Corporate Firings and Layoffs May Not be Legal

What to Do When an Employer Fires or Lays Off Workers Illegally

Oct 5, 2009 Daniel Gansle

When is a company within their rights to fire employees? Because of at-will employment law this question is complicated, but workers do have some protections.

Imagine comfortably working at a company for several years. The CEO says the corporation is raking in the money, and things are better than ever. One day the organization runs into financial trouble and suddenly decides to file for Chapter 11 Bankruptcy, giving employees only two weeks' notice and denying any requests for severance pay. However, the U.S. Worker Adjustment and Retraining Notification Act of 1988 says otherwise.

According to the WARN Act, employers must generally provide notice of an impending mass layoff 60 days in advance. Should the employer fail in its legal duty to give fair warning, they may be liable for an amount including back pay and benefits for the period of violation. Furthermore, an employer who fails to provide notice as required to a unit of local government is subject to fines of up to $500 for each day of violation.

Laid-off workers have cited the WARN Act in successful class action lawsuits against companies who failed to provide notice of a mass layoff 60 days in advance. Yet at the same time, such payouts for ex-employees are relatively rare. So how can one tell whether it’s in the organization’s legal rights to fire employees?

At Will Employment

At times an employer will rescind a job offer that has been signed, sealed, and delivered. Even if a worker relocates across the country for the new position, the company can still come back and say, “Sorry, don’t need your service after all.”

It is within a company’s rights to lay off the person at any time and not even provide a reason. While this may sound unfair, it is perfectly legal thanks to state at-will employment laws which essentially permit companies to let employees go at any time, for any reason whatsoever, or no reason at all.

Says attorney Aaron Larson in the September, 2003 ExpertLaw article, “Wrongful Termination of At Will Employment, "Many people are employed ‘at will,’ meaning that they don't have a formal employment contract with their employer and state law thus permits their employment to be ended at any time, or that they do have a written contract under which contains an ‘at will’ clause...”

When Corporate Layoffs and Firings Cross the Line

Despite the vagaries of at-will employment, instances where it is not within the employer’s legal rights to let an employee go do exist. These exceptions include anti-discrimination laws, whistleblower protections, public policy exclusions, and procedural/contractual protections. For example, it is illegal to fire someone based on race, if they expose company wrongdoing, if they file for worker’s compensation, or if the employer fails to follow guidelines for disciplinary action before letting them go.

Unfortunately, there isn’t much legal recourse for those who in ordinary circumstances are let go without explanation. Because of at-will employment laws, companies can terminate the contract at any time for any reason, or no reason at all; and corporate lawyers insert detailed clauses to ensure the organization is fully protected against such inevitable litigation. Thus, cases involving wrongful termination are often costly and difficult to prove.

If an ex-employee suspects he or she has been let go from the company illegally, or perhaps has even been retaliated against, consulting a lawyer specializing in employment law is a good first step. This also holds true for those downsized in mass layoffs care of companies who fail to provide the minimum 60-day notice required by the WARN Act. Otherwise, state at-will employment laws kick in to protect the company against costly employment litigation.

The copyright of the article Corporate Firings and Layoffs May Not be Legal in Career Advice is owned by Daniel Gansle. Permission to republish Corporate Firings and Layoffs May Not be Legal in print or online must be granted by the author in writing.
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