GA firing/severance "package" likely illegal
ocregister.com
LABOR: An Irvine firm's compensation offers to laid-off workers called 'not legal.'
February 22, 2001
By ERIC JOHNSON
The Orange County Register
IRVINE -- A tranquil transition has turned into a trying time for Larry Hornby.
Hornby was one of about 50 General Automation employees who say they weren't paid salary and vacation hours due them when the Irvine firm laid off workers at the end of January.
The employees were instead offered a choice of two packages that would pay them no more than half of their accrued wages and vacation time immediately. The other half would be paid either in stock or in nine monthly payments.
Executives at General Automation, including Chief Executive Officