COVID-19 has wreaked havoc on employers in Silicon Valley and across the country. Many businesses need to implement layoffs to stay afloat. Although the pandemic has created urgent and difficult circumstances, it is important for employers to keep in mind their legal obligations and potentially seek advice before laying off employees due to COVID-19. The San Jose employment lawyers at SAC Attorneys can address your concerns and devise a strategy for you.
Deciding to lay off workers can be construed as an adverse employment action under federal and state anti-discrimination laws. Even if the reason for the layoff is the pandemic or economic losses arising from the pandemic, the reason why a certain employee is laid off may not be clear to the employee. It is important for employers to document their business reasons for choosing which employees are subject to layoffs and make sure that those reasons are neutral reasons, such as job tenure and classification, rather than aspects of identity.
Even during the COVID-19 pandemic, employers laying workers off need to be mindful not to run afoul of federal anti-discrimination laws like Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and other laws enforced by the Equal Employment Opportunity Commission (EEOC). In other words, an employer should not determine which employees to lay off based on protected characteristics. It should also be careful to avoid choosing employees to terminate based on characteristics protected by the California Fair Employment and Housing Act (FEHA).
Sometimes an employer has arranged to pay severance under an employment contract, and it is important to honor any employment agreements that mandate that severance be paid when laying off a worker. There are also situations in which an employer wants to pay severance to avoid future claims, such as employment discrimination or harassment claims.
Special protections may come into play under the federal Older Workers Benefit Protection Act (OWBPA) when an employer has at least 20 employees. The OWBPA requires that employers follow certain rules when seeking a release from an older worker that requires them to waive their age discrimination claims under the ADEA. These rules are intended to ensure that the ADEA rights waiver is knowing and voluntary. Among these rules is the requirement that an employee should be given a minimum of 21 days to consider the offer and at least seven days after signing the agreement to change their mind.
When there is a reduction in force, or a group of employees is offered a termination incentive program, and at least one affected employee is over 40, additional requirements related to releases must be met. Each employee, regardless of age, must be given a minimum of 45 days to consider the proposed release prior to signing. Each employee needs to be given specific information about the titles and ages of affected and unaffected members of the group that is being terminated together. If the OWBPA requirements are not met, a waiver is invalid and unenforceable.
Employers should review employment policies, collective bargaining agreements, and individual employment contracts to make sure that their contractual obligations are met in a layoff. There may be a layoff procedure that was arranged at the start of the employment relationship. There may be policies set forth about accrued paid time off benefits that need to be paid at termination. There may be a requirement that severance pay be offered.
Under California law, an employee who is terminated needs to be paid all their wages, including accrued vacation, immediately at the time of termination. When final wages are not timely paid, an employee can seek damages for the days for which the wages stay unpaid.
The federal Worker Adjustment and Retraining Notification (WARN) Act may apply to an employer laying people off in a qualified plant closing or mass layoff due to COVID-19. Under the WARN Act, employers with 100 or more full-time workers need to give 60 calendar days’ written notice before covered plant closings and mass layoffs.
There are exceptions to the 60-day advance notice requirement. If a company was actively seeking capital or business and reasonably and in good faith believed that advance notice would prevent its ability to get the capital or business that would allow the employer to avoid or postpone the shutdown for a reasonable period, it need not provide the advance notice. Another exception is when the mass layoff or plant closing is caused by business circumstances not reasonably foreseeable at the time that the employer would have been required to give the notice.
Governor Newsom has issued an Executive Order that temporarily modifies the California WARN Act requirements for employers engaging in mass layoffs because of COVID-19. Usually, employers covered by the California WARN Act are those with at least 75 employees in the last 12 months, and they must give 60 days’ notice before a mass layoff or location closing. However, the Executive Order requires employers conducting a layoff because of the COVID-19 pandemic to give only as much notice as is practicable and a short statement of reasons for reducing the notification period. When written notices are provided on March 18, 2020 or afterward, an employer needs to include specific language about the employee’s eligibility for unemployment insurance.
If you want to know more about your obligations in laying off employees due to COVID-19, while complying with the law, you can consult SAC Attorneys. We represent businesses in San Jose and throughout Silicon Valley. Call us at (408) 436-0789 or contact us via our online form.