Although Maryland is an employment-at-will state, meaning employees and employers can generally choose to terminate employment at any time for almost any reason, there are exceptions to this rule. One exception applies to mass layoffs. Under the federal Worker Adjustment and Retraining Notification Act, companies with more than 40 employees generally must give workers 60 days' notice of layoffs. When companies cannot give this notice, they must pay workers 60 days worth of wages from the date notice is given.
A federal judge recently ruled that former employees of ESPN Zone in Baltimore, who were laid off abruptly, are entitled to additional compensation under the WARN Act. The restaurant closed in the summer of 2010, providing workers little notice. Although the employer paid full-time workers a severance package, and part-time employees 60 days of wages, a class-action lawsuit was filed to argue that the employees were not compensated fairly.
Under the WARN act, companies must pay out 60-day notice by using either the pay rate at the time of the lay-off or the worker's average wages. ESPN Zone closed in June, right before its busy season, and the employer apparently calculated the workers' notice pay based its slowest season.
The class-action lawsuit also argued that those who received severance were not properly compensated. Apparently, the 60-day notice period payment was deducted from their severance payments, while under WARN these workers were entitled to both 60-day notice pay and severance.
A federal judge agreed with the plaintiffs and ordered that payments for all of ESPN Zone's laid off employees be recalculated. Those who are owed more will be paid the difference.
Being laid off is very difficult. In addition to being shorted on their final paychecks, these workers lost their jobs just before the tourism season, likely making it difficult for them to find summer employment. It is always difficult to be laid off, but laws are in place to make the transition a little less distressing. Those who are laid off should research their rights to ensure they are not being shortchanged. Those who are offered separation agreements are also often wise to seek legal counsel before signing any contracts.
Source: The Baltimore Sun, "Judge rules former ESPN Zone workers due additional compensation," Kevin Rector, Jan. 3, 2013
For more information about employment rights and negotiating separation agreements, please visit our Maryland employment law firm's Severance Agreements page.