Layoffs, Lawyers, and Lawsuits
I’ve done a number of posts on why employers shouldn’t use layoffs as their first answer to economic hard times. (Click here, here, here, here, here, here, here, here and here.) A recent New York Times headline suggests yet another reason: “Layoffs Herald a Heyday for Employee Lawsuits.” And in case you haven’t heard, lawyers are being laid off, too. So, you have a lot of people out of work, and you have a lot of lawyers looking for work. Yep, there will be a lot of employee lawsuits.
Under the Worker Adjustment and Retraining Act (WARN), a business closing or a mass layoff requires 60 days notice to affected employees. There are probably more WARN lawsuits being filed right now than in the history of the Act’s existence. Because of a 2005 Supreme Court decision (Smith v. City of Jackson), age discrimination lawsuits are easier to win now, and a lot of laid-off boomers are going to court. Sex discrimination lawsuits are on the rise, in part because there’s evidence of what some call “mommy RIFs.”
Combine all that with a new Obama administration more likely to aggressively enforce employment laws, the new Lilly Ledbetter Fair Pay Act, the new ADA Amendments Act, a 15% jump in discrimination charges with the Equal Employment Opportunity Commission, a growing number of cases claiming discrimination against veterans, and an already hot wage and hour lawsuit category (particularly the failure to pay overtime claims), and the perfect storm comes to mind. Or, as a leading lawyer who represents employees in these cases is quoted as saying in the Times article: “We are embarking on a new phase in employment litigation.”
It’s likely that layoffs will continue throughout 2009. Get ready to deal with desperate employees who hook up with unemployed or underemployed lawyers.
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About Chris Parker
Chris Parker's practice focuses on the representation and counseling of companies in matters pertaining to the workplace and the protection of their intellectual property and trade secrets. In addition to serving as an advocate for clients, Mr. Parker is also trained as a mediator and frequently serves as a third-party neutral.
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About Jimmy Daniel
Jimmy Daniel provides counseling to businesses of all sizes related to the employment relationship. He assists in the drafting of employment agreements, policies, and handbooks, as well as provides guidance related to compliance with federal, state, and local legislation such as the Fair Labor Standards Act and the Family and Medical Leave Act.
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About Larry Bridgesmith
While serving in an Of Counsel relationship with the firm, Mr. Bridgesmith also serves as the Executive Director at the Institute for Conflict Resolution at Lipscomb University and as an officer and principal in Strategic Resolutions Group, LLC. In these roles, Mr. Bridgesmith brings over 30 years of legal experience in dispute resolution and innovative workplace strategies to clients, students and business entities alike.
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Layoffs should not be the answer to challenging economic times however most firms and companies are quick to utilize layoffs as their solution. Consequently, in addition to legal challenges the decision to downsize and lack of planning for the layoffs can have devastating effects on the morale and reputation of the organization.
If it is necessary for the organization to execute the layoffs they should consider a strategic plan comprised of three parts. Motivating those that remain, assisting the transitioned employees and coaching managers executing the layoffs on how to handle the situation sensitively.
Good point, or you can do what my company did, and start your mass layoff with a few days notice to the media, not to your employees. Which resulted in colleagues who were severed leaving the building shocked and in tears. No coaching or assistance, well later on they gave out a few papers stapled together copied from a website about how to cope and a few phone numbers to employee agencies. No severance, vacation pay earned, turned out like a 2 dollar…well you know…many who put in years of service and made the owner millions. A class act huh? Lawsuits pending.