Laid Off vs. Fired: Understanding the Difference

Even if you were told you were laid off, you might have been illegally fired.

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Historically, a layoff was a temporary suspension from work. Workers might be laid off during the slow season of a cyclical business, for example, then be returned to work when business picked up again. These days, however, a layoff usually refers to a permanent termination of employment. 

In a layoff, employees generally lose their jobs for business reasons unrelated to their performance. For example, a company might decide to eliminate a product line, close a factory, reduce the size of a department, or trim staff to save money. However, some employers say they are "laying off" employees when they are actually firing them for other reasons. And, some layoffs may be illegal, depending on how the employer decided which employees would lose their jobs. In other words, sometimes a layoff is actually a wrongful termination in disguise. 

What is Wrongful Termination?

Most employees work at will, which means they can quit at any time, and can be fired or laid off at any time, for any reason that is not illegal. Unless an employee has a contract that requires good cause for termination or limits the employers right to fire in other ways, the employee works at will. 

However, even at-will employees can't be fired for illegal reasons. For example, it is illegal to fire an employee for discriminatory reasons or in retaliation for reporting harassment, safety violations, or other workplace wrongs. An employee who is illegally fired may have a wrongful termination claim against the employer. 

When Is a Layoff a Wrongful Termination?

There are a couple of ways a layoff might actually be a wrongful termination in disguise. The first happens when an employer includes a particular employee in a layoff for illegal reasons. For example, even an employer that has perfectly legitimate economic reasons to lay off employees generally might decide to include a particular employee because she has complained of sexual harassment, because she has a disability, or because she has exercised a legal right (for example, by taking FMLA leave or filing a workers' compensation claim). It doesn't matter that the employer has sound reasons for letting workers go or that some workers may have been laid off for legitimate reasons. If an employee can show that there were illegal reasons why he or she was selected for layoff, that employee may have a wrongful termination claim. 

The other way a layoff may constitute wrongful termination is by the impact it has on workplace demographics. If a layoff has a disproportionate negative effect on a protected group (such as African American employees or Muslims), the employees may be able to prove a disparate impact discrimination claim. In this situation, the employees aren't arguing that the employer intentionally selected individual employees for layoff because of, for example, their race. Instead, the employees claim that the employer's apparently neutral selection criteria screened out too many employees in particular groups and were, therefore, discriminatory. 

Hiring a Lawyer

If you believe your layoff was actually a wrongful termination, you should consider consulting with an employment lawyer. If the employer had economic reasons for letting workers go, it can be tough to prove that individual employees were illegally included in the layoff group. It can be even tougher to prove a disparate impact case, which depends on statistical analysis. An employment lawyer can sort through the facts and let you know whether you might have claims worth pursuing. 

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