But if you have to, no, it does not have to be the newest employee first. The decision about who to lay-off should be a business decision based on productivity and impact on the company or organization. Which person's absence will negatively impact the company worse?
There may be some long term solutions that can reduce the budget without cutting staff. Putting some effort into finding an alternative solution will have a positive effect even if you have to lay-off - it will show that you did not do this lightly.
I am the "HR" person for a church with 65 employees. We have an accountant and a lawyer. The accountant does not have HR legal experience and I would prefer not to have to engage the lawyer if I can get a basic question answered without it.
Presumably you don't have any union contract or agreement that would call for that, so no, it doesn't have to be the employee with the lowest seniority.
Are you in an "at will" state? If not, you'll likely have to establish some type of non-discriminatory criteria for selecting the employee(s) who will be laid off before you actually select any specific individual.
I'm not an attorney (nor am I aware of any active members in the community who are) -- so while you may not want to engage yours, he/she would probably rather you get in touch before there's a problem to deal with, rather than after.
If you have a small company and know all employees and their performance you can decide yourself. If you have a bigger company then you have to have the head of each area help you. The procedure is similar: whomever is responsible for getting the work done just needs to ask themselves who they would lay off if they had to: the name of that person comes right into your head. If it does not and all things are equal then you need to lay the person off who has the least ability to contribute to the overall mission. Most folks go overboard trying to be fair, making a system up so they are sure they were fair, etc. But, your first reaction is usually the answer. You just need to trust your own judgement. If you have a union all bets are off and you just have to follow the rules of the contract.
The rule of thumb is usually the newest employee, however with that said.. you are not in a union, unless you have specifically written guidelines that you have established to reduce your workforce. You can use productivity, etc.. for laying people off. The best way is to look at solution to not have to lay anyone off.. maybe reduce the amt of hrs on several employees that will reduce the amt of monies you are trying to save. The bottom line, is that if that employee is a full time worker, you will get hit with the unemployement percent going higher.. That person will collect for 6 months or more if extended.. Hopefully, you can work it out. Establish a good guideline in writting for your business so that you don't have to worry when this comes up again. Written policies as well as good work ethic helps in situations such as this.. even though they are hard decisions you must make. Good luck.
As every state has their own specific labor laws it is always best to check with a lawyer before making any final decisions. You don't want to get hit with a lawsuit when it can be avoided!
Most "at will" states do allow you to lay off based upon whatever criteria you set forth. It typically does not have to be seniority based. Asking a lawyer that is unfamiliar with your HR policies seems like a waste of time to me! I think you need to talk to your company lawyer in order to make sure there is nothing in your policies that would dictate how you make decisions.