If you are in an "at-will" employment state or if you have an "at-will" policy at your company, then you can lay off a person for any reason that is not illegal (racial, gender, disability discrimination) and most of the time you don't even have to give them a reason why (although if you do and it's legitimate like you need to lower costs, then you are less likely to have to deal with them calling the labor board or EEOC.
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