Temporary Termination: A Layoff Law Blueprint for the COVID Era

Abstract

This paper, prepared for a forthcoming Washington University of Saint Louis symposium on COVID-19, responds to the pandemic-induced unemployment crisis with a strategy for addressing temporary, economic-based terminations. Workplace regulation has long neglected workers separated for economic reasons, leaving the problem to the social welfare system, which is now overwhelmed by record numbers of unemployment applicants. In prior articles, I have drawn on comparative law models to argue for laws requiring employers to provide mandatory advance notice of termination or commensurate severance pay to laid off workers. Building on that work, and drawing specifically on Canadian law, this paper argues for recognizing “temporary separation” as a distinct legal status that confers individual rights to affected employees within the context of a comprehensive law of layoffs. Under this system, all employees terminated for economic reasons would be entitled to advance notice or its equivalent in severance pay. However, employers could suspend such obligations by classifying workers as temporarily separated. Affected individuals would retain their status as employees, obtain fast-track access to unemployment benefits, and enjoy a right to reinstatement when their jobs resume. Should the employer choose not to recall a temporarily separated worker, or if the lack of work becomes permanent, the employer would be required to fulfill its deferred severance obligation.

Keywords: Labor, Employment, Contracts, COVID-19

JEL Classification: K12,K31