You Lost Your Job; Can You Sue?
No job lasts forever. Most employment can be terminated at any time, voluntarily or involuntarily, and both situations have legal dimensions to them. But, an involuntary termination (usually through a discharge or layoff) typically presents the most legal issues, including a number of discrimination concerns.
In the United States, most employees are considered employees at will. This means, simply stated, that an employer or employee can end the employment relationship at any time, for any reason, with or without notice. Accordingly, unless otherwise restricted by an agreement, employers can terminate the employment of an employee at any time for a good reason, a bad reason, or no reason at all – but never for an illegal reason.
So what does this mean for you if you have been fired or laid off? Your termination is likely lawful, even if the circumstances surrounding your termination appear to have been handled unfairly. This is true unless you can find evidence that you were terminated for an illegal reason, such as your membership in a protected category as defined by a federal or state antidiscrimination law or your reporting alleged misconduct by your employer. However, you may have additional rights if you work for the government, have an express or implied employment agreement, or are covered by a collective bargaining agreement.
It is important to note that an employer's freedom to discharge or lay off employees is restricted by antidiscrimination laws. An employer may never decide which employees to lay off or fire based on the membership of those employees in one or more protected classes.
Being Fired Versus Being Laid Off
While the effect of a discharge and a layoff may be the same – i.e., you have lost your job – the reasons behind discharges and layoffs are usually different. A discharge is usually the result of some conduct of the employee – for example, the employee's performance was not up to standard; the employee violated company work rules; or the employee's personality conflicted with those of others in the workplace. A layoff, however, usually stems from some issue relating to the operation of the business – for example, sales are down and the employer does not need as many workers; a merger has resulted in duplication among workers; or the company has reorganized so that certain types of jobs are no longer needed.
No specific law governs how employees may be laid off or the means by which employers must select who will be laid off. If there is no collective bargaining agreement establishing layoff procedures, an employer generally is free to determine when layoffs are necessary and who is to be laid off. Contrary to popular belief, an employer – absent a collective bargaining agreement – is not required to use seniority (meaning, the principle of "last hired, first laid off") to determine layoffs. Nor does the law require employers to pay severance to laid-off workers.
During layoffs, concerns about age discrimination often arise. Mass layoffs disproportionately reducing the number of older workers may indicate that age discrimination is taking place. An employer may not base a layoff decision on the assumption that older workers are not as productive as younger workers, or on the belief that "young blood" is necessary for new ideas. However, decisions can be made based on the performance and evaluations of the specific employees involved.
To encourage employees to voluntarily quit rather than face layoffs, employers sometimes offer incentive packages. These packages usually provide for economic inducements that are not generally available to laid-off employees. They also often require employees to waive their right to sue the company for anything that happened while they were employed. Such waivers are enforceable, as long as they are known and voluntary, and can prevent an employee from suing the company for any violations of labor and employment laws. There is one general exception: courts will not enforce a waiver of any claims that arise under the Fair Labor Standards Act.