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Laying Off or Firing Employees

When your business requires employees, you have to be prepared for lay-offs and terminations, as well as hiring and recruitment. As an employer, it is therefore wise to familiarize yourself beforehand with the basics of Pennsylvania employment law.


When termination of an employee seems like the only option, consider these questions before you take action:

  • Have you warned the employee about his or her inappropriate conduct or poor performance? Has the person had an opportunity to correct the situation?
  • Have you fired other employees for similar actions or performance deficiencies? Are you being fair?
  • Is the employee protected by employment discrimination laws? And have you treated employees who are not members of protected groups in the same way?
  • Are there other disciplinary actions you can take besides firing?

If you do choose to fire someone, be sure to conduct an exit interview in which you:

  • Explain why they are being fired
  • Handle administrative matters, such as the employee’s final paycheck
  • Document the conversation (as well as any of the above actions taken) for your records.

If you are having difficulty with an employee, keep track of what has transpired and the dates on which you spoke to the employee about their performance. After termination, if legal complications arise you will have a record of what happened.

Employers must pay fired employees any earned and unpaid compensation on or before their next regular payday.


It’s usually better for your business and the community to avoid layoffs whenever possible. Consider such options as offering reduced hours or wages to minimize the impact on workers and their families.

If layoffs are the only solution, you may have a legal obligation to let workers know in advance. More information about notification requirements as well as resources available to help employees transition is available on the closing a business page.

Worker Adjustment and Retraining Notification Act (WARN)

The City of Philadelphia’s Worker Adjustment and Retraining Notification Act (WARN) of 1985 requires the following:

Businesses with 50 or more employees shall submit a letter (impact statement) to the Philadelphia Director of Commerce specifying the anticipated economic impact associated with the impending and involuntary closure or relocation of their facilities.

WARN notices are triggered by a company that has 50+ employees, no matter the location, and operates a business in Philadelphia, no matter the size of the Philadelphia operation.

Included in all impact statements shall be the following:

  • The employer’s payroll
  • The number of employees affected by the action
  • The employer’s efforts to find suitable employment for those affected by the closure or relocation

Letters should be sent to:

Director of Commerce – RE: WARN
Philadelphia Department of Commerce
1515 Arch Street, 12th Floor
Philadelphia, PA 19102

When the Department of Commerce receives this letter, it will notify both Philadelphia Works and the Pennsylvania Regional Rapid Response Center of the impending impact.

Philadelphia Works (PhilaWorks) will then reach out to businesses subject to closure and their affected employees to offer its services.

Federal Requirements

The U.S. Dept. of Labor has its own Worker Adjustment and Retraining Notification (WARN) Act, which it enacted in 1988.

Learn more about the federal Worker Adjustment and Retraining Notification (WARN) Act.

Unemployment Compensation

Employees released from employment through no fault of their own or because conditions beyond their control forced them to quit , may be eligible for unemployment benefits. (An employee fired for just cause, such as stealing, cheating, ignoring safety cautions, or harassment or discrimination against co-workers, may not be eligible for unemployment compensation.)Employers are required to pay quarterly tax payments to contribute to the Unemployment Compensation Trust Fund, and in certain years, to withhold a portion of employee wages to be added to the fund. To assist your employees with collection of unemployment benefits, be sure to give them Form UC-1609P at the time of layoff.

Visit the Department of Labor & Industry Unemployment Compensation / Employer Services section for further information.

Whether or not you are liable for the payment of unemployment contributions, it is mandatory to maintain accurate, up-to-date employment and payroll records, cash books, journals, ledgers, and corporate minutes.


Employees who have been laid off or fired, and who were receiving healthcare coverage through your employee benefits program, may be covered under the COBRA or mini-COBRA laws that allow people the option to continue receiving medical coverage at their own expense for a certain period of time after termination. The American Recovery and Reinvestment Act of 2009 (ARRA) calls for a portion of COBRA medical coverage to be subsidized; learn more about this from the US Department of Labor.The COBRA law applies to employees of larger businesses (20 or more employees), while Mini-COBRA covers employees of smaller businesses and for a shorter period of time.

For questions about Mini-COBRA and COBRA coverage call the Pennsylvania Insurance Department at (877) 881-6388.