There Is An Upside

Getting Fired: What to Do If You're Fired, Downsized, Laid Off, Restructured, Discharged, Terminated, or Forced to Resign
by Steven Mitchell

(Page 2 of 3)

While these developments are depressing, you should not despair. Some of my clients, out of frustration and anger, cry when they relate the facts of their firing to me in my office. This is understandable. Since most of us equate self-worth with our work, it's not surprising that losing a job can cause anxiety, self-doubt, depression, and even mental illness. But the experience doesn't have to leave you shattered.

Once you deal with the initial pain, you can use your time wisely to examine your goals, discover what you really want from a career, and find a new job that makes you happy. Being fired can be a benefit both financially and personally in many ways, as I will explain later. For example, after negotiating a large severance package for a client, I sometimes recommend that he or she not begin a job search immediately, but rather travel for three months or take the summer off. Later, after they have spent rewarding time “smelling the roses,” many clients have thanked me for this advice.

While large numbers of corporate layoffs continue, the law fortunately has changed for the better in many respects. Up until twenty years ago, employees had few options when they received a pink slip. This was because of a legal principle called the employment-at-will doctrine, which was generally applied throughout the United States. Under this rule of law, employers hired workers at will and were free to fire them at any time with or without cause and with or without notice. From the nineteenth to the late twentieth centuries, employers could discharge individuals with impunity for a good reason, a bad reason, or no reason at all with little fear of legal reprisal.

During the 1960s, however, some state legislatures began scrutinizing the fairness of this doctrine. Courts began handing down rulings to safeguard the rights of nonunionized employees. Congress passed specific laws pertaining to occupational health and safety, civil rights, and the freedom to complain about unsafe working conditions.

The net effect has been a gradual erosion of the employment-at-will doctrine in many areas. Now, in most states, there are probably many exceptions that make it illegal for you to be fired. For example, it was recently reported that a state circuit jury in Miami returned an $850,000 judgment against Sears, Roebuck & Co. after a former store manager alleged that officials fired him for filing a workers' compensation claim. The Florida workers' compensation statute, like statutes in many other states, prohibits this kind of retaliation.

As a result of the passage of the federal Worker Adjustment and Retraining Notification Act (WARN), you must be given at least sixty days' notice before being let go or comparable financial benefits (i.e., at least sixty days' notice pay) if you are part of a large layoff that affects fifty or more workers at a plant site or company office.

Some courts have ruled that statements in company manuals, handbooks, and employment applications constitute implied contracts that employers are bound to follow. In many states, handbooks have been transformed into legally binding contracts of employment. Thus, every word counts when companies draft or revise employee manuals. This is a consideration they sometimes forget, and it can be a costly mistake.

Other states now recognize the obligation of companies to deal in fairness and good faith with longtime workers. This means, for example, that they are prohibited from terminating workers in retaliation when they tattle on abuses of authority (i.e., whistle-blowing) or denying individuals an economic benefit (a pension, commission, bonus, etc.) that has been earned or is about to become due.

A few states are even allowing wrongfully terminated workers to sue in tort (as opposed to asserting claims based on contract) and recover punitive damages and money for pain and suffering arising from a firing. Some employees who have sued under tort theories for wrongful discharge have recovered seven-figure jury awards as a result. Innovative lawyers are asserting federal racketeering (RICO) claims, seeking criminal sanctions and triple damages against companies. This is in addition to asserting fraud and misrepresentation claims against the individuals responsible for making wrongful-termination decisions.

A number of recent court decisions have also favored people whose employer-paid health benefits or monthly pension checks were reduced or taken away after a firing. In 1995, Pittsburgh-based USX Corp. agreed to pay $47 million to seventeen hundred steelworkers after a federal district court judge ruled that the company, in closing its Provo, Utah, plant in 1987 simply to avoid paying pension benefits, was in violation of the federal Employee Retirement Income Security Act of 1974 (ERISA).

After six years of litigation, a federal jury in 1995 took less than an hour to decide that Pfizer Inc. had unfairly persuaded a lifelong employee to take an early retirement package just weeks before it offered subsequently downsized employees a more lucrative buyout. And in another case, the U.S. Supreme Court ruled in 1996 that a large company must restore health benefits to individual employees who, in the eyes of the Court, had been tricked into transferring their benefits to an undercapitalized dummy subsidiary and eventually lost the benefits. The workers were awarded $8.3 million in the case.

