Layoffs vs. Wrongful Termination: How to Spot the Difference in California

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Layoffs vs. Wrongful Termination: How to Spot the Difference in California

California saw 147,000 people get laid off or discharged from their jobs in March. This was 10,000 fewer layoffs or discharges than happened in February, which is good news, but it’s not perfect. In the past year, there have been an average of 157,000 discharges or layoffs each month. The question arises: how many of these discharges were wrongful terminations?

If you look at the 2023 reports with the U.S. Equal Employment Opportunity Commission (EEOC), there were 11,947 wrongful termination complaints filed in 2023. It accounted for 6.2% of the state’s employment discharges that year. The charges included:

  • Retaliation (2,549)
  • Sex (1,778)
  • Disability (1,716)
  • Race (1,651)
  • Age discrimination (971)
  • National Origin (655)
  • Religion (428)
  • Color (351)
  • Equal Pay Act (65)
  • Genetic Information (33)

One of the worst feelings in the world is when you get an email, call, or face-to-face announcement that you are being let go. You go from having a solid income to having to make ends meet on a meager unemployment income. Worse, you’re unsure that this was a wrongful termination. How can you tell the difference between a layoff and wrongful termination?

Understanding What a Layoff Is

Merriam-Webster defines a layoff as “the act of ceasing to employ an employee or workforce.” Layoffs are usually based on company financials, downsizing, restructuring, or lack of enough work, such as seasonally. Because layoffs can be tied to seasonal slowdowns, they may be temporary. When things pick back up, employees are called back, if they still want their job back.

When a company lays off employees, severance packages are common. Employees often gain additional benefits like help finding a new job and helping signing up for unemployment.

In California, the Worker Adjustment and Retraining Notification (WARN) Act requires employers to give notice to employees, local representatives, and the state before mass layoffs or a plant closure. The goal is to give workers and the community time to make plans to protect against the loss of income, tax revenues, and local sales tied to the workers who come and go from that town or city. 

California’s WARN Act requires a business with 75 or more covered employees to get 60 days advance notice before a closure, layoffs, or relocation. If the 60-day notice isn’t given, penalties of up to $500 per day are possible. Employees may also be paid back pay and have any medical expenses reimbursed if they would have been covered by the company’s insurance.

Understanding What Wrongful Termination Is

Layoffs are legal as long as the WARN Act is followed. Sometimes, workers are dismissed for valid reasons, such as clocking in and then sneaking back out to a car to take a nap. There are also wrongful terminations where an employee is discriminated against, subject to workplace retaliation, or contract terms are violated. A wrongful termination may be set up to look legal, but it’s actually a violation.

Suppose a company claims to need to lay off 10% of its workforce. It lays off all of the most senior staff members, who also happen to be the oldest workers in the plant and the most expensive age group when it comes to health insurance policies. No one under the age of 55 is laid off. It could easily be age discrimination being masked as a layoff.

California is an at-will state. This means that employers have the right to terminate positions as long as those reasons are legal. If the reason for the layoff is a protected class, it becomes a wrongful termination. Common reasons for wrongful termination are:

  • Breach of Contract – Before a termination takes place, the guidelines listed in the worker’s contract must be followed. If your contract states workers with more seniority are the last in line for layoffs and you’re laid off first, it’s a breach of contract and therefore a wrongful termination.
  • Constructive Discharge – The employer makes the work environment unbearable leaving workers with no choice but to resign. For example, refusing to allow more than one bathroom break per shift.
  • Discrimination – Any termination based on age, color, disability, gender, national origin, race, religion, etc. If you’re laid off because too many customers have complained that they don’t feel your hijab makes you trustworthy, it’s a wrongful termination.
  • Retaliation – A termination that takes place after an employee reports a violation such as harassment or discrimination. You reported your manager for making snide comments about your body. In return, you lost your job. That’s retaliation.
  • Violation of Public Policy – Terminating a worker’s job because they wouldn’t violate a law for the company. For example, a store owner tells workers to sell cigarettes to anyone, regardless of age, to boost sales or lose their job if they refuse.
  • Whistleblowing – If you’re terminated after reporting fraudulent or illegal activities at your workplace, it’s a violation of whistleblowing protections.

How Do You Know If You Were Wrongfully Terminated? 

What signs indicate a wrongful termination over a valid layoff? Look at these three factors.

  • Were other employees laid off around the same time?
  • Are there any patterns with the workers who were laid off? (i.e. all the same race, color, gender, age, etc.)
  • Is the company strong with plenty of work and a seemingly steady cash flow?
  • What reason were you given for the layoff, is it related to the company’s financial decline or lack of available work, or something more alighted to potential discrimination?

As an example, a Los Angeles charge nurse in California lost her job after her supervisor and fellow employees made comments about her age, that she should be retiring, and that she was making it harder for younger employees. She filed a wrongful termination case and won over $41.49 million in damages.

What Do You Do Next?

Gather as much evidence as you can. If a group of you were all terminated at the same time and you’re of similar ages, races, religions, etc., get everyone’s contact information if you can. Keep note of who was laid off and what reason they were given.

If you have performance reviews, get copies of them all. Don’t just save them on your work computer as you might lose access. 

Keep copies of emails you were sent during the termination process and any letters you received. Jot down things your manager or supervisor says about your layoff. The more evidence you have in your favor, the better it is.

Once you have this information, contact an expert in California employment law. You want to have a professional opinion to determine if you have a valid complaint or if your employer’s layoff was handled legally.

Shegerian Conniff offers free consultations to help you determine if you have a valid case against your employer. We’ll offer guidance on how to proceed. Don’t sit back and let your employer get away with mistreatment. Our employment law team is here to make sure you’re treated fairly and according to California’s employment laws.

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