Is the United States experiencing a recession? It depends who you ask. Recession is generally understood as two consecutive quarters of negative gross domestic product (GDP) – in which case a recession began this past summer. However, the National Bureau of Economic Research’s definition (the nation’s official one) characterizes recession as a significant nationwide decline in economic activity lasting at least several months – and doesn’t feel that’s happened yet.

Semantics aside, this “Are we or aren’t we?” is fueling recession-related worry that’s becoming palpable in many workplaces.

Will a formal recession hit the U.S. anytime soon? myHR Partner makes no prediction. But we’re helping our clients prepare. After all, some of HR’s key responsibilities – mitigating stress, maintaining morale, ensuring employees’ fair treatment – are more relevant during economic downturns than during any other time.

Some guidance we offer:

Choose Transparency

Already, employees are pondering a recession’s impact on your business and, by extension, their livelihood. Could they lose their jobs? Will your company fold? Will retirement savings evaporate? You might not have answers, or the answers they want to hear. It’s why many businesses keep mum. However, myHR Partner suggests a bolder approach: Financial transparency with your staff.

Before you recoil: Transparency doesn’t mean sharing every financial detail with the people who work for you. It means sharing information (agreed upon in advance by executives and owners, and accompanied by a high degree of education) that paints an honest picture of your business’s reality and outlook.

Is this risky for businesses in a precarious place? Could you lose employees who can’t tolerate verified uncertainty? Sure. But we believe (and our observation shows) that the trust engendered by transparency will likely outweigh short-term fallout. After all, misleading employees about something as serious as their professional livelihood or keeping mum only to make cuts without warning are reputational downfalls from which few companies return.

Review Your Layoff Protocol

If work diminishes or you can’t afford to pay employees, layoffs might become necessary. 

Layoffs are stressful for everyone involved. Layoffs conducted poorly add a lot of unnecessary stress and can even expose your company to liability. If there’s even a chance of layoffs, consider the following:

  • Review and abide by your compliance obligations. The federal Worker Adjustment and Retraining Notification Act (WARN) applies to employers with 100 or more full-time employees and requires 60 days’ notice before a mass layoff or business closing. Many states have their own versions (mini-WARNs) that kick in at a lower employee count, so be sure to check state law, too. Your state unemployment insurance law may also have notice requirements.
    Be doubly sure that layoffs are absolutely necessary and that you’re letting go of the right number of people. Layoffs mean less work gets done, period. Unless you’re shutting down, you need to retain at least enough people to keep the business running. Quickly rehiring people because you underestimated labor needs sets the stage for confusion and mistrust.
  • Determine whether layoffs will be temporary or permanent. If you intend to rehire employees later, let them know and keep them apprised of developments or changes in your plans. Being on-again, off-again with employees can seriously interfere with their unemployment insurance and larger livelihood.
  • Be fair and nondiscriminatory. Base layoff decisions on legitimate business reasons and document those reasons.
  • Comply with laws regarding final pay. Many states require that you pay an employee much sooner than their next regular pay day if they’re discharged or laid off. If your state law doesn’t address layoffs specifically, we recommend using the deadline that applies to terminations. If your state law doesn’t set a deadline for final paychecks, we recommend paying no later than the next regular pay day.

Think Twice Before Making “Non-Essential” Cuts

It’s tempting to respond to economic downturns by taking an axe to programs or initiatives that aren’t essential or revenue-generating. However, first consider these commitments and the possible consequences. For example, if you’d committed contributions to your local public school, but then cut that program to help make ends meet, employees will question whether it was ever truly a priority. If diversity, equity, and inclusion training grinds to a halt, you’re giving the sense that it was for show – not a firmly-held company pillar. 

Take care when deciding what programs and practices to stop. What would your choices say about your values? Carefully consider the message your actions will communicate.

If you really have no choice but to cut programs and practices that speak to your values and commitments, be incredibly thoughtful in communicating these decisions. Again, transparency is key, as is reactivating these commitments as soon as your company is back on its feet.

Don’t Disregard Behavioral Protocols

During economic downturns, money worries can take a toll. Patience wears thin, energy deteriorates, and distrust can emerge – sometimes resulting in spikes in behaviors that defy your employee code of conduct.

While it can be tempting to let things slide when times are tough, it’s important that you don’t make exceptions just because of larger economic circumstances. Address behavioral and performance issues the way you always would. Remind everyone that you’re all working for a common purpose.

But Also Have Empathy

A sluggish economy impacts everyone differently. Even if your organization fares well and jobs are secure, your staff might be taking hits elsewhere in their lives. 401(k)s might be tanking. Seismic household shifts could be occurring as employees’ spouses, partners, or roommates lose jobs. 

Be mindful that your employees’ experiences during a recession will vary widely. Some may take bad news harder or feel less celebratory when there’s good news to share. In times like these, empathy is invaluable. Keep a pulse on what your people are feeling. Point them in the direction of helpful resources, including those offered through your healthcare benefits. Be human. Recessions are difficult to go through and sometimes require hard choices. Treating people with respect and empathy is key.

Have questions about the economy ‘s impact on the people in your business – or other workplace HR matters? Reach out to myHR Partner. We can answer your specific questions and help you navigate any economic season. Email us at