Bad economy means prime grounds for lawsuits
This is the unfortunate side effect of the economic downturn we are in. We all know know people that have directly been affected by the downturn, but this NYTimes article shows that simply laying off employees isn’t going to be the last that employers will see:
http://www.nytimes.com/2009/01/31/business/economy/31employ.html?partner=rss&emc=rss
First layoffs, then lawsuits.
More workers are being let go as corporate layoffs that began in earnest last year have accelerated in recent weeks. And more often, people are looking around and complaining that they have been unfairly or improperly dismissed.
Former employees of Lehman Brothers, for example, say they were not given the required 60 days’ pay before their jobs vanished, while Dell is being sued over allegations of age and sex discrimination against workers, in what lawyers say are growing choruses.
Before filing many types of discrimination lawsuits, disgruntled employees must file a claim with the government. The number of such claims, which had fallen for several years, rose more than 15 percent last year on top of a smaller increase in 2007, and lawyers expect a bigger jump this year.
People take legal action out of desperation as it becomes more difficult to find new employment, said Lawrence Z. Lorber, an employment lawyer at Proskauer Rose in Washington.
“When there is no job, there is no safety valve,” he said, “so people who have issues and then lose their jobs or have some adverse employment action taken, are now much more willing to file their suits.”
But a number of laws — most of them passed in better times — also give victims of layoffs more legal arguments to draw on since the last steep recession in the early 1980s.
The suddenly unemployed may be emboldened by a sense that the Obama administration will be more aggressive in enforcing employment laws. Under the Bush administration, the number of employment lawsuits brought by the government declined for several years.
“This is the first time we’ve had major reductions in force with the full panoply of employment protections we have now,” said Joseph M. Sellers, head of the employment practice at the law firm Cohen Milstein Sellers & Toll. “We are embarking on a new phase in employment litigation.”
Though there are no statistics on total employment cases, lawyers say the number of suits is rising fast. But lawyers also say that winning an employment case is not easy.
Employees of several companies are trying to bring class-action suits — which will require a judge’s approval. Terminated employees of the furniture retailer Ethan Allen filed an age discrimination lawsuit against the company in October. Former employees of Dell, the computer maker, filed an age and sex discrimination suit against the company that same month. A veteran terminated by Lockheed Martin sued in November, claiming among other things that the company discriminated against veterans.
Individual claims, as opposed to class actions, are rising too, lawyers say. So are lawsuits on behalf of employees claiming they never received overtime pay.
In a decision in 2007, the Supreme Court effectively blocked a sex discrimination claim against Goodyear Tire and Rubber by Lilly Ledbetter, who argued that for years she had been paid less than her male colleagues. The court ruled she had to bring the case within 180 days of her employer’s initial decision to pay her less than men.
President Obama signed legislation on Thursday overturning the Supreme Court’s decision, which could open the doors to similar cases. Congress is weighing legislation to expand on laid-off workers’ rights.
Some companies, retrenching quickly or collapsing, may have violated a 1989 law requiring 60 days’ notice before laying off workers. It is the Worker Adjustment and Retraining Notification Act, known as the Warn Act, and a complaint by a group of displaced workers who did not get pay for that time led to a Chicago sit-in recently. Suits claiming Warn Act violations have been filed not only against Lehman Brothers, the failed investment bank, but also against Eos, a bankrupt airline, and a pair of law firms that recently folded, Thelen and Heller Ehrman.
At Eos, employees were paid twice a month and were told of the company’s collapse days before payday, said Peter C. Mochnal, a former director of global sales for the airline and the class representative in the suit. He worked at Eos from 2005 until its bankruptcy last spring; the airline did not pay him during his last weeks at the company, nor did it pay him the amounts mandated by the Warn Act.
“My first paycheck from Air Partner came maybe two weeks into August,” said Mr. Mochnal, referring to the aviation services company where he now works. He added that he had earned more than $10,000 a month at Eos, so two months’ pay would have been substantial.
Mr. Mochnal said that he considered his family lucky. Though they had to make do with much less and relied on credit cards for a few months, they had just sold their house in Florham Park, N.J., before he lost his job. “We had moved in with my in-laws” in the same town, he said. “That is the only thing that saved us.”
With bankruptcy the only other bright spot for lawyers in this recession, some law firms are focusing on these types of cases.
“We have a Warn Act practice group that we started from scratch a year and a half ago, and they’re busy, busy, busy,” said Wayne N. Outten of Outten & Golden, a New York employment law firm representing the Eos employees. “We have filed somewhere in the neighborhood of 25 Warn Act cases, two-thirds of those in the last four months.”
Many corporate defendants may not have the funds to pay up even if they are found in violation. If the plaintiffs suing Lehman are successful, for example, they will end up as claimants in bankruptcy court, with probably a small fraction of the amount sought, alongside the company’s other creditors. The Eos plaintiffs stand to receive about $1.7 million, just over half of what their lawyer says they were owed, under a settlement approved by federal bankruptcy court in White Plains on Wednesday.
The number of lawsuits filed under the Warn Act or state versions of it (under New York‘s law, which takes effect Feb. 1, companies must provide 90 days’ notice before a layoff) could multiply quickly. Such suits do not require plaintiffs to wait until the government has a chance to investigate.
Courts and lawmakers have also given employees more options under longstanding antidiscrimination laws. In the fall, Congress modified laws prohibiting discrimination against the disabled, increasing the number of conditions considered disabling.
A critical ruling by the Supreme Court in 2005 augmented protections for older workers. The court stated that a plaintiff in such an discrimination lawsuit need not prove an employer acted intentionally, only that a layoff had a “disparate impact” on older workers. The ruling is important because it can be difficult to find evidence that an employer deliberately singled out one or a group of employees.
Only recently have employment lawyers begun to take advantage of protections afforded by federal law to people caring for family members who are sick. Reductions in force, or RIFs, that affect people who are caregivers may violate one of several federal laws, including a prohibition on sex discrimination.
“There is robust social science evidence that there is serious workplace discrimination against mothers and that in the context of this economic downturn it appears that mothers are encountering lots of what they see as ‘mommy RIFs,’ ” said Joan C. Williams, a professor at the University of California Hastings College of the Law and director of the Center for WorkLife Law. Ms. Williams added that calls had soared in recent months to a hotline for caregivers who thought discrimination played a role in their layoffs.
Proving discrimination is not easy; much turns on the specific facts of an individual’s case. And while the number of legal arguments available to plaintiffs may have increased, winning in court has actually become more difficult, according to several employment lawyers.
“Interpretations of these laws often make it harder for plaintiffs to prevail,” Mr. Sellers said.
In many instances, employers will offer severance payments only to employees who agree to sign away their right to sue. So recipients of generous severance packages, like people laid off by Wall Street firms, may sit out the litigation fray.
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