Helping Restaurant Workers Survive Layoffs and Furloughs
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How to make the hardest decision in restaurant management without losing your team's trust or your reputation
Laying off or furloughing restaurant staff is one of the most difficult decisions an operator can face - whether it is driven by a slow season, rising costs, or a shift in your business model. How you handle it determines whether good employees come back when you need them. This post covers the legal requirements you must follow, how to communicate with your team, the financial resources you should point departing workers toward, and how to rebuild when the time comes.
The restaurant industry employs 15.9 million people across the United States, according to the National Restaurant Association's 2025 projections. It is the nation's second-largest private-sector employer, and 63% of American adults have worked in a restaurant at some point in their lives. When layoffs or furloughs happen in this industry, they affect real people - often hourly workers with limited savings and few safety nets.
Most restaurant operators will face this decision at some point. Seasonal slowdowns, economic downturns, rising food and labor costs, or a fundamental restructuring of the business can all force the question. The restaurant industry's turnover rate already tops 75%, which means many operators are constantly navigating staffing changes. But there is a difference between voluntary turnover and telling a loyal employee you no longer have hours for them.
How you handle that conversation - and what you do afterward - is what separates operators who can rebuild from those who permanently damage their reputation and their ability to hire.
Understand Your Legal Obligations First
Before making any staffing cuts, know what the law requires.
The WARN Act applies to larger operations. The federal Worker Adjustment and Retraining Notification Act requires employers with 100 or more employees (not counting part-time workers) to provide 60 days' advance written notice before mass layoffs or plant closings. A plant closing triggers WARN when a shutdown results in job loss for 50 or more employees at a single site. A mass layoff triggers WARN when 50 or more employees who represent at least one-third of the active workforce are laid off at a single site, or when 500 or more employees are affected regardless of percentage. Nine in ten restaurants have fewer than 50 employees according to the National Restaurant Association, so most independent restaurants are not subject to the WARN Act - but multi-unit operators and large venues may be.
State laws may add requirements. Several states have their own versions of the WARN Act with lower thresholds and longer notice periods. States including California, New York, Illinois, and New Jersey have enacted state-level notification laws that may apply to smaller employers. Check your state's Department of Labor website before making any cuts - requirements vary significantly by location.
Final paycheck laws vary by state. Some states require you to deliver the final paycheck on the employee's last day. Others allow until the next regular payday. Getting this wrong can result in penalties.
COBRA or state continuation coverage. If you offer group health insurance and have 20 or more employees, you must notify departing workers of their right to continue coverage under COBRA. For smaller employers, many states have mini-COBRA laws with similar requirements.
| Legal Requirement: | Who It Applies To: | Key Details: |
| WARN Act (federal) | Employers with 100+ employees (excluding part-time) | 60 days' advance notice for mass layoffs or plant closings |
| State WARN laws | Varies (lower thresholds in CA, NY, IL, NJ) | Check your state labor department |
| Final paycheck | All employers | Timing varies by state - some require same-day |
| COBRA notification | Employers with 20+ employees offering group health | Must notify workers of continuation rights |
| Unemployment cooperation | All employers | Respond to UI claims promptly and accurately |
Layoffs vs. Furloughs - Choose the Right Approach
The distinction matters for your workers, your business, and your legal exposure.
A layoff is a permanent separation. The employee's position is eliminated. They are free to seek other employment, and you have no obligation to rehire them. Layoffs are appropriate when you are closing a location, permanently reducing your operating hours, or eliminating a role that is not coming back.
A furlough is a temporary leave. The employee remains on your roster but does not work or receive pay. They typically retain their benefits (depending on your policies) and have an expectation of returning. Furloughs are better when you expect to need the worker again - during a slow season, a renovation, or a temporary financial squeeze.
Why this matters for your workers: Furloughed employees are generally eligible for unemployment benefits just like laid-off workers, but they also have the reassurance that their job is waiting. That reassurance makes a significant difference for someone living paycheck to paycheck - and according to the Restaurant Workers' Community Foundation, 40% of restaurant workers live on poverty-level wages.
If you have any expectation of needing these employees again, furlough is almost always the better choice. Good restaurant workers are hard to find - the industry's ongoing labor shortage makes replacing them more expensive than retaining them.
How to Communicate Layoffs and Furloughs
The conversation is as important as the decision.
Have individual conversations, not group announcements. Every affected employee deserves a private, face-to-face meeting. Announce layoffs via group text or a posted schedule change and you will lose the trust of your entire team - not just those being let go.
Be direct and honest about the reason. Explain why the cuts are happening. Workers can handle hard truths. What they cannot handle is vagueness, blame-shifting, or the sense that the decision was arbitrary. If costs are the issue, say so. If business volume dropped, say so.
Explain exactly what happens next. Cover their final paycheck, when benefits end, whether this is a layoff or furlough, and what resources are available. Have this information written down so they can process it later - most people will not absorb details during an emotional conversation.
Never use layoffs as a performance management tool. If you are cutting staff for economic reasons, do not use the opportunity to get rid of underperformers. That creates legal risk and sends a message to your remaining staff that layoffs are punitive. Manage performance separately from workforce reductions.
