Businesses sometimes make the decision to dismiss an employee for reasons related to how the business is performing. For example, the business may be experiencing such significant financial losses that it decides that restructuring or downsizing (reducing the number of employees currently on its payroll) is the best way to save the business.
The layoff may be permanent or short-term. If the layoff is temporary, it is important that you distinguish the layoff from a furlough, which also happens when a business decides to reduce labor costs by temporarily ceasing the worker’s employment with the company or reducing the days and hours they work. In the case of a furlough, the employee is not considered separated from the company and may return to work once the furlough is over.
A layoff is often confused with a firing or termination, as well. They essentially have the same effect—leaving the employee without a job—but are usually done for different reasons. A termination normally occurs when the employee has failed to follow company procedures or has been performing unsatisfactorily. A layoff, unlike a termination for cause, means the employee is generally entitled to collect unemployment insurance and benefits.
A layoff means different things in different states and can further be complicated if you signed a separation agreement or severance package. While not mandatory, severance package are fairly typically when a worker is laid off and is usually given to ensure the worker’s continuing goodwill towards the company and to avoid numerous lawsuits against the company by the laid off employees.
It is not unusual for employers to offer a severance package to a worker without having given them the opportunity to comment on what should be included in the severance agreement. Usually, only really well-placed employees (such as executives) can negotiate the terms of their severance package.
As well, most severance agreements require that you waive your right to sue the company and that you agree you will not negatively comment about the company. This often puts workers in an untenable situation, but these types of agreement are enforceable depending on your state and what the agreement actually states. The hours and days following a layoff can be quite emotional. It’s a good idea to take some time to review a severance agreement before you decide to sign it.
If you received a severance agreement when you were laid off, it is important that you review it carefully to understand what you can and cannot do under the terms of the agreement. You can review the agreement with an attorney if you are at all confused about what you are obligated to do to continue to receive payment under the severance agreement or to determine if you have reserved any rights to take action against the company despite the agreement.
Whether you may pursue an action against a company after you have been laid off depends on a variety of factors, including the terms of any severance agreement you may have entered into and where you live.
As well, if the company engaged in a wide-scale layoff or if its layoff affected a large group of workers, it might be harder to establish you have a case against the employer for improperly terminating your employment. However, if you feel your layoff was more targeted, you may have a number of claims against the employer.
Assuming there are no legal obstacles, you can sue a company under a number of theories asserting you were unjustly released from your employment. You should start by looking at the circumstances under which you were laid off.
Did your employer lay off older works as part of a group layoff? Consider whether this might have been a violation of the Age Discrimination in Employment Act. Were you laid off due to your disability? Your employer might have violated the Americans with Disability Act. Or were you laid off because you belong to a minority group? If so, you may have a Civil Rights claim.
Perhaps you revealed some unethical conduct by your company right before you were laid off. Your employer might have violated the federal and state whistleblower laws. Finally, if you were on leave pursuant to the Family Medical Leave Act when you were laid off, you may have a claim against the employer.
If you feel you have been unfairly laid off or you are uncertain whether to sign your severance agreement, you should consult with an employment attorney. A qualified attorney in your state can make sure you are not signing away your rights and that you fully understand what you are entitled to receive in the event of a layoff.