One of the more painful things that happen to employees of start-ups in San Francisco and the rest of Silicon Valley is being laid off shortly before or right before they become eligible for a stock or right before an important vesting deadline. Sometimes, employers terminate an employee specifically for that reason – to avoid giving them these stock rights. As unfair as this type of action may sound, usually it’s perfectly legal. Most stock agreements are written in a way that does not create a binding contract. These agreement allow employers to do this lawfully, and there is not much that the terminated employee can do to not lose the stock he was looking forward to receiving.
However, this loss of stock can often be used in negotiating a severance or a better severance packager, especially if an employee is terminated days before his stocks vest, which is not uncommon. Different strategies are appropriate for negotiating a severance depending on the length of your tenure with the company, your most recent position, duties and compensation, any potential legal claims you might have against the employer, and other specific circumstances of your employment and termination.
An experienced employment attorney can guide you through how to go about negotiating a higher severance and getting the best deal you can, as you transition to your next job or the next stage in your career. Negotiating a higher severance is always a good idea for a simple reason – you have nothing to lose, and if a 10 minute conversation can result in putting a few more thousand dollars in your pocket, then why not try.
The reality is that an employer can choose to fire you at any time for any reason, and nothing can physically stop them from firing you or force them to continue employing you if they don’t want you around, if you are an at-will employee. Most private sector workers in California are employed at-will, and therefore this applies to them. An employer can choose to fire you even if they know it would violate the law, and then – if you decide to pursue a legal claim against them, you may choose to do so.
The more proper question is whether terminating an employee while that employee is on disability is legal. This depends on a number of factors, including (1) the reasons for that employee’s termination as stated by the employer; (2) the nature of the employer’s business, (3) the employee’s position and job duties with the company, (4) the expected length of disability leave and other factors.
Many employees (and employers) misunderstand what FMLA protection means. They assume that this protection provides them with a certain immunity from being terminated – i.e. that they cannot be terminated while on FMLA leave no matter what. This is not entirely correct for at least two main reasons:
First, an employee who requested FMLA leave or who is already on FMLA leave can be terminated for any legitimate reason that any other employee could be fired. This includes such typical reasons as misconduct, insubordination, policy violations, and performance issues. That employee can also be laid off like anyone else due to workforce reduction, restructuring, etc. The fact that the reason provided does not seem to be fair does not make that termination illegal. FMLA prohibits discrimination on the basis of exercising FMLA rights; it doesn’t mean that the employee should be treated better or with more lenience than other employees. Thus, if you were terminated anyway, requesting FMLA leave is not a shield from that termination. Of course, if you are terminated while on medical leave or shortly after requesting it, it creates a suspicion that the true reason for your termination is exercising your FMLA rights, which would be illegal. However, timing of termination relative to FMLA leave is generally not enough to provide FMLA discrimination and retaliation. An experienced attorney should be able to evaluate your termination in light of all the circumstances surrounding it to advise you whether there is sufficient evidence to make a claim of FMLA violation against your employer.
Secondly, even if your termination would be illegal under FMLA, the employer can still choose to violate the law and fire you, and then deal with the legal consequences of illegal firing, if and when you decide to pursue a case against them. In fact, employers often intentionally violate the law and fire employees illegally because they just don’t want them around any more and they are willing to pay for it by spending money on defending the case against them and paying out settlements.
The following is is a list of things that employers often do, which might seem unfair or hurtful, but generally not illegal (in the absence of specific evidence of discrimination or unlawful retaliation) in an at-will employment setting:
(1) Issuing unfair performance reviews or warnings
An employer is entitled to a subjective view and opinion of your job performance. The fact that you disagree with your review or believe it’s false or unfair, and the fact that you think that you are very good at what you do, doesn’t make that evaluation illegal. The same applies to warnings or any other disciplinary action.
Employers in the San Francisco area routinely offer severance package to the employee they lay off or fire or even to those employees who choose to resign. This severance may include monetary compensation, additional stock options, continued health insurance coverage and other possible benefits. The amount of severance can be more or less generous and it can be more or less negotiable. The fact that an employer offers you severance doesn’t mean that you have or don’t have some kind of legal claim against them and it doesn’t mean that they believe that they violated any of your workplace rights.
The main two reasons employers offer severance are –
(a) A gesture of good will – employers offer severance because they have an interest in preserving a good will in the industry and make the transition of a separated employee to another job easier, and discourage the employee from saying about things about the company by making that employee a confidentiality and non-disparagement agreement. Of course, severance payment is not guaranteed to achieve this goal, but softening the overall impact of termination is a good business practice.
Having been working with hundreds of employees on dealing with their workplace issues in San Francisco and Sacramento area over the past ten years, I see the same five common misconceptions about California employment law that many employees have, and their repeat themselves over and over:
1. I can sue my employer because I am being treated really badly.
The are many ways in which an employer can treat an employee badly – from unfair performance reviews, false rights ups, to micromanaging, yelling and using degrading language. However, the vast majority of those types of behavior are not illegal. Being treated badly, whether you think it’s bullying or harassment, is not against the law, unless there is specific evidence that the actual reason for that bad treatment is discriminatory, i.e. your rage, age, sexual orientation, disability, familial status, etc… or retaliatory (due to complaining about unlawful actions of a specific kind). Otherwise, no legal claims can be made based on unfair or harsh treatment by the employer.
- “If I file EEOC of DFEH charge, my employer cannot terminate me.” – This is not correct. Your filing of a charge with one of the agencies might or might not be a protected activity depending on, among other things, whether you have a good faith, reasonable belief that you are being discriminated or retaliated against. However, the employer can still choose to terminated you, if they want to, and then deal with any type of legal consequences of that termination if you decide to pursue a claim against them. In other words, submitting a discrimination or retaliation complaint does not grant you immunity against termination.
- “EEOC / DFEH will be fighting for my rights.” Equal Employment Opportunity Commission and Department of Fair Employment and Housing receive thousands of complaints every year. They have limited resources and they have to pick very few cases which they would look closely into and pursue. With regard to the vast majority of cases, they close their files and issue a right to sue letter to the complainants, informing them that they can hire a private attorney and proceed with their case in court, if they wish. Thus, you should not be expecting those agencies to pursue a case against your employer.
Recently, the Fifth District Court of Appeal made a very important distinction in its disability discrimination opinion Wallace v County of Stanislaus, which is highly useful to employees-plaintiffs. The court clarified, among other things, what it means to be discriminated “because of” disability. For years, the employers have been fighting disability discrimination, and often effective, by arguing in court that the employee cannot prove that the employer intended to discriminate against an employee because of his medical condition, or that the employer had some kind of ill will toward an employee because of his disability.
The Wallace court rejected the above notion and stated that no such requirement exists in the law. The court distinguished between disability discrimination and other types of discrimination cases and concluded: “… an employer can violate section 12940, subdivision (a) by taking an adverse employment action against an employee “because of” the employee’s physical disability even if the employer harbored no animosity or ill will against the employee or the class of persons with that disability”. This means that technical violation of disability laws, such as failing to engage in the interactive process and / or failing to provide reasonable accommodations in violation of ADA / FEHA can be the basis for employers’ liability, whether those action was taken with malice or innocently.
Retaliation claims increased by nearly five percent in 2015 and continue to be the leading type of cases filed by workers across the US. Various disability law violations, including ADA disability discrimination claims increased by six percent from last year and are the third largest category of claims filed by employees.
The U.S. Equal Employment Opportunity Commission (EEOC) released breakdowns of the 89,385 charges of workplace discrimination that the agency received in fiscal year 2015. The year-end data shows that retaliation again was the most frequently filed charge of discrimination, with 39,757 charges, making up 45 percent of all private sector charges filed with EEOC. Race, disability and sex discrimination were other most commonly brought charges in 2015,. EEOC said it resolved 92,641 charges in fiscal year 2015, and secured more than $525 million for victims of discrimination in private sector and state and local government workplaces through voluntary resolutions and litigation.
Charges raising harassment allegations made up nearly 28,000 charges of the total number of claims, or 31%. Employees claimed harassment or hostile work environment based on race, age, disability, religion, national origin and sex, including sexual orientation and gender identity.