Legal Question in Employment Law in California

WIP vs. Layoff?

I work for a technology-focused company, and in the last two quarters, we have had to let people go. In the first quarter, we had a ''WIP'' or workforce improvement program, in which people were laid off and they only received two weeks severance. While the company told outsiders that we were letting go of ''poor performers,'' they said internally that we lost good people, and that, because of the economy, they would not be replaced (typically in a WIP, you let go of bad performers and replace them with new hires).

Last quarter we had a much larger, openly recognized layoff in which the company offered 3 months severance to departing workers.

We are still struggling this quarter, and the rumor is that after the quarter closes, we're going to lay off more people, but it will be disguised as a WIP again, so only two weeks severance will be offered. People are scared and angry that they will be treated unfairly.

Are WIPs truly different from layoffs under the law, and if so, how are they different? Can the WIP be contested?


Asked on 9/06/03, 12:53 pm

1 Answer from Attorneys
Wayne Wisong Wayne Wisong, Attorney at Law

Re: WIP vs. Layoff?

Not if the employer covered it's tracks properly. Severance is supposed to be paid under a written severance plan governed by ERISA, although many employers don't bother to comply. However, the employer can amend it and change it any time and can even make eligibility discretionary. If the second layoff involved an extremely large number of people, or at least 1/3 of the workforce, it could have been covered by a federal law called WARN, which requires 60 days notice to lay off more than a third of the workforce. Many employers opt to pay "WARN pay" in lieu of the notice. So, if that applied, they would have been obligated to pay at least 60 days of severance (WARN pay). But WARN wouldn't have applied to the other two layoffs where they only paid 2 weeks. It is also possible that they paid more because they were requiring releases of age and other potential discrimination claims in the second round of layoffs because the makeup of the laid off group caused them some legal concerns (a lot of elderly, minority, women, etc.), so they felt it prudent to pay more to buy releases.

Read more
Answered on 9/10/03, 4:03 am


Related Questions & Answers

More Labor and Employment Law questions and answers in California