5 Laws That Protect You During Layoffs

Knowing the difference between an illegal layoff and an unfair layoff can help you decide whether to fight or move on.
Knowing the difference between an illegal layoff and an unfair layoff can help you decide whether to fight or move on. (Adobe stock image)

Being laid off is an emotional event that can leave you feeling wronged. Knowing the difference between an illegal layoff and an unfair layoff can help you decide whether to fight or move on.

"It's difficult for employees to see layoffs from an objective perspective," said Marilyn Conyer, vice president of Accord Human Resources, an Oklahoma City HR consulting firm. "Many times when employers lay out the facts of a layoff, we don't think it's fair, either, but there's nothing illegal about what the company did."

Employment in most states is "at will," meaning you can quit or the company can fire you without cause. However, companies still have to follow federal and state employment laws covering issues such as discrimination, whistleblowing and layoff notices.

Five major federal laws protect laid-off employees. States have their own laws about employment, so to be sure your layoff wasn't illegal, check with a local attorney.

Discrimination Laws

How can you tell whether your layoff was discriminatory? Consider all the reasons you were laid off, says Sarah Beth Johnson, an attorney at Fox Rothschild LLP in Atlantic City, N.J. If there's even one other explanation for why you were let go, the discrimination charge likely won't stick.

"If you're the worst employee ever and you're older, that's not enough," she said. "It really has to be that you were told you're too old for the job, or you're a Black woman who can point to a white male who's your peer in every way, and you got laid off and he didn't."

It is legal to lay off a highly paid older worker.

"If I can fire you and hire two people for your salary who do twice the work, I'm allowed to do that," Johnson said.

If you think discrimination played a part in your layoff, contact a lawyer or the Equal Employment Opportunity Commission (EEOC). The EEOC will listen to your story, question your former employer, make a finding and issue a right-to-sue letter you can take to an attorney, Conyer says. You can sue regardless of whether the EEOC finds in your favor.

Federal laws that prohibit discrimination include:

  • Title VII of the Civil Rights Act of 1964, which prohibits companies from making employment decisions based on race, religion, sex (but not sexual orientation), pregnancy or national origin, explains Neil Patrick Parent, an attorney with Reavis Parent Lehrer LLP in New York City.
  • Title I and Title V of the Americans with Disability Act of 1990, which prohibit employment discrimination against those with disabilities.
  • The Age Discrimination in Employment Act of 1967, which protects workers 40 and older.
  • The Older Workers Benefit Protection Act, which covers workers over 40 caught in a group layoff. The law gives you extra time to consider any severance waiver your employer offers and a week to change your mind after signing a waiver.

If your employer is large, The Worker Adjustment and Retraining Notification Act, which sets rules for notifying workers about large layoffs and plant closures, may cover you.

Handbooks, Severance Not Binding

Employee handbooks typically cover layoffs, severance, pay for unused vacation and your duty to return company equipment, Johnson says.

However, an employer can change the rules and then do a layoff under the new rules. "If an employer has reserved the right to change [the handbook] -- and most do that -- they can change it," said Karen McLeese, vice president of CBIZ, a Kansas City, Missouri, HR consulting firm.

A company can also say it's broke so no one gets severance. "Severance [is] an unsecured promise to pay unless they've funded it into a trust," McLeese said.

Severance Releases

When severance is offered, you may have to sign a waiver releasing the company from future claims. When helping clients decide whether they should sign, Julia Murphy -- an attorney with Outten and Golden LLP, a Stamford, Connecticut, firm that represents only employees -- discusses the circumstances surrounding the layoff.

"Why were you picked? Did they eliminate your whole department? Do you feel like you're being singled out, because you just had a baby or took a disability leave?" she said. If you want to fight the decision or ask for a better severance package, "that's when you need some legal leverage, and that comes from the facts surrounding the termination," she said.

Layoff Lawsuits

Even if you were illegally laid off, it may be tough to pursue your case in court. Johnson warns: If your salary was low, finding an attorney willing to take your case may be difficult.

A lawsuit found in your favor could result in back pay, damages and attorneys' fees. However, those come with a cost. "You have to have the stomach for litigation," Johnson said. "It will take 2-4 years, unless you have slam-dunk evidence."

During the litigation process, be prepared to talk about topics like your work history and whether you've ever been convicted of a crime. If you claim emotional distress, your medical records will be brought up. Claim lost income, and your employer's attorney will get to see your tax return and your spouse's return, Johnson adds.

In the end, an attorney can tell you whether your layoff appears to be legal or illegal, but only you can determine whether the cost of going after your former employer is worth the effort it will take.

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