The tech industry has recently been hit by a series of major layoffs that will impact thousands of employees. Meta, Twitter, Lyft, and Stripe, among others, have all announced major job cuts in the face of economic challenges.

The decision to conduct layoffs is always difficult, especially when there is an urgency to implement layoffs quickly. Common issues that arise in layoffs include:

Potential employment discrimination claims. Employers must develop objective criteria for layoff decisions. Employers that fail to base layoff decisions on nondiscriminatory reasons, such as quality of work, may be subject to employment discrimination claims.   

Potential retaliation claims. Employees who have complained of suspected violations of the law may have grounds to pursue a retaliation claim if selected for a layoff.  

Disparate impact on protected classes. Employers should review selection criteria to determine if they will disproportionately affect older employees, employees with disabilities, or any other group protected by employment laws.  

Advance notice requirements. In some cases, employers are required to provide advance notice of layoffs under the federal WARN Act or the California WARN Act.  

While most employers are not legally required to offer severance packages to laid-off employees, many employers will decide to do so voluntarily. Issues for employers and employees to consider in severance agreements include:

Release of claims. Employers may condition severance payment, or increased payment, on the employee signing a waiver of potential legal claims against the employer. Employees should consider the impact of giving up the right to pursue such claims before agreeing to accept severance payments.

Confidentiality and non-disparagement. In exchange for a severance payment, employers often seek to force employees to agree not to discuss the terms of the severance package or to make negative statements about the employer. California has recently placed limitations on some of these restrictive clauses, which employers should be careful to comply with. 

Non-compete and non-solicitation clauses. Non-compete agreements that prevent former employees from working for a company’s competitors are generally not enforceable in California.    

Protections for older workers. The Older Workers Benefit Protection Act requires that employers provide workers who are at least 40 years old with at least 21 days to consider a severance offer.  

Employees are not required to simply accept an employer’s offer of a severance package in exchange for waiving their legal rights. Severance agreements can sometimes be negotiated, and employees can seek more favorable terms.  

For more information on reductions in force and severance agreements, you may contact Minami Tamaki Consumer and Employee Rights Group attorneys Sean Tamura-Sato and Lisa Mak online or call us at 415-788-9000.

*The content of this article is for general informational purposes only and does not constitute legal advice.  Information in this article may not constitute the most complete or up-to-date legal or other information.  Readers should contact a licensed California attorney to obtain advice with respect to any particular legal matter. Use of this website does not create an attorney-client relationship between the reader and Minami Tamaki LLP.