there may be some extenuating circumstances, said Judish, with temporary layoffs, which may include the following: 

• The employer may hope to rehire the employee.
• Depending on the duration of the temporary layoff, the layoff may not count as the type of employment loss that triggers federal WARN Act notice requirements or state mini-WARN requirements.
• Severance packages may be structured such that severance benefits cease if the individual is rehired.
• Some statutory benefits, employee policies, and/or collective bargaining agreements may preserve seniority rights or other benefits if an employee is rehired after a temporary layoff.

Unless there is an existing agreement between the employer and the worker, an employer is not obligated to rehire a laid-off employee. However, if within six months of laying off employees you need to hire workers and you’d like to hire previous employees whom you’ve deemed as eligible for rehire, reach out to them to see if they are willing to work for you again.

Best practices for rehiring a laid-off employee

Rehiring a laid-off employee is similar to hiring a new employee in terms of human resources protocol, but you want to follow these three best practices:

1. Carefully consider the employee’s benefit rights.

Former employees may have unique rights stemming from their previous employee benefits. For example, their benefits may be enhanced through seniority credit for their prior employment period, or they may retain some statutory benefit rights that accrued from their prior employment. 

For example, in Washington, D.C, employees who are rehired within 12 months of being laid off are entitled to have their accrued sick leave time restored, according to Judish.

“Also, employees who have worked for their employer for 1,250 hours in the prior 12-month period and who have been employed by that employer for 12 months may be eligible for leave under the federal Family and Medical Leave Act, even if the 12 months of employment are not consecutive,” Judish said.

Assess applicable federal, state and local laws when making temporary layoff and rehiring decisions.

2. Require the employee to resign all employment documents.

You will want to have the rehired employee resign all of their employment acknowledgements, even if they only recently left the company. New employee signatures are required for all legal documents, except for Form I-9.

“For rehired employees with nonexpiring employment authorization who are rehired within three years of their prior separation from employment, employers may either complete a full I-9 form or complete only Section 3 of the prior I-9 form,” said Judish.

However, experts recommend employers have rehired employees complete all new paperwork (Form I-9 included).

“It won’t be worth the headache or the attorney’s fees to argue about whether their signature acknowledging receipt of the employee handbook was still meaningful after rehire for skimping on an additional signature,” warned Govro.

3. Communicate the changes.

Chances are that a few changes were made to your organization between the time the employee was laid off and rehired. Those changes, which might include new safety protocols or team structures, changes to the employee’s specific terms of employment (e.g., employee expectations, wages, benefits, work hours and reporting structure), must be clearly communicated to the employee.

Communicating these changes ensures you and the employee are clear about your expectations of them, and it gives the employee a chance to determine whether the company and position are still a good fit for them.

“If you called someone and offered them their old job back, but fail to mention a shift in hours, a reduction in pay or a significant change in management, that renewed employment relationship could go south very quickly,” said Govro.

Weighing the pros and cons of rehiring a laid off employee

There are benefits and drawbacks to bringing back a laid off employee once financial circumstances improve. On one hand, they’ll likely require less training, especially if they’re hired back for their old role. On the other hand, they may harbor some resentment that keeps their morale from ever fully recovering. Always consider the individual and your unique circumstances when making the decision whether to bring back a former employee. If you know them well enough and believe they’ll welcome the opportunity with open arms and a positive attitude, it may be the right move for your team.