The sudden worsening of the economy since last month’s terrorist attacks has forced some companies to make difficult and often hasty decisions about laying off large numbers of people at once.

That’s set off a boost in business among area law firms from companies wanting to know the proper procedures for trimming their operations and avoiding lawsuits alleging discrimination or wrongful termination.

“Normally, larger companies understand that raises the possibility of lawsuits,” said Lee Feldman, an employment discrimination lawyer in Los Angeles. “And some have pretty rigorous procedures for overseeing the layoff, trying to make sure there’s no discrimination. My concern is at this point these companies see this as such a dire emergency and something so unexpected, I’m not so sure they had time to prepare for this and take the precautions to weed out discriminatory choices.”

Notification requirement

One of the biggest hurdles is complying with the federal Worker Adjustment and Retraining Notification Act, or WARN Act. The law requires companies with 100 or more employees seeking a mass layoff or plant closure of 50 or more people to give their employees 60 days notice before their jobs are terminated.

But many employers don’t want to wait 60 days this time around and are seeking an exception outlined in the Act as an “unforeseeable business circumstance.”

Scott Silverman, head of the employment practice at Morrison & Foerster LLP’s L.A. office, said he has had several local tech clients say they were hoping they wouldn’t have to undertake layoffs before Sept. 11. Now, they need to issue pink slips right away.

“The tension I know some employers are facing is between pulling the trigger precipitously now to minimize their WARN Act exposure versus being a benevolent employer and avoiding layoffs. Your efforts could fail you either way,” said Ethan Lipsig, a partner in the employment law department of Paul Hastings Janofsky & Walker LLP.

If employers wait too long, they may not be able to use the WARN Act exception, since the events of Sept. 11 are no longer considered “unforeseeable,” Lipsig said. But if they institute layoffs quickly, enabling them to justify their rapid actions through the events of Sept. 11, they may be vulnerable to lawsuits for discrimination and breaches of employment contracts.

In some layoffs, employers are expected to eliminate people across the board, meaning certain employees from each department are let go, rather than an entire department. Such selective firings are vulnerable to discrimination charges, Lipsig said.

Following procedures

Even if employers have a procedure by which a human resources or legal consultant looks over the laid-off employees’ job descriptions one by one, they may not have the time to be as thorough as they were in the past.

Among the most likely to be laid off are middle-management workers, older workers and workers with protected leaves or disabilities all of whom are more expensive to keep.

Lawsuits also may come up if employers are forced to break employment contracts. That especially holds true for those employing union members.

Jesus Quinonez at Geffner & Bush in Burbank represents several unions in the entertainment, machine and transportation industries. In his 20 years of practice, he has not seen businesses being hit as much as they are now.

Most unions have provisions in their contracts that employers will now try to amend because of the events of Sept. 11, Quinonez said. Those include health care benefits, severance packages and re-hiring procedures.

He expects most contract negotiations to be amicable, much more than they may have been before Sept. 11. But he also anticipates some employers to use the events of Sept. 11 as an excuse to amend their contracts and make massive layoffs.

“To the extent that some employers will try to act quickly, and they act without enough thought and foresight into how these protections play into their decision, I’m confident the courts will enforce the rights of the employees.”

As chairman and chief executive of Electro Rent Corp. in Van Nuys, Daniel Greenberg has laid off 40 percent of his 930 or so employees in the past three years. But his latest round of 50 people, on Sept. 5, was supposed to be his last layoffs for a long time.

Then came Sept. 11.

“We’ve had to take a very long and sober look at what we’re going to do to make certain we can get through this period,” said Greenberg, whose publicly held company rents computer equipment and provides test and measurement equipment. “I hope we won’t have to do (another layoff), but I can’t say we wouldn’t have to consider it at some point if things continue to deteriorate.”