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Legal Policies: Are You About to Lose Your Job?

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April 01, 2002
Legal Corner
Melissa Calhoon - info@berkleylawgroup.com
Daniel T.Berkley

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© 2002 Hospitality Upgrade. No reproduction without written permission.

Layoff. Reduction in workforce. Downsizing. These terms have been prevalent in business vocabulary since the mid 1980s. With the recent economic downturn, however, they have become increasingly common, and relevant to a larger portion of the American workplace than ever.

The hospitality industry has been heavily hit as discretionary spending drops, forcing industry employers to reduce staff and economize in order to survive lean times. The uncertainty of the current economic climate is devastating for employers and employees alike. How can you, the employee, prepare for a layoff? Here are a few suggestions.

Be Prepared for Anything
Preparation includes having some money in savings and knowing your rights. It also includes reviewing any agreements that you have signed with your current employer, such as an offer letter, employment agreement, non-disclosure agreement, non-compete agreement, proprietary rights agreement and severance plan documents, group insurance plan documents, employee handbooks and other policy materials that describe the terms and conditions of your employment.

Offer letters, employment agreements and company policies may describe the employment relationship. Are you, like most American employees, an at-will employee who may be terminated at any time for any or no reason, without advance notice? Or are you an employee who may only be terminated for cause? While neither status will prevent you from being laid off, understanding your status will help you evaluate whether your layoff is being handled appropriately. Similarly, non-compete, non-disclosure or proprietary rights agreements may impact your future by restricting your ability to work for competitors, or to solicit clients or co-workers.

You may be able to get these documents from your employer if you cannot find them. The right of employees to review their personnel files and obtain copies of the documents contained therein varies from state to state. California employees, for example, have the right to review their personnel files (and any documents used in making decisions about the continuation of their employment, promotion, termination and the like), and to obtain copies of documents that they have signed. Other states’ laws may differ. Your employee handbook may also provide procedural information about requesting review. If your employer refuses to allow you to review your file or to give you copies of documents that you have signed, please seek legal advice about whether this response is lawful.

What Benefits Apply?
Another aspect of preparation is learning about unemployment insurance benefits and wage payment rights. If you contact your local unemployment agency, you will be able to find information relating to benefits and the eligibility requirements for obtaining them. Also, if you are terminated or laid off without being paid in full for the wages due to you, contact the local state agency responsible for enforcing wage and hour laws to learn how to file a claim. You may also get agency assistance if your employer has failed to provide you with information regarding continuation coverage for health benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA; 29 U.S.C. § 1163.)

Of course, what most people want to know is whether they are owed severance. There is a federal law called the Worker Adjustment and Retraining Notification Act (WARN; 29 U.S.C. § 2101, et seq.) that requires large employers to give at least 60 days written notice under special circumstances involving plant closings and mass layoffs. Other than WARN, which again only provides for notice of layoff, there is no law that requires the payment of severance – unless there is a separate contractual obligation for such payment. This means that if the employer has a severance policy or practice in place and you qualify under it, you may be entitled to severance. In the absence of a severance policy or practice, however, you probably are not.

Finally, if your employer does offer you severance, some or all of the payment may be tied to a release agreement that you must sign first. Employers do this to prevent litigation.

Since few employees have actionable legal claims against their employers (frankly), exchanging a release for cash or continued benefits may be to most employees’ benefit; however, the claims that are waived when you sign a release are legal claims and it frequently takes a lawyer to recognize one. Legal review by a lawyer who specializes in employment law is especially important where you are a member of a protected class (age, race, sex, etc.) or you believe that your employer has failed to follow company policy/procedure or the law. In addition, where there is no formal severance plan that must be uniformly applied, you may be able to negotiate additional severance or benefits, particularly non-economic benefits such as a letter of reference or access to voicemail or e-mail during a job hunt, but should only do so with legal advice.

Melissa Calhoon and Daniel T. Berkley of the Berkley Law Group, P.C. can be reached at (415) 989-7711 or at info@berkleylawgroup.com.

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