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Your employment rights: The US

Employment laws in the U.S. offer few protections. With the exception of Montana, employment in every U.S. state is considered “at-will,” meaning companies can dismiss workers at any time for any reason – other than an illegal one – without cause or notice. Moreover, U.S. employers are not required by law to offer workers severance pay, and can cut salaries and benefits as they see fit.

There are, however, a few exceptions to at-will employment that protect employees from being let go in certain circumstances. Discrimination laws prevent companies from terminating someone for the reasons of age, race, religion, sex, disability and veteran status.

Employees are also protected from company retaliation by “whistleblower” laws, which prevent employers from punishing or firing workers who report violations in workplace safety or securities laws, as examples.

Forty-one states and the District of Columbia recognize implied contracts like employer handbooks, policies and even verbal agreements, according to the National Conference of State Legislatures (NCSL). If specific provisions are laid out in these implied contracts, like project durations or guarantees of notice, a judge may consider them binding.

A lesser number of states recognize what is known as an implied covenant of good faith and fair dealing, which require employers to be fair-minded when considering letting someone go. Firing an older employee to avoid paying retirement benefits or letting a commissioned salesperson go right before they close a big deal are two examples cited by the NCSL.

In the real world, though, these implied contracts offer little protection, according to employment lawyers. Cases are extremely hard to prove in court and, in most cases, are rarely worth pursuing.

Contractual Obligations

The majority of employee rights are then governed by contracts, which take precedent over any at-will or implied agreement, said Kevin Carreno, chief legal officer at Florida-based International Assets Advisory. A contract can include notice and severance provisions, along with a host of other agreements, which, as long as they are legal, are binding for employers, Carreno said. Contracts essentially replace at-will agreements, giving both sides certain rights that aren’t required by law.

Unfortunately for employees, contract disputes often favor the company. ““Many attorneys who practice in this area of law do not take cases on contingency, therefore the disparity in financial position dissuades employees who ordinarily would like to pursue claims,” said Michael J. Borrelli, an employment lawyer at the Law Office of Borrelli & Associates in New York. Quite often pursuing a case makes little fiscal sense for the individual, Carreno added. However, if a group of former employees is able to prove a company consistently failed to abide by contract language, lawyers will likely take the case on a contingency basis, he said.

Mass Layoffs

When employers let go a large number of employees in a mass layoff, a provision known as the Worker Adjustment and Retraining Notification Act (WARN) provides certain rights. WARN requires employers to give workers 60 days of advanced notice if they plan to let go 500 or more employees during a 30-day stretch, or 50-499 employees if they make up at least 33% of the employer's active workforce. If an employer violates WARN provisions, they are required to provide back pay and benefits to each worker for the period of violation, up to 60 days.

Banking sector protocol

Banks tend to offer severances packages more often than do firms outside of the financial sector, particularly at the executive level, where employees can often negotiate above what banks tend to pay, said Joanne Seltzer, a partner at the New York City branch of Jackson Lewis, a law firm that specializes in workplace litigation. For back office and rank-and-file employees, severance packages parameters tend to be static, and similar to those set by firms in other industries, at least in terms of a raw percentage, Seltzer said.

Like companies in other sectors, banks frequently set a policy that designates a certain number of weeks worth of pay for every year of service, Borrelli said.

U.S. bankers will usually take home a larger severance package than other workers simply because they command a higher salary.

Severance packages at hedge funds and private equity firms, on the other hand, tend to be much higher than the baseline, both in terms of percentage of salary and gross pay. “There is a much bigger appetite for negotiation, and more flexibility to negotiate a higher package,” Seltzer said. In addition, many agreements are paired with non-competes, she said. “In exchange for covenants that prevent a portfolio manager from moving to a rival, [private equity and hedge funds] will often negotiate larger settlements,” Seltzer added.

AUTHORBeecher Tuttle US Editor

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