Nine Things Managers and Employees Need to Know About Layoffs

Without collective bargaining agreements, layoffs can be conducted in any way an employer chooses as long as it doesn't discriminate.

If we're talking about a reduction in force that doesn't involve closing down a facility, the laws that are applied are mostly anti-discrimination laws. Some statutes of the anti-discrimination laws apply to companies with 15 or more employees. Other statutes apply to companies with 20 or more employees.

If we're talking about closing down a facility that involves laying off a substantial number of employees, under the WARN Act (Worker Adjustment and Retraining Notification Act), the company is required to give employees at least a 60 day notice of the closing or of a mass layoff at the facility. The WARN Act only applies to employers who have 100 or more employees, excluding part-time employees. A mass layoff means a loss of at least one-third (equaling at least 50) of the employees at a single site during a 30 day period, or at least 500 employees at sites with more than 1500 employees.

If an employee has an employment contract for a definite period of time and if the employer lays the employee off in the middle of the contract, that might be a breach of contract, depending on what the employment agreement says.

Also, employers may have severance programs and those severance programs may provide for payment of severance benefits in the event someone is laid off.

Do most employees realize they have these rights?

My experience is that most people do not have an understanding of their legal rights, but they have a fairly strong understanding of what it means to be treated fairly or unfairly. If someone feels they've been treated unfairly, they're likely to consult an attorney.

Older workers benefit from a protection that applies to age discrimination laws. If a company is laying off employees and decides to pay them severance, the company will ask the employees to sign a release of legal claims in order to get their severance. To obtain an enforceable release of age discrimination claims, employers need to tell employees over the age of 40 to seek the advice of a lawyer.

If an employer wants a release to be effective, the employer needs to give the employee the opportunity to read the release, ask questions, and not pressure the employee to sign it. If the severance plan is sufficiently complex to be covered by the federal Employee Retirement Income Security Act (ERISA), the company has an obligation to notify employees of their rights [to severance] under the severance plan. The general standard for [legal] releases where the federal age discrimination statute doesn't apply&mdashh;for employees younger than 40, or for employers with less than 20 employees—is that the release has to be knowing and voluntary. The employee has to understand that he's giving up a legal claim, and he can't be coerced.

There are certain kinds of claims, such as workers compensation claims and violations of the Fair Labor Standards Act, that cannot be released without getting the authorization of a government agency.

It doesn't seem fair that companies can ask employees to basically waive all their rights to future legal claims as a condition of severance.

There's no legal obligation to pay severance. There are no laws that require people in the U.S. to be paid a certain amount of money if their employment is terminated for reasons other than bad conduct. If a company voluntarily undertakes to pay someone [severance] at the time that they leave, the company legally has the right to condition the payment on the basis of not being sued. And the employee has a choice: If he thinks his rights have been violated, he can bring suit, or he can accept severance and give up his right to a lawsuit. The exception to this is when a company has an existing severance plan and the plan doesn't have a provision that says to get severance, the employee must sign a release. In those situations, if the company wants a release, it has to offer additional money beyond the severance.