Does Wrongful Termination Apply to Layoffs Without Adequate Severance?

While wrongful termination typically refers to an employee being fired for illegal reasons, layoffs can sometimes fall under this category if the employee is not provided with proper severance pay, benefits, or if the layoff violates specific legal protections. Employees may have grounds to claim wrongful termination if their layoff breaches employment agreements, violates labor laws, or involves discriminatory or retaliatory practices.

Steps to Take If Laid Off Without Adequate Severance

Review Your Employment Contract: Check if your employment agreement or company policy outlines specific terms for severance pay. If the company has a policy or contract that specifies severance benefits, you may have legal grounds to claim they are not fulfilling their obligations.

Confirm Company Layoff Policies: Many companies have policies regarding layoffs and severance pay. If you were laid off without receiving severance in accordance with company practices, this could be a breach of those policies.

Check Local and Federal Laws: In most cases, severance pay is not legally required unless specified in an employment contract or collective bargaining agreement. However, if your layoff violates labor laws, such as discrimination or retaliation laws, or if it involved a breach of contract, you may have a claim.

Document the Situation: Keep records of your layoff notice, communications from your employer, and any other relevant documents that indicate you were not provided with the proper severance pay or benefits.

Consult with a Lawyer: If you believe your layoff was handled improperly or you were denied severance in violation of an agreement or law, consulting with an employment attorney can help you understand your rights and options for legal action.

Legal Actions and Protections

Employment Contract Violations: If your employment contract specifies severance pay or benefits in the event of a layoff, failure to provide these may constitute a breach of contract. You may be able to pursue legal action for breach of contract or wrongful termination.

Discrimination and Retaliation: If you believe you were laid off in violation of anti-discrimination laws or as retaliation for reporting harassment, discrimination, or unsafe work conditions, you could file a claim for wrongful termination based on these illegal reasons.

WARN Act (Worker Adjustment and Retraining Notification): Under the federal WARN Act, employers with 100 or more employees are required to provide 60 days’ notice before a mass layoff or plant closing. If an employer fails to provide this notice, employees may be entitled to back pay and benefits for the violation.

Severance Pay Expectations: While severance is not mandated by law, certain industries or collective bargaining agreements may have specific requirements. Employees laid off without severance may be able to file a claim if the company has a history or policy of providing severance pay or if it is contractually agreed upon.

Example

Susan worked for a marketing firm for over 10 years and was laid off due to company restructuring. Her employment contract stated she was entitled to a severance package that included two weeks of pay for every year worked. However, when Susan was laid off, she was only given one week’s severance, and the company did not offer any other benefits, despite having the financial resources to do so.

Susan documents the terms of her contract and the communications from HR about the severance pay she received. She consults an attorney, who helps her file a claim for wrongful termination based on breach of contract, arguing that the company did not meet its contractual obligation to provide the proper severance. The firm is required to pay Susan the remaining severance she was owed and could also be liable for additional damages if it is found that they acted in bad faith.

In this case, if Susan’s employer fails to follow the terms of her contract or violates any legal protections surrounding layoffs and severance, the company may face legal consequences for wrongful termination.