How to plan a documented reduction in force
A reduction in force starts with a clear business reason. Identify the work that must continue, the structure needed to support it, and the positions affected. Then review proposed selections for potential adverse impact, including the four-fifths screening measure where appropriate. Group separation agreements involving employees age 40 or older may require a 45-day consideration period under the OWBPA. Covered employers must also review federal WARN notice requirements, including the 60-day notice period, and applicable state requirements.
About this note
Published Reviewed
Use this note to organize the business rationale, employee selection, impact review, separation agreements, and notice requirements for a reduction in force. The guidance draws on the EEOC, the OWBPA, and federal WARN rules for US employers. State laws may establish additional notice and separation requirements.
At a glance
Begin with the business reason, establish selection criteria before evaluating employees, and review the proposed selections before making final decisions. The OWBPA requires at least 45 days to consider a covered group-program age-discrimination waiver. Federal WARN requires at least 60 calendar days of notice for covered plant closings and mass layoffs.
- 80%
- The four-fifths screening threshold of 80% used to identify potential adverse impact in employee selection rates.
- 45 days
- Minimum consideration time for an age-40-and-over release in a group termination program, with 7 days to revoke after signing. Set by the OWBPA.
- 60 days
- Federal WARN notice period for covered plant closings and mass layoffs, subject to applicable coverage requirements and exceptions.
- Business reason Step 1
- Document why the reduction is needed, the date of the decision, and the alternatives considered before reviewing individual employees.
- Selection criteria Step 2
- Establish job-related criteria and apply them consistently within each defined selection group.
- Selection impact review Step 3
- Divide each group’s retention rate by the highest group’s rate. Review results below the 80% four-fifths screening threshold before finalizing selections.
- Separation agreements Step 4
- For anyone 40 or over, meet the OWBPA terms: 21 days to consider, 45 in a group program, and 7 days to revoke.
- Notice requirements Step 5
- Check federal WARN and applicable state notice requirements before confirming the reduction timeline.
Establish the business reason
Document the financial or operational reason for the reduction. Identify the functions affected and the structure the business needs going forward. Record the alternatives considered, such as a hiring freeze, attrition, reduced hours, or a voluntary separation program. Keep the financial and operational records that support the proposed reduction.
RIF and Restructure Planning Kit | $129
Organize the business rationale, selection criteria, adverse impact review across age, sex, and race or ethnicity, and documentation for the planning process.
Choose and document selection criteria
Agree on and approve the selection criteria before evaluating employees. Choose criteria that are job-related, measurable, and supported by records. Examples include the skills needed after the reduction, overlapping roles, and documented performance. Seniority may also be considered where lawful and consistent with applicable agreements. Managers must apply the approved, documented, job-related criteria consistently within the defined decisional unit. Record the reason for each exception when it occurs.
Use documented performance information when it is relevant to the future work. Review the underlying performance records for completeness and consistency before assigning ratings. Base each rating on reliable performance records and observable results. Keep protected characteristics, protected leave, accommodations, and protected activity separate from selection decisions.
Review the proposed selections
Use the approved criteria to prepare the proposed layoff list. Review the proposed layoff list for potential adverse impact before making final decisions, consistent with the EEOC's guidance for small employers. Compare each group’s share of the list against its share of the workforce. If one group is affected at a clearly higher rate, consider whether adjusted criteria would still meet the business need.
The federal Uniform Guidelines provide the four-fifths rule as a common initial screening method. Calculate each group’s retention rate and divide it by the highest group’s rate. Flag results below 80% for further review. The free Adverse Impact Calculator lets you complete the four-fifths calculation in your browser. See the four-fifths reference note for help interpreting a flagged result. The Guidelines identify two important considerations. Small groups can produce ratios that are difficult to interpret. With larger groups, a statistically significant difference may warrant review even when the ratio meets the 80% threshold. Consider additional statistical analysis for larger or more complex reductions. Complete the impact review and document any adjustments before finalizing the proposed selections.
Prepare releases for employees age 40 and older
A severance agreement that includes a release of claims must meet the applicable waiver requirements. For an employee age 40 or older releasing age-discrimination claims, the OWBPA requires the waiver to be knowing and voluntary. A valid OWBPA waiver must use plain language, specifically reference ADEA rights, and advise the employee in writing to consult an attorney. The employee must receive consideration beyond what the employee is already entitled to receive. The employee must have at least 21 days to consider an individual agreement or 45 days in a covered group program. After signing, the employee must have a 7-day revocation period that cannot be shortened or waived.
For covered group programs, the required written disclosures must be provided when the consideration period begins. The disclosures describe the decisional unit, eligibility factors, and applicable time limits. They identify the job titles and ages of employees eligible or selected and the ages of employees in the same job classifications or units who were not eligible or selected. Material changes to the final offer restart the consideration period unless the parties agree otherwise. A release cannot waive future claims. It also cannot prevent an employee from filing an EEOC charge or participating in an investigation. Have employment counsel review the agreements and required disclosures before distributing them to employees. The OWBPA release requirements note includes a detailed checklist.
