Is there employment law that addresses layoffs after bankruptcy?

November 29, 2017 5:03 PM

I work for a U.S. subsidiary of a German-based parent company that has filed for bankruptcy. I have been informed that, due to lack of funds, my position is ending this Friday. Are there legal ramifications for letting me go prior to my direct counterpart, especially in light of the fact that I have seniority and higher sales numbers?

Our U.S. division consists of five people: the President of our group (male), an East Coast Regional Manager (male), a West Coast Regional Manager (me - female), a part-time tech support person (female), and an Office Administrator (female). Our U.S. headquarters are in MA. I work out of a home office in CA. A couple months ago, our parent company filed for bankruptcy and has been restructuring. We have gotten little to no information about what that means to our U.S. Division until last week when we were instructed to return all our demo equipment to the home office, indicating that we wouldn't be in business much longer. All indications are that the company's assets will be purchased by another company by the end of the year and there is no expectation that the new company would keep any of us on. We were informed that our Office Manager would be leaving this Friday to take another job and to get all our expenses in and vacation days accounted for. I was also told last week that there was only money to make payroll through this Friday. Therefore, I wasn't surprised when I received an email from my boss this morning confirming that my last day of employment would be this Friday and we would be scheduling a call to make arrangements for my office equipment to be sent back. During the course of the call, my boss explained that without product to sell, the eminent closing of our division, and the lack of financial resources, my position would be coming to an end. He mentioned that he would be keeping on the part-time tech support person as long as he could to support our current customer base. And then he said something that alerted me to the fact that only my position be ending this Friday, my East Coast counterpart would be continuing. I have since learned that my counterpart has not yet been given an end date of employment. When I called my boss on this, I was told that in a conversation with the German head of the company this morning, he was instructed to let me go first. And that my boss was just doing as he was told.

Nobody expects our company to continue past the end of the year, or for our remaining team to be acquired along with our products, but I'm concerned about the optics of being let go before my counterpart with less seniority and lower sales numbers. I am hoping to get a position with another company in our field, possibly even the one rumored to be acquiring our assets. In the course of discussions, it's a different conversation to say that our sales team was disbanded due to our parent company filing for bankruptcy than that just I was laid off when my counterpart in the same position continued on. Is there employment law in CA or MA that addresses this issue?

posted by ms_rasclark to Law & Government (5 answers total)

Best answer: I have been laid off from a company in bankruptcy. (I was hired back a week later at twice the salary to help wind down the assets.) I do not know about CA or MA law, but I think the way you are presenting the situation to a potential employer is not the way I would present it or the way I see it. Often in bankruptcies, there are different stages of layoffs. I would frame it as the West Coast office was closed. Period. End of story. I do not think you need to go into the other people or the other offices. In my bankruptcy situation, the layoff decisions which were rolling almost weekly, were mostly a function of cost. Higher salaried people with higher benefits went first. Sales folks who had nothing to sell, went first. Even if you have better numbers in terms of sales and revenue generation, that matters little to a company that is liquidating. Especially for a couple of weeks.

I think too that I would contact the company acquiring the assets. Tomorrow. Before you leave. Tell them you wish to continue to sell the product, have an established customer base and track record and see if they can transition you right away.
posted by AugustWest at 5:18 PM on November 29, 2017 [7 favorites]

California is an at will state. Your employer may terminate you or anyone else in the organization for any reason that does not involve discrimination prohibited by law. Sex discrimination is prohibited by law, but proving it is quite difficult when there is no trend (a single person is hard to demonstrate a trend) and there is no direct evidence. Further, if you were to pursue it, it's likely your employer will be out of business before you even get to court.

I suggest spending your energy on finding a new job. Realistically, it doesn't matter what the law says here even if there was some law protecting you.
posted by saeculorum at 8:15 PM on November 29, 2017 [1 favorite]

Companies in bankruptcy, to say the least of companies not in bankruptcy whose corporate patent is bankrupt, are subject to all employment laws. The Bankruptcy Code gives special protections to rank and file workers’ wages and customary corporate bankruptcy practice goes even farther. The WARN Act, which requires notice of certain mass layoffs, has financial distress exceptions that end up exempting many layoffs relating to bankruptcy, but not all.

That said, layoffs are a part of corporate failure and the courts are going to have a high bar to find unlawful conduct in the pattern you describe. Also, under these circumstances, no potential employer is going to think less of you because you were laid off a month earlier than a colleague.
posted by MattD at 5:24 AM on November 30, 2017 [1 favorite]

I have been the west coast office that shut down while the east coast continued. Nobody looks twice at it on the resume; department got smaller, and they shut down the office with the least client activity and/or the least need to be compatible with overseas timezones.

While there might be an issue of discrimination, it'd be very, very hard to prove, since there is an easily-identifiable set of practical reasons to shut down a west coast office while leaving the east coast active.
posted by ErisLordFreedom at 5:14 PM on November 30, 2017

Response by poster: As it turned out, my east coast counterpart’s last day was yesterday, too. He was informed on Thursday. Though I’m sorry we both don’t have another week or two of pay, it was the right decision. There was just no reasonable rationale for us both not to be leaving at the same time.
posted by ms_rasclark at 3:54 AM on December 2, 2017