Employers reminded of RIF rules as layoff surge

U.S. companies announced the most job cuts for October 2025 in more than 20 years, according to data from Challenger, Gray & Christmas Inc.

More than 153,000 workers were affected by reductions-in-force (RIFs), a 175% increase over October 2024 and an 183% increase over September 2025.

Analysts suggest that the increase is linked to the adoption of artificial intelligence (AI), combined with broader economic uncertainty and 2026 budget planning.

While companies may feel pressure to trim costs or restructure roles due to automation and evolving skill needs, RIFs remain one of the most legally complex actions an employer can take.

Employers must navigate multi-layered compliance obligations, including:

• Federal, state, and local notice rules: The federal Worker Adjustment and Retraining Notification (WARN) Act generally requires 60 days’ advance notice of a mass layoff or plant closing, and many states have “mini-WARN” laws with lower thresholds, longer notice periods, or mandatory severance pay.
• Anti-discrimination risks: Layoff selections that disproportionately impact protected groups, including older workers, may lead to claims under both federal and state law, even as federal enforcement priorities shift.
• Older-worker protections: The Age Discrimination in Employment Act and Older Workers Benefit Protection Act imposes special rules if a RIF affects employees aged 40 or older. Employees must have at least 45 days to consider a severance agreement, plus seven days to revoke acceptance. Additional RIF rationales and disclosures are also required.
• Voluntary separation options: Incentive programs that encourage employees to resign can reduce legal exposure and soften the impact on morale, but these require careful structuring and compliance review.

Meanwhile, state and federal players are moving to regulate AI-related workforce decisions.

For example, in March 2025, New York became the first state to require employers to disclose when layoffs are driven by AI-based workforce optimization. A similar bill, the AI-Related Job Impacts Clarity Act, is under consideration in Congress.

Before initiating workforce changes, employers should audit selection criteria, review jurisdiction-specific notice and severance rules, and plan communications and documentation well in advance.