Check the notice thresholds
Federal WARN requires employers with 100 or more employees to give at least 60 calendar days of written notice. The notice requirement applies before a covered plant closing or mass layoff. One trigger is a plant closing involving 50 or more employment losses at a single site. Another is a mass layoff of 50 to 499 employees representing at least 33% of the active workforce at the site. A third threshold is 500 or more covered employment losses at a single site, regardless of the share of the workforce. Separate smaller layoffs within any 90-day window aggregate toward the thresholds unless each has a separate and distinct cause. Consider related employment losses together. State mini-WARN laws may impose lower coverage thresholds or longer notice periods, so check applicable state requirements alongside federal WARN. See the WARN Act note for coverage definitions, notice requirements, and exceptions.
Review the plan before communicating
Before finalizing selections, confirm the timeline, consistent application of the criteria, and supporting records. Review proposed selections involving recent protected leave, accommodation requests, or employee complaints with particular care. Confirm that managers used consistent criteria and documented exceptions, and that the proposed organizational structure supports the business rationale. Document the business reason for each eliminated position.
Review flagged results and selections involving protected leave or other sensitive circumstances with employment counsel. Document the business basis for the final selection decisions and complete the legal and HR review before communicating them.
Research and sources
6 citations checked, newest check 13 October 2026
- EEOC, Avoiding Discrimination in Layoffs or Reductions in Force. EEOC guidance for employers. Identify the business reason, apply layoff criteria, and list who would be affected. Compare group impact, and adjust criteria where a group is disproportionately affected while still meeting the business need. eeoc.gov, layoffs and RIF guidance
- Uniform Guidelines on Employee Selection Procedures, 29 CFR 1607.4(D). Establishes the four-fifths screening method, under which a selection rate below 80% of the highest group's rate is generally regarded by federal enforcement agencies as evidence of adverse impact. The regulation also discusses small sample sizes and statistical significance. ecfr.gov, 29 CFR 1607.4
- EEOC, Questions and Answers on the Uniform Guidelines. EEOC explanation of the screening method. It carries the four step method, the 80% rule of thumb, and the general 2% analysis floor. Explains that the rule provides an initial inference rather than a final determination of unlawful discrimination. eeoc.gov, UGESP Q and A
- Waivers of rights and claims under the ADEA, 29 CFR 1625.22. The OWBPA regulation establishes the knowing and voluntary waiver requirements, including the 21-day and 45-day consideration periods. It carries the 7 day revocation that cannot be shortened, the restart on material changes, and the group-program informational disclosure. eeoc.gov, 29 CFR 1625.22
- Older Workers Benefit Protection Act of 1990, Title II. The statute amending ADEA section 7(f). Establishes the statutory waiver requirements. Those include the group disclosure of covered units, eligibility factors, and time limits. They include the job titles and ages of individuals eligible or selected, and the ages of those in the same classification or unit who were not. eeoc.gov, OWBPA text
- U.S. Department of Labor, Plant Closings and Layoffs (WARN). Explains federal WARN employer coverage, the 60-day notice period, plant closing and mass layoff thresholds, and required notice recipients. dol.gov, WARN overview
Common questions
What makes a reduction in force selection well documented?
A well-documented reduction starts with the business reason and objective selection criteria, both set before identifying employees for separation, followed by an adverse impact review while adjustments are still possible. Apply the OWBPA waiver requirements for employees age 40 or older and confirm WARN notice obligations before setting separation dates.
How can performance factor into selection?
Performance can be one selection factor when it is relevant, documented, and applied consistently. Compare proposed performance ratings with existing reviews and other documented results. Use existing, reliable performance records and apply the same criteria across the decisional unit. Consider performance alongside the skills needed in the future organization and overlapping responsibilities.
How do I review a proposed layoff for adverse impact?
Apply the selection criteria to identify proposed separations. Then compare each group’s share of the proposed selections with its share of the workforce. If one group is affected at a clearly higher rate, ask whether adjusted criteria would still meet the business need. The four-fifths rule is the standard screen. It compares retention rates across groups against the highest rate. A result below 80% calls for further review before selections are finalized.
What does a group layoff release require for employees age 40 and older?
A release of age claims from anyone 40 or over must be knowing and voluntary under the OWBPA. The waiver must use plain language, specifically reference the ADEA, and advise the employee in writing to consult an attorney. The employee must receive consideration beyond existing entitlements and at least 45 days to consider the agreement in a covered group program, followed by 7 days to revoke after signing. Group programs also require a written disclosure. The disclosure identifies the decisional unit, eligibility factors, and applicable time limits. It also lists the job titles and ages of everyone eligible or selected, along with the ages of employees in the same job classification or unit who were not eligible or selected.
When does federal WARN notice apply?
The federal WARN Act covers employers with 100 or more employees. It requires 60 calendar days of written notice before a covered plant closing or mass layoff. One trigger is a closing affecting 50 or more at a single site. Another is a layoff of 50 to 499 that is at least 33% of the site. A third threshold is 500 or more covered employment losses at a single site, regardless of the percentage of the workforce affected. Smaller layoffs within any 90-day window aggregate toward the thresholds unless each has a separate and distinct cause. Many states also have stricter mini-WARN requirements.
Tools for the next step
Organize the business rationale, selection criteria, adverse impact review across age, sex, and race or ethnicity, and documentation for the planning process.
$129Compare group selection rates using the four-fifths screening method. Enter each group considered and kept, and see every rate, every ratio, and any group below the 80% line.
FreeEstimate separation expenses and projected savings before finalizing the plan. Include severance, benefits runout, and net savings by role and month. Use the results to support the financial rationale for the proposed reduction.
Free
See something that needs correcting? Send us a note.