Wages
When distressed companies fail many do not final wages. These amounts must always be paid when terminating employees, and when they are not, individual owners and managers may be personally liable. Wages are typically protected by contractual agreements and statutes. Promises may be contractually binding. Any work performed but unpaid will be protected by contract law and in most states, by unpaid paid wage statutes. Minimum wage under federal law applies in instances when no wages, or minimal wages are paid.
Overtime must be paid that is earned under federal and state law in most instances. Also, everal states require payment within a specific number of days from when it normally is paid – what is called “waiting time.”
In most instances, unpaid accrued vacation must also be paid out as earned wages in mass layouts and shutdowns. This may be dependent on company policies or not, depending upon the governing state’s law.
Severance
Why is severance important? It’s about loyalty. Every company wants loyalty from their best, hard-working employees. Nothing boosts the bottom line like employees who stick around and are storehouses of specific skills and knowledge. They are irreplaceable.
But to keep them from heading out the door, employers often don’t raise the salaries or wages or pay bonuses. That’s cash out the door year after year. To keep these employees from leaving they defer the reward. It is called “severance.”
The longer you remain “loyal” – the bigger your severance grows – at least on paper. But when mass layoffs or shutdowns occur – what gets paid are bonuses, loans, invoices and rent for executives, banks, vendors and landlords. What gets cancelled is severance for employees. So much for loyalty.
That is what happened to 30,000 Toys ‘R Us employees. The employees were induced to stay and work through going out of business sales in exchange for earned severance. The employees held up their end of the bargain, but the promised severance disappeared for 30,000 employees.
This sent a shockwave through America’s retail workers. Not only because of the hardship, but also because of the chilling reality that severance for ordinary wage earners is poorly protected by the American legal system – if at all.
We entered the bankruptcy fray for the Toys ‘R Us workers. We also went to work with lawmakers in New Jersey, the home state for Toys ‘R Us. As a result, a severance law now requires at least some severance paid to those caught in a mass layoff.
Benefits
When distressed companies fail many let benefits lapse and leave contributions to plans unpaid. Raisner Roupinian holds the company, or the responsible individuals, accountable. Benefits, such as a heath care coverage cannot just be shut off, unless there is a bankruptcy. Usually, a plan must at least provide for COBRA continuation. Other benefits may be owed if, for example, a contractual agreement, or statutes such as the WARN Act, have been violated.
Raisner Roupinian has been representing employees to get severance, wages and benefits paid even in distressed bankruptcies when few general creditors are paid. We continue to work to expand and protect the right to severance, be pay.