Layoffs are inevitable. Companies fail. Business needs change. Layoffs have swept technology and other sectors in recent years, including huge layoffs at Google, Meta, Twitter and IBM. The list goes on.
However, that doesn’t mean an employer can simply lay off whomever it chooses. Put simply, a company can’t target employees in protected classifications and it can’t disproportionately select protected employees without a legitimate business reason.
Who’s protected?
Under California law, employees are protected from discrimination and harassment because of:
- Race
- Color
- Religion
- Sex
- Gender
- Gender identity
- Gender expression
- Sexual orientation
- Marital status
- National origin
- Ancestry
- Mental and physical disability
- Medical condition
- Age (over 40)
- Pregnancy
- Denial of medical and family care leave
- Pregnancy disability leave
In addition, an employer can’t retaliate against an employee for protesting illegal discrimination relating to one of the above categories. Likewise, an employer can’t retaliate against a whistleblower (for example, an employee who discloses a company’s legal violation to a supervisor or the government).
What kinds of discrimination are prohibited?
There are two kinds of unlawful employment discrimination: (1) disparate treatment and (2) disparate impact. Disparate treatment refers to intentional discrimination. These claims are proved by direct and circumstantial evidence. Direct evidence may consist of discriminatory comments – for example, “you’re too old and need to retire.” In contrast, circumstantial evidence raises an inference of discrimination – for example, if the reason given for your layoff is false, it can be inferred that your employer may have had a discriminatory motive. In a layoff, this may occur where an employer says your job is going away, but then hires a younger replacement.
Disparate impact refers to a policy or practice having a disproportionate, negative impact on employees in one of the above categories. In a layoff, this usually occurs when an employer selects employees for layoff based on business needs, but ends up selecting too many employees in one or more protected classifications – for example, too many employees over the age of 40. These claims are proven through statistical evidence. Unless the employer can show that it had a legitimate business reason for laying off too many protected employees, such discrimination is unlawful.
Employees subject to discrimination may recover economic damages (for past and future lost wages and benefits), non-economic damages (for emotional distress), punitive damages (in disparate treatment cases only), and attorneys’ fees and costs.
Evaluating your options
Many employers offer severance agreements to employees selected for layoff. In exchange for a payout (typically 1-6 months’ salary), employees give up all claims against their employer, including the ones discussed above. In addition, companies generally require employees to keep the terms of the severance agreement confidential and also prevent employees from saying anything negative about their employer.
If you are required to release claims of age discrimination in exchange for a severance agreement, including giving up your right to a class action or a jury trial, the company is required to provide you with information about who else is being laid off and their respective ages.
Before you sign a severance agreement, you should carefully consider your options. In some cases, the agreement may provide a soft landing, allowing you to successfully transition to other employment. In other cases, you will be giving up important rights and a potentially large recovery in exchange for a meager payment.
You are strongly encouraged to seek legal advice regarding any potential claims you may have against your employer before signing a severance agreement. Even if you decide to sign the agreement, you may be able to negotiate a better deal, including a larger severance payment.