Byline: ON THE JOB by Bureau of Labor and Industries For The Register-Guard

Question: Business has been a little sluggish lately, and we need to lay off a couple of people. Since I've never laid off anyone before, I don't know quite how to do it. What are the legal requirements?

Answer: As with most other employment actions, you are free to adopt your own procedure for laying off employees. Oregon is an employment at-will state, which means you can fire or lay off anyone at any time for any reason, as long as it's not an illegal reason. Thus, you are generally free to choose both your criteria for layoffs and the procedure you will follow.

But there are exceptions to employment at will, and you should see whether you might fall into any of them.

For example, both verbal and written contracts are at-will exemptions. So if you have an employment contract or a collective bargaining agreement that sets out your layoff procedures, you must, of course, honor that.

You also must make sure that your selection criteria do not discriminate based upon a category protected by state and federal discrimination laws. You couldn't say, for example, that you will lay off the older employees first, or that people who have filed workers' compensation claims have less seniority than others.

So what criteria should you use in making the layoff decision? Many employers consider seniority in selecting individuals for layoff, but there's no requirement that you do so. You could make your layoff decision based on attendance records, job skills, productivity and/or the necessity for particular positions relative to others.

Remember that when you decide what your layoff criteria and procedures are going to be, they are likely to become your "policy" by default. And unless you do something to change that, your employees probably will expect you to use the same standards the next time there's a layoff. In other words, it's possible that you will have created a different kind of contract, one that is "implied" from your past practices.

However, you can prevent that by having the appropriate "at will" language in your written policy. If you directly state in your policy that you reserve the right to employ at will, that would be your defense if an employee tried to bring a contract action against you.

The at-will language must be prominently displayed and carefully drafted, so it is crucial that you get legal advice here.

Question: When I do lay off these employees, when do I have to pay them their final paycheck?

Answer: It depends. If the layoff is temporary - meaning it's certain that you will recall your employees within 35 days - then you can consider them "continuing employees" and you will not have to pay them until the next regular payday. But if it's not certain that they will return within 35 days, then you must consider the layoff a discharge for purposes of Oregon wage and hour laws. That means that the employees' paychecks must be available by the end of the next business day following the layoff.

Question: One of my employees says that I'm required to give him severance pay when I lay him off. Is that true?

Answer: No. While some employers offer this kind of severance benefit, the wage laws don't require severance pay at all. Just like vacation pay, sick leave, holidays and health insurance, severance pay is a fringe benefit and you have no inherent obligation to provide it.

Question: I laid off an employee a few months ago because of a lack of work. Business has picked up since then and ordinarily I would call that employee and invite him back to his job. But I've had the opportunity to examine his work more carefully in his absence and I'm not at all happy with it. Can I hire someone else to take his place and just make his layoff "permanent'?

Answer: That depends. If your policy says you are an at-will employer and your employee has no reason to believe that you are planning to call him back, then you would be free not to invite him back to his job.

However, you said in your question that "ordinarily" you would call the employee back. If you routinely lay off and recall the same employees, your practice may suggest to this individual that he has some sort of implied job guarantee once business picks up. You should probably talk to your attorney here as well. And in the future, be very clear with your employees that being laid off doesn't necessarily mean they have any future job guarantee with you.

On The Job is written by the staff of the Oregon Bureau of Labor and Industries. Contact BOLI at (503) 731-4200, or BOLI, 800 N.E. Oregon St., No. 32, Portland, OR 97232.