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Navigating Wage And Hour Issues During Layoffs And Furloughs

Employees consider wage and hour issues during layoffs.

According to USA Facts, over 160,000 New Yorkers were laid off during the month of September 2024 alone. During layoffs and furloughs, employers face numerous potential problems. These include contractual disputes, wrongful termination lawsuits, and potential losses in productivity. That being said, sometimes layoffs represent the most logical choice for employers. When a company maintains its financial well-being, the remaining employees may experience more long-term stability. This could serve the best interests of all parties – including business owners, workers, and even customers. Wage and hour issues can be surprisingly complex during layoffs and furloughs, and employers might need help from experienced employer defense attorneys in New York. To learn more about these issues, consider contacting Shwab & Gasparini. Dial (315) 422-1333 for our Syracuse location, (518) 591-4664 for Albany, (914) 304-4353 for White Plains, or (914) 304-4353 for Hudson Valley.

Do You Need to Pay Unused Vacation Time During Layoffs?

Many New York employers may want to lay off workers who have accumulated unused vacation time. According to the New York Department of Labor, the correct course of action in this scenario depends on the specific terms of the relevant vacation policy. Since vacation pay is not mandated by federal or state law, employers must refer to their policies and contracts. Specifically, they should review not only their vacation policy, but also their termination/resignation policies. That said, the Department of Labor states that New York courts have allowed employees to lose accrued benefits (including vacation pay) under certain conditions. On the other hand, the lack of a “forfeit policy” means the employer must pay out accrued, unused vacation pay after a termination or resignation.

How Should Employers Pay Terminated Workers in New York

The Department of Labor states that employers must not deviate from normal payment schedules after layoffs. In other words, terminated employers should receive their final paychecks on their next regular payday for the last period of their employment. Employers may need to add additional payments to these final paychecks for accrued, unused benefits like vacation pay. From a logical perspective, it makes sense to provide these payments as quickly as possible – and without unnecessary delays. When an employer adheres to normal payment schedules, this will streamline the termination process and minimize potential disputes. If a terminated worker asks their employer to mail them the final paycheck, the employer must comply.

Employers May Need to Comply With the WARN Act During Mass Layoffs

The federal Worker Adjustment and Retraining Notification (WARN) Act went into effect in 1988, and it enforces additional requirements for employers conducting mass layoffs. The State of New York also has its own version of the WARN Act, and it mandates even stricter requirements for employers. Compared to the federal WARN Act, the New York version also defines a “mass layoff” in broader terms, thereby affecting a wider range of potential employers.

If an employer has at least 50 full-time employees and plans to lay off at least 25 full-time employees, the New York WARN Act applies. The only exception is if these 25 laid-off employees make up less than 33% of the total workforce. Regardless of this percentage requirement, the WARN Act always applies to mass layoffs involving 250 or more full-time employees. The details of the WARN Act are somewhat complex, and employers may want to review them with Schwab & Gasparini. If this law applies, employers must notify all their employees of the upcoming layoffs at least 90 days beforehand. If employers fail to do this, they may need to pay the laid-off workers civil penalties, benefits, and back wages. These financial penalties can be quite burdensome, but employers can avoid them after carefully planning their layoffs ahead of time.

Why Wage and Hour Issues Can Arise Many Years After Layoffs

Due to the statute of limitations in New York, wage and hour disputes may arise many years after layoffs. An employee could theoretically sue their employer for unpaid wages, vacation pay, and other benefits six years after their termination. This issue could be particularly problematic after mass layoffs, as former employees may all file their suits at the same time. Most employers want to terminate employees in a compliant, streamlined manner while minimizing potential issues in the future. If employers do not handle mass layoffs and furloughs correctly, they may face years of costly litigation. Employers should not assume that they are “safe” from wage and hour disputes if a few years have passed after their mass layoffs. Former employees may speak with each other after noticing unpaid wages – potentially leading to a class-action or hundreds (even thousands) of separate claims.

The Definition of an “Employee” Could Become Important

Many New York laws regarding mass layoffs and terminations only apply to “employees.” This is an important term in the world of employment law, as an “employee” has specific rights in New York and the United States. In contrast, an “independent contractor” may not have the same rights during and after layoffs. Employers may want to determine whether their workers fall under the legal definition of “employees” before planning effective legal strategies during layoffs.

Confidently Navigate Wage and Hour Issues With Schwab & Gasparini

Layoffs and furloughs may represent the best choice for New York companies, but employers should not rush through these processes without considering potential legal issues. Although it might seem tempting to suddenly carry out a mass layoff and move on as quickly as possible, various employment lawsuits could make this decision much more time consuming than employers realize. Those who spend a little more time on compliance and planning may avoid time-consuming, costly lawsuits involving wage and hour disputes. As a result, working with an experienced employer defense attorney in New York may streamline layoffs – even if hiring one of these legal professionals initially seems like a needless delay. Each situation is slightly different, and a consultation with a lawyer may provide more targeted guidance compared to online research. Employers may be able to learn more about their various options by speaking with Schwab & Gasparini. Dial (315) 422-1333 for our Syracuse location, (518) 591-4664 for Albany, (914) 304-4353 for White Plains, or (914) 304-4353 for Hudson Valley.

Mon May 5 2025, 12:00am