Does an employee have any legal recourse if their employer alters the severance policy immediately before a big layoff?
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Does an employee have any legal recourse if their employer alters the severance policy immediately before a big layoff?
My mom works for a large company named which just altered their severance package this week to limit payout to 5 years max. They also announced that next week they will be laying off many employees, including my mom. My mom has worked there for 25 years. The new policy effectively cuts her severance package to 1/5 of what it was. What legal options does my mom have? Could litigation successfully argue that the policy when hired applies? Should she seek legal help in negotiating a severance amount or would the legal fees absorb any benefit gained?
Asked on March 9, 2011 under Employment Labor Law, Minnesota
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
There is, unfortunately, no law stating that a company can't alter it's policies, including severance policies, even if those changes will affect long-term employees, so as a general matter, your mother has no recourse. (Remember: the law does not even require *any* severance; it is voluntary on the part of companies to give severance at all.) Companies don't need to maintain the policies in place when an employee was hired.
If there is a contract, including a union one, in place which discusses severance, it's terms would apply. If your mother turned down some other job opportunity recently, relying on the severance that she could get, and if the employer knew she did this, she may have a cause of action under the theory of promissory estoppel. If in the layoffs, your mother is treated negatively because of her age over 40 or gender (e.g. more older employees are let go than younger; or more women then men) there may be an employment discrimination claim.
It would be worthwhile for your mother to consult with an employment attorney (many provide a free or low-cost initial consultaton) to see what rights she may have.
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