Layoff Survival Guide
In this unprecedented economy, layoffs are becoming a fact of life. No matter how well you have done your job, you may be laid off for economic reasons. Of course, it is not illegal to let you go for economic reasons, but there are many other things to consider. Here are a few legal issues you should think about if you think you might be laid off or if you are told that you are being laid off:
1. Your Personnel File: You are entitled to it under the Connecticut Personnel Files Act and you should get a copy of it. All you need to do is submit a written request. I recommend that you refer to this law. Your employer can charge a reasonable copy charge. Knowledge is power in this world and knowing what is in your file could help down the line.
2. Severance Benefits / Severance Pay: If your company has a Severance Pay Plan you might be entitled to severance pay. You should get a copy of it, review it and understand it. If there is no such plan, you might still be able to negotiate a severance or separation payment. Generally, companies pay these if they have some reason to believe you might sue them and win. Of course, they will require that you sign a General Release in return for this pay. Always consult an experienced employment attorney before signing.
3. Accrued Personal Time Off: In Connecticut, if an employer has a policy to pay accrued but unused PTO (sick, vacation, personal) then they must pay it at separation. C.G.S. Sec. 31-76k. If they don’t, then they need not.
4. Commissions: A commissioned sales persons may be entitled to be paid commissions that they earned before the layoff, even though the revenues haven’t yet come in. You should get a copy of the commission plan and review it.
5. Incentive Compensation: Employees whose compensation includes a bonus or incentive compensation component may be entitled to a pro rata share, even if they were terminated before the end of the year.
6. Overtime pay: Most people do not understand the law of overtime pay. Frequently, employers will classify an employee as exempt from overtime pay when in fact they are non-exempt (and therefore entitled to overtime pay). Retail managers or assistant managers who don’t actually exercise management authority may be entitled to overtime back-pay if they were misclassified. It might be possible to negotiate a payment of previously earned overtime pay in return for a release of claims.
7. Unemployment: Generally, if you are laid off for business reasons, you will collect. Make sure you make your claim the week after your termination. You will not be allowed to collect for prior weeks if you don’t make a timely claim. If you sign a release of claims in return for severance pay, you may collect unemployment benefits for the same period of time as your severance payments.
8. Restrictive Covenants: These include covenants not to compete and covenants not to solicit. Covenants not to compete restrict your ability to compete in the same industry and same area for a limited period of time. Covenants not to solicit restrict your ability to solicit clients from your former employer. Both types of documents are construed narrowly and strictly against the employer, but can be enforceable. You should obtain and review any such documents that you may have signed. There can be ways to get around them if they were not drafted or executed properly.
9. Reference letters: As part of a severance negotiation, it is possible to obtain a reference letter from your employer. Of course, these can come in handy on your next job interview. I recommend that you write it, but don’t go overboard. One paragraph describing what you did and another describing how well you did it. Using language from your most recent performance appraisal is often a good idea.
10. Separation Agreements: Some employers will offer a few weeks severance pay in return for a Release of Claims. Be very careful. These documents could require you to sign non-compete clauses when you hadn’t signed one before. They could also have other conditions and restrictions which are unfair. Usually, they state that you have 21 days to consider them and 7 days to revoke. If so, don’t let your employer bully you into signing before seeing an attorney. Many times, you can negotiate an extension of time if you need one. You should always meet with an experienced employment attorney before signing any such document.
Generally, while there is nothing illegal about laying off an employee for business reasons, there still are several important legal issues that arise. At the Hayber Law Firm, we have been assisting employees with these issues for years.