Various commentators are now suggesting that in situations where employers manipulate employees unfairly, judges and juries are going to find a way for the wronged to win. Thus, given the changing legal climate, it is understandable that more people are seeking information about their rights and are fighting back after being fired. They are requesting enhanced benefits after a one-on-one firing or major departmental layoff and are receiving greater severance pay than the company's initial offer. As a result of successful negotiations, they are also obtaining accrued bonuses; continued medical, dental, and life insurance coverage; unemployment benefits; office space with use of a telephone, secretarial help, r?sum? preparation, and outplacement guidance while looking for a new job; a mutually acceptable cover story to tell prospective employers; and favorable letters of reference.

Mismanaging the termination process can result in hard feelings, loss of company prestige from bad publicity, a decline in loyalty and morale within the firm, difficulty in attracting new talent, more turnover, and litigation. As a result, employers are now beginning to see a clearer picture of what they are potentially up against when they handle terminations improperly.

Employers are being reminded to carry out terminations in a discreet, consistent, and mature fashion to avoid charges of defamation and/or discrimination. This means, for example, taking all precautions not to embarrass terminated workers in front of coworkers. Companies are also being advised not to fire employees before vacations, during company Christmas parties, or in the presence of a large group of colleagues.

Because a job is closely linked to a person's identity and self-respect and most terminated workers experience feelings of humiliation during a discharge, on-site training is being conducted to help employers understand more clearly how to fire people in a proper and humane manner. In light of the vast number of employment-related lawsuits filed these days, companies are reminded that being fired under humiliating or unfair circumstances is generally devastating to an individual and often brings out vindictive tendencies, which increase the chances that he or she will file a lawsuit to regain a sense of self-respect.

It is not surprising, according to Evan J. Spelfogel, a lawyer and past chair of the New York State Bar Association Section on Labor and Employment, that twenty times more employment discrimination cases were filed in 1990 than in 1970, almost 1,000 percent greater than the increase in all other types of civil litigation combined. The April 1994 issue of Inc. magazine reported that workplace discrimination suits have increased more than 2,200 percent close to the past two decades and now represent an estimated one-fifth of all civil suits filed in the United States. There is currently a backlog of close to 100,000 employment discrimination cases at the EEOC and over 25,000 wrongful-discharge cases pending in state and federal courts nationwide. Nearly all these cases involve jury trials with lengthy delays and unpredictable results.

William K. Slate II, president and chief executive officer of the American Arbitration Association, remarks that defending against a wrongful-discharge claim brought by a former employee can cost an employer hundreds of thousands of dollars. He states that the median time between the date an employment lawsuit is filed and the commencement of a civil trial is two and a half years and that fired workers currently win nearly 70 percent of these cases, with the average jury award for a wrongfully fired employee now being approximately $700,000.

One story in the New York Times reported that “in almost every industry, unfair discharge litigation has proliferated and the amount of money involved in settlements runs into hundreds of millions of dollars annually.” Even more than ten years ago, the Wall Street Journal confirmed that more than one third of the New England companies interviewed indicated that they were involved in legal actions with terminated employees.

One reason for this dramatic increase in litigation is that lawyers representing employees have discovered that sympathetic plaintiffs are very appealing to juries in such disputes. Average jurors are lower-level employees themselves. Given the chance, jurors are likely to side with an employee against a deep-pocket employer.

Another reason the number of discrimination cases is soaring is that the stakes have become very high. Due to the enactment of the federal 1991 Civil Rights Act, which made jury trials as well as punitive and compensatory damages up to $300,000 available remedies, more people are now inclined to sue. When the Americans with Disabilities Act (ADA) became effective in 1993, hundreds of thousands of people previously excluded from the legal process who were fired as a result of a physical or mental condition became eligible to sue. The current litigation explosion has also been fueled by an increased public awareness and the large jury verdicts awarded to women who complain they were mistreated or fired after reporting incidents of personal discrimination or sexual harassment.

© 1998 by Steven Mitchell Sack

About the Author

Steven Mitchell Sack is the author of Getting Fired: What to Do if You're Fired, Downsized, Laid Off, Restructured, Discharged, Terminated, or Forced to Resign.