Monday, February 2, 2009

Layoffs = lawsuits

This headline from the New York Times says it all: “Layoffs Herald a Heyday for Employee Lawsuits.”

More workers are being let go as corporate layoffs that began in earnest last year have accelerated in recent weeks. And more often, people are looking around and complaining that they have been unfairly or improperly dismissed.

Potential lawsuits from layoffs come in all shapes and sizes: WARN Act violations for lack of notice, discriminatory selection for the layoff, or the use of selection criteria that discriminatorily impacts one group over another. According to the New York Times article one plaintiffs firm in New York has started its own WARN Act practice group that has filed two dozen different cases against employers in the last 18 months.

In all layoffs, companies should consider paying some amount of severance to affected employees in exchange for a release of claims. It’s painful for some businesses to consider paying severance to a group of employees being let go because the company can no longer keep them as employees. And, the higher up the corporate ladder the layoff reaches the greater amount of severance pay will be necessary to buy an employee’s release. The alternative, however, is potentially exponentially more expensive – years of protracted litigation brought by employees or groups of employees.

If a company is going to offer severance, it should insist on receiving a signed release in return. Just make sure that the release complies with the Older Workers Benefit Protection Act (OWBPA). Otherwise, at least as far as far as a federal age discrimination claim, the release will not be worth the paper on which it is written.

For more on releases under the OWBPA, see:

[Hat tip: Minding the Workplace]