Termination & Lay Offs
Discrimination and Wrongful Termination
Federal and state law prohibit employers from discriminatorily selecting employees for layoff on a variety of bases, including race, gender, disability, color, national origin, religion, pregnancy or in retaliation for opposing such discrimination or participating in a discrimination proceeding. An employee who believes he or she was selected for lay off on an unlawful, discriminatory or retaliatory basis may bring a claim under state and/or federal law in a variety agencies and courts. For more information, go to: http://www.eeoc.gov or http://www.crc.ohio.gov.
Severance Agreements and Final Paychecks
Some employers are obligated to pay severance pay under a collective bargaining agreement, employee benefit plan or other agreement. Absent such an agreement or plan, there is typically no right to severance pay. However, your employer may offer you a severance payment in exchange for the employee signing a release. Generally, if an employee was discriminated against or unlawfully separated from work, the release prohibits that employee from later suing the employer.
Separation and/or severance agreements sometimes provide that the laid off employee will not seek employment with the employer in the future or seek to characterize the separation as a resignation or termination for cause. These provisions can have an impact on your ability to apply for jobs with your former employer, your right to unemployment benefits and your ability to use your former employer as a reference. Thus, it is important to have a lawyer review an severance agreement or release before signing it.
State laws vary but typically require an employer to pay an employee his or her final paycheck within a limited time after termination – usually no more than 30 days and in some states, even less. In Ohio, it’s 15 days from the last date worked, or the date of the next regularly scheduled pay date, whichever is earlier. Additional disputes sometimes arise about payment for overtime, commissions, expense reimbursements, unused vacation or sick pay and disputed deductions from final paychecks. Employee rights in some cases depend upon the employer’s written policies, practices and/or individual arrangements or understandings with employees.
Continuation of Insurance Benefits (COBRA)
Under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986, laid off employees are often entitled to continue their or their dependents’ health insurance coverage under a former employer’s group plan for 18 months (or longer in certain qualifying circumstances). The former employee or his/her dependents who elect to continue coverage may be required to pay up to 102% of the total premium. Important timelines apply to the election of COBRA coverage. Generally speaking an employee and his/her dependents have 60 days from the later of the loss of coverage or the notice of COBRA rights. For detailed information about COBRA rights go to the Department of Labor’s page at: http://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html.
It is important to determine how your pension or 401(k) rights may be affected by a layoff. These plans vary widely and are governed by a “plan document” that sets out the terms of the plan. Employees are entitled to a “summary plan description” providing basic terms of the plan. Pensions may also be affected by the bankruptcy of the employer. For more information about your rights in such an event, go to: http://www.dol.gov/dol/topic/heath-plans/cobra.html.
Advance Notice of Layoff (WARN Act)
The federal Worker Adjustment and Retraining Notification Act requires many larger employers (i.e., those with more than 100 employees) to provide 60 days prior notice of a mass layoff or plant closing. There are several exceptions to this requirement, and whether a layoff constitutes a “mass layoff” or “plant closing” within the meaning of the WARN Act can be disputed. However, if an employer fails to comply with the WARN Act’s notification requirements, it can be required to compensate affected workers with up to 60 days wages and benefits. For more information about the WARN Act and its requirements, go to: http://www.dol.gov/compliance/laws/comp-warn.htm.
Older Worker Rights
Employers laying off workers over the age of 40 must comply with the federal Older Workers Benefit Protection Act in order to secure an enforceable release of potential age discrimination claims from such employees. Among other things, this Act requires that an employer give the laid off employee 21 days to consider an agreement and seven days to revoke it – longer periods and additional disclosure requirements apply where the layoff is part of an exit incentive program or employment termination program (i.e., a large layoff). To learn more about age discrimination in employment (the “ADEA”) and the OWBPA, go to: http://www.eeoc.gov/laws/types/age.cfm.
Many employers utilize noncompete agreements to try to limit an employee’s activity after the employment relationship ends. Depending upon the circumstances in which such an agreement is implemented and its terms, such agreements may or may not be enforceable. If the employer’s restrictions do not protect a legitimate business interest, such as client information, the agreement may be unenforceable. Further, if the noncompetition agreement is unreasonable in scope, geographic restriction or time, it may be unenforceable. Moreover, if you lost your job because of misconduct by the employer, such as discrimination, the noncompete agreement becomes unenforceable.
If you are leaving a position or considering a separation agreement that includes a non-compete provision, it is important to carefully analyze the circumstances before making a move. In addition, many agreements include confidentiality provisions that can be used by former employers to try to attempt to limit an individual’s future employment possibilities. There is a great deal of litigation over these issues, so it is highly recommended that you obtain good legal advice about your rights and obligations if you are subject to such an agreement.
The federal Worker Adjustment and Retraining Notification Act (WARN) requires many larger employers (i.e., those with more than 100 employees) to provide 60 days of prior notice of a mass layoff or plant closing. There are several exceptions to this requirement, and it can be disputed whether a layoff constitutes a “mass layoff” or “plant closing” within the meaning of the WARN Act. However, if an employer fails to comply with the WARN Act’s notification requirements, it can be required to compensate affected workers with up to 60 days of wages and benefits. For more information about the WARN Act and its requirements, go to: http://www.dol.gov/compliance/laws/comp-warn.htm.
Laid off workers are often entitled to collect unemployment compensation benefits because their employment ended through no fault of their own. Terminated workers are often entitled to benefits, too, depending on the facts and circumstances. However, severance pay and other provisions in separation or other agreements can have an impact. For more information on unemployment compensation benefits in Ohio go to: http://unemployment.ohio.gov.
For information on termination that you believe was the result of retaliation against a protected activity or discrimination, please see the “Retaliation and Discrimination” section of this website.
For information on the effects of termination on your health insurance and your pension, please see the “Pension and Health Insurance Plans” section of this website.