In hard times, workers have few legal protections over losing job

As more Americans lose their jobs, worker advocate Lou Maltby is happy to talk about employee rights, but he warns that it's a short conversation.

Workers in the United States facing the prospect of losing their jobs generally have very few legal protections when it comes to employment notice.

In a difficult economy, the furor generated by the recent abrupt firing of workers at Republic Windows in Chicago has drawn attention to what protections workers have against sudden firing. Bankruptcy, like that filed by Tribune Co. on Monday, can complicate the economic picture even further - for consumers as well as workers.

Experts note that by law, workers may not be fired on the basis of specific discrimination such as race, sex or pregnancy. Union and executive jobs are generally protected by contracts. But, beyond that most workers in Illinois are considered "at-will" employees, meaning they can be fired immediately at any time, for any reason or no reason.

If it becomes necessary to terminate workers - through layoff or any other cause - the process probably has more to do with the policies and financial condition of the company than with factors imposed by state or federal law.

To outline some of the rights and responsibilities companies and workers have in the face of widespread layoffs, here are some key questions and answers gathered through interviews with labor law experts, state regulators, and Maltby, president of The National Workrights Institute, a not-for-profit advocacy group in Princeton, N.J.

What notice are employers required to give?

The Illinois Worker Adjustment and Retraining Act (WARN) requires companies with 75 or more employees to give 60 days notice of mass layoffs. It applies only when the firings hit 25 or more full-time workers constituting at least one-third of the work force, or 250 workers total. The state law, which took effect in 2005, is stricter than the federal law, which applies to employees with 100 or more workers. But companies can claim exemptions due to unforeseen circumstances or natural disasters. Union contracts can require longer notice.

How is the law enforced?

Federal law provides for no government regulation of WARN, other than in the courts, but state law puts the Illinois Department of Labor in charge of enforcement.

The department can investigate alleged violations and order employers to provide back pay and benefits for the 60-day notice period, plus fines of up to $500 per day per employee.

In the case of a union contract, federal law requires collective bargaining to settle any disputes over notice and compensation.

What are employees entitled to financially?

Employees are entitled to any wages and compensation which they've already earned, such as two weeks' labor and business expenses.

But in general, laws don't require severance pay. While many companies offer one week's pay for each year of service, if it's not required by contract, it's not guaranteed.

If severance pay is offered, it's generally dependent on signing a waiver of rights, so that the employee cannot sue, disparage or compete against the company and must keep the terms confidential.

How does bankruptcy affect layoffs?

If a company is reorganizing under Chapter 11 bankruptcy, it can renegotiate contracts to provide for layoffs and pay cuts, with the judge's approval. From a consumer's perspective, the company may continue operating as normal, as United Airlines did recently, and as the Tribune has promised to do.

But if the company is liquidating under Chapter 7 bankruptcy, the business and its jobs may be gone forever.

Even if employees prove violations of the WARN notification requirements, they have to get in line with other creditors in bankruptcy court, and may not get all the back pay to which they're entitled.

The biggest threat to many workers such as those at the Big Three automakers, Maltby said, is the loss of their pension plan. Companies in bankruptcy, like steel companies, can walk away from their obligations to pay pensions, leaving it up to federal taxpayers through the Pension Benefit Guaranty Corporation.

What health insurance are workers entitled to?

Laid-off workers are entitled to continued coverage under the federal COBRA law, which allows workers to take over their employer's former share of insurance premiums at the same group rate.

But if the company goes out of business, there's no group insurance to claim.

How can workers protect themselves?

Workers who fear they may lose their jobs should document their pay stubs, notification of termination or any evidence of discrimination, for an employment attorney to review.

Employees should also talk to a lawyer if they're unsure whether to sign a severance agreement.

If workers suspect they were treated unlawfully, they should contact the Illinois Department of Labor at (312) 793-2800.

Is this the time to tell the boss what you really think?

While workers may be tempted to go into a tirade upon being fired, they should think twice.

Former employers may be the best source of referrals, so employment experts advise not burning any bridges.

Sources: Illinois Department of Labor spokeswoman Anjali Julka; University of Illinois Professor Michael LeRoy; DePaul University Visiting Assistant Professor of Management Robert Perkovich.