Dealing with Layoff and Recall in an Unpredictable Economy

We received a question relating to employment in the economic downturn.  Is it legal in Pennsylvania to layoff an employee for lack of work, and a month later, replace that laid off employee with someone new.  I thought this would be a good topic to address in our blog. Generally, in the absence of a collective bargaining agreement or employment agreement providing for limitations on termination of employment, such an action on the part of an employer does not violate the law.

However, further inquiry can be made as to the true motive of the layoff.  Was the employee terminated because of his/her membership in a class protected under Pennsylvania and federal discrimination statutes?  Is she being replaced with someone not a member of the same protected class?  For example, replacement by an individual under the age of 40 can establish a preliminary claim for age discrimination if the employee replaced is over 40.

While the employer’s proffered reason for termination, economic necessity, can appear to be pretextual if the employer is hiring a replacement soon after the layoff, the employer may have a logical reason for the new hire if it has secured new orders or new business.  And absent an agreement to the contrary, the employer has no obligation to recall laid off employees if business does turn around.