Tell your remaining team what happened and why. The staff who keep their jobs are watching closely. If they see their coworkers treated with dignity and transparency, they will trust you. If they see people disappear without explanation, they will assume they are next - and your best people will start looking for other jobs.
Resources to Share With Departing Workers
The most helpful thing you can do for a departing employee is point them toward concrete resources. Print this information or email it to them on their last day.
State unemployment insurance. Every state administers its own unemployment program. Workers who lose their jobs through no fault of their own are generally eligible for partial wage replacement, typically ranging from 12 to 26 weeks depending on the state. Direct employees to their state's unemployment website or to CareerOneStop.org, a U.S. Department of Labor resource that links to every state program.
SNAP (food assistance). The Supplemental Nutrition Assistance Program provides food benefits to low-income individuals and families. A restaurant worker who just lost their income may qualify. Applications are handled through state agencies, and the USDA maintains a national directory at fns.usda.gov.
Restaurant Workers' Community Foundation. The RWCF is an advocacy nonprofit created by and for restaurant workers. While they do not provide direct emergency payments, they fund organizations that offer career training, mental health support, and financial literacy programs for restaurant workers. Their website at restaurantworkerscf.org connects workers with available resources.
Local workforce development programs. Most states and major cities operate workforce development centers (often called American Job Centers) that provide free job search assistance, resume help, interview preparation, and skills training. These are especially valuable for restaurant workers who want to develop new skills or transition to a different role within the industry.
Effective restaurant management means taking care of your people even when they are leaving. Providing a clear list of resources takes five minutes and can make a meaningful difference in someone's next few weeks.
Planning for the Rebuild
If you are furloughing staff with the intention of bringing them back, maintain the relationship.
Stay in contact. A brief check-in every two to three weeks shows that you still value them as part of the team. It does not need to be a phone call - a text message is enough. The goal is to prevent your best workers from assuming the furlough has become a permanent layoff.
Give as much notice as possible for callbacks. When business picks back up, give furloughed employees at least a week's notice before asking them to return. They may have taken a temporary job elsewhere and need time to transition.
Invest in customer service training during the restart. Returning staff may need a refresher on your current standards, especially if your menu, systems, or service model changed during the gap. A short retraining period is significantly cheaper than hiring and training someone entirely new.
Address the root cause. If layoffs were driven by financial pressure, use the downtime to evaluate what changed. Review your staffing approach and consider whether scheduling adjustments, cross-training, or operational changes could prevent the same situation next time. The restaurant financing guide covers options for building financial resilience before the next downturn.
Frequently Asked Questions
Are furloughed restaurant workers eligible for unemployment benefits?
In most states, yes. Furloughed workers who have their hours reduced to zero or near-zero are generally eligible for unemployment benefits because the job loss was not their fault. Eligibility varies by state, so direct workers to their state's unemployment insurance website or to CareerOneStop.org for specific guidance.
How much notice do I need to give before laying off staff?
It depends on the size of your operation and your state. The federal WARN Act requires 60 days' notice for employers with 100 or more employees (not counting part-time workers). Several states have their own laws with lower thresholds. For most independent restaurants with fewer than 50 employees, there is no federal notice requirement - but giving as much notice as possible is both ethical and practical for maintaining your reputation as an employer.
Should I provide severance pay to laid-off restaurant workers?
There is no federal requirement to provide severance pay. However, even a modest severance - a week or two of pay for long-tenured employees - demonstrates good faith, reduces the chance of legal disputes, and makes it more likely that good workers will return if you hire again. If you cannot afford severance, be transparent about why.
What is the difference between a layoff and a furlough?
A layoff is a permanent separation - the position is eliminated and there is no expectation of return. A furlough is a temporary unpaid leave where the employee remains connected to the business and is expected to return when conditions improve. Both typically qualify the worker for unemployment benefits, but a furlough preserves the employment relationship.
How do I decide who to lay off?
Base decisions on objective, business-related criteria: seniority, role necessity, skills, and operational needs. Document your reasoning. Never use layoffs to eliminate employees based on protected characteristics (age, race, gender, disability, etc.). If in doubt, consult an employment attorney before making final decisions.
How can I motivate remaining staff after layoffs?
Transparency is the most effective tool. Explain why the cuts happened, what the plan is going forward, and that you value the people who remain. Acknowledge that layoffs are hard on everyone - not just those who left. Follow through on any commitments you make about the business's direction.
What if a furloughed employee finds another job and does not want to return?
This is a normal risk of furloughs. You cannot force someone to return, and holding their position indefinitely is not always practical. The best way to reduce this risk is to stay in contact during the furlough, be transparent about timelines, and make sure your workplace is one people actually want to come back to.
Related Resources
- Restaurant Financing Guide - Financial options for building resilience before downturns hit
- How to Be an Effective Restaurant Manager - Leadership skills for difficult management decisions
- Restaurant Customer Service Training - Retraining framework for when furloughed staff return
- How to Properly Staff Your Restaurant - Staffing strategies that reduce the need for layoffs
- 10 Ways to Motivate Your Staff - Keeping remaining team members engaged after workforce reductions
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