Employee Rights for a Lay Off
In the United States, most employment is "at will." That means either the employer or employee can end the work arrangement at any time for any reason, so a business is allowed to lay off workers whenever it deems necessary. Exceptions to this at-will practice include workers covered by a union agreement or by an individual employment contract. On the surface, it appears that employers have all the power in a workforce reduction, but laid-off employees have certain rights that are protected by federal and state laws.
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Notice of Lay Off
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Under the federal Worker Adjustment and Retraining Notification Act, businesses with more than 100 workers must give workers up to 60 days' advance notice for a mass layoff or plant closing. Under this law and similar state laws, the business must pay regular wages and benefits during this 60-day period even if the plant has already closed.
Final Pay Rights
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Businesses are required to pay laid off employees for all hours worked, including overtime pay, commissions and expense reimbursements, within a reasonable amount of time. This may be the last day worked, the next regularly scheduled payday or within 30 days of the termination date.
In addition, if a laid-off worker is covered by the WARN Act, the required pay for the 60 days advance notice of layoff must also be paid out within a reasonable time period. Payouts for bonuses, accumulated vacation or sick pay are subject to the employer's human resources policies. Some states have laws regarding payout of unused vacation time.
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Unemployment Insurance Benefits
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Laid-off employees are entitled to apply for unemployment insurance benefits. These benefits are mandated by federal law and are administered by individual states. The qualifications for UI, the benefit amount and the number of weeks a laid-off worker may receive benefits varies from state to state.
Continuation of Health Insurance
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Laid-off workers are entitled to continuation of their employer sponsored health, dental and vision insurance benefits. Under the Consolidated Omnibus Budget Reconciliation Act, laid-off employees are entitled to the same insurance benefits as current workers.
The laid-off employee must pay 100 percent of the insurance premium, plus up to 2 percent to cover administrative costs. Participation in COBRA is voluntary, and the worker has 60 days from the date of COBRA notification to accept or decline these benefits.
Severance Pay
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Businesses are not required to give laid-off workers severance pay unless it is specified in a labor agreement or an individual employee contract. However, many employers give severance pay based on employees' years of service and their job position.
An employer may require a worker to sign a separation or severance agreement, which lays out the terms of the severance pay and prohibits the worker from filing a lawsuit against the employer.
Workers have the right to negotiate the amount of severance pay, if it is offered, or to request severance if it is not offered. However, the employer is not required to negotiate the amount or to pay severance when it is not required by a contract or labor agreement.
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References
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