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What Are the Rights of a Laid-Off Employee?

December 17th, 2021
laid off

The COVID-19 pandemic had, and continues to have, a devastating effect on employment. Many people lost their jobs when employers shuttered their businesses, either temporarily or permanently, or reduced operating hours. Even without the pandemic, employees are laid off every day across the United States for any number of reasons.

Employment in the United States is at will. That means that an employer can let workers go for virtually any reason or no reason at all as long as it is not employment discrimination. Layoffs happen suddenly and without warning in most cases, leaving the laid-off employee shocked and fearful about their future.

In some cases, an employee will be told of an impending layoff. The federally mandated Worker Adjustment and Retraining Notification (WARN) Act requires employers to give at least 60 days’ notice to their affected employees of a company closure or mass layoff. WARN applies to organizations with 100 or more employees. There are some exceptions to the 60-day notice period, including:

  • Closure due to strike or lockout
  • A natural disaster such as hurricane, flood, or pandemic
  • Business circumstances that were not reasonably foreseeable

If you are laid off, with or without warning, be sure to check out the following rights for which you may be entitled, legal or otherwise.

Some Rights Provided to Laid-Off Employees

Unemployment benefits. The federal-state unemployment insurance programs provide unemployment benefits to eligible workers who lose their jobs through no fault of their own. Each state has its own requirements for eligibility, benefit amounts, and the length of time benefits are available.

In general, benefits are based on a percentage of the person’s earnings over a recent 52-week period up to a maximum amount set by the state. Filing for unemployment should be the first step after being laid off, as it may take some time for the state to process your application.

Pension benefits. Your pension benefits may be affected by a layoff. An employer-sponsored 401(k) program may also need to be closed out or rolled over to another qualified plan.

The Department of Labor administers the Employee Retirement Income Security Act (ERISA), which covers most private-sector pension plans. Consult with your employer or ERISA for information on protecting your retirement benefits and savings if you are laid off.

Final pay. Each state sets final pay laws, but most require the employer to issue a last paycheck immediately or soon after employment ends, such as within 30 days or by the next scheduled payday.

Final pay typically includes wages through the last day of work, overtime, bonuses, commissions, expense reimbursements, and accumulated vacation pay. It is important to note that specific company policies may limit some types of compensation, such as bonuses and vacation. The law does not include payment for accumulated sick leave, but some employers will pay it.

Severance pay. Employers are not required by law to pay severance unless it is part of a collective bargaining agreement. Severance is additional money an employee might receive along with their salary and other monies owed. A severance package is a standard offering in layoffs and often includes other benefits, such as extended health insurance.

Severance pay is usually based on the employee’s length of service, such as two weeks of pay for every year employed. An employee must generally sign a separation or severance agreement to receive severance pay. This agreement includes the terms of the layoff and, in most cases, a release clause that prevents the employee from taking legal action against the employer.

Health benefits. If you are enrolled in the company’s health care insurance program, you may have a legal right to continue receiving coverage for up to 18 months. A federal law called the Consolidated Omnibus Budget Reconciliation Act (COBRA) gives you access to company insurance for a certain amount of time after employment. COBRA applies to most companies with more than 20 employees. There may be state laws regarding layoff health benefits for smaller companies, so be sure to check.

Support services. Every state has a One-Stop Career Center sponsored by the U.S. Department of Labor. This center is open to all residents and offers services for those who are laid off or will be laid off to help the person get back into the workforce. Services include resume preparation, career counseling, training, and job search assistance. In addition, an employer may sponsor other services to help the employee find work, such as specialized training programs.

Is a Company Shutdown Different from a Layoff?

In most cases, benefits offered from a company shutdown will be similar to a layoff from a company that remains in business. However, companies with more than 100 employees are required by law to give a 60-day WARN notice as described previously.

Also, employees who are covered by a collective bargaining contract through a union will be entitled to the benefits described in the agreement. Otherwise, when a company shuts down, employees have rights similar to other laid-off employees. These include a final paycheck; unemployment insurance; and benefits the company may provide, such as severance pay or health benefits.

Can I Negotiate My Layoff Benefits?

Most times, a severance agreement is also a promise not to sue. That means that to get the severance benefits, the employee must waive their right to take legal action against the employer. A severance agreement might also include restrictions about working for a competitor, soliciting clients or customers, and other constraints.

It may be a good idea to consult with a lawyer before signing a separation or severance agreement. Some of the limitations may not be worth the severance package or payment.

You are not obliged to take the first offer the employer hands you. There could be room to negotiate as well as legitimate legal claims. A lawyer can guide you on negotiations or potential legal action.

What if I Think My Layoff Was Discriminatory?

If you were laid off and in a protected class based on age, sex, national origin, religion, race, or disability, you might want to talk with a lawyer. Although employment is at-will, an employer cannot lay you off for discriminatory reasons.

Of course, an employer would never admit discrimination, but if you believe it might be the case, know you are protected by federal and state laws, including the following:

The Age Discrimination in Employment Act (ADEA).This 1967 act protects workers 40 and older. Those in that age category are also protected by the Older Workers Benefit Protection Act, which gives them 21 days to consider a severance offer and seven days to revoke a signed agreement.

Title VII of the Civil Rights Act. This 1964 legislation prohibits companies from making employment decisions based on race/color, religion, sex including sexual orientation or sexual identity, national origin, and pregnancy.

Americans with Disabilities Act (ADA).The ADA of 1990 prohibits employment discrimination against employees and job seekers with disabilities, including employment, transportation, public accommodations, communications, and access to government services.

Whistleblower laws. Federal and state whistleblower laws make it illegal for an employer to fire or take other retaliatory action against an employee who reports the company for unlawful or unethical behavior.

Medical claims. It is illegal for an employer to lay off an employee who files a Workers’ Compensation claim, uses their insurance, or takes medical time off under the Family and Medical Leave Act (FMLA).

It is worth consulting an employment lawyer if any of the above situations applies to you. You have the right to sue your employer after a layoff, but proving discrimination can be difficult and takes the knowledge and experience of a lawyer.

Chester County Employment Discrimination Lawyers at The Gold Law Firm P.C. Advocate for Laid-Off Worker Rights

The Chester County employment discrimination lawyers at The Gold Law Firm P.C. believe that laid-off workers deserve every benefit for which they may be entitled, whether legally mandated or employer provided. We will be your advocate and fight to protect your rights. Call us today at 215-569-1999 or contact us online for a free consultation. Located in Philadelphia, Pennsylvania, and Pennsauken, New Jersey, we serve clients in Wilkes-Barre, Scranton, northeast Philadelphia, Bucks County, Chester County, Delaware County, Montgomery County, and Cherry Hill, South Jersey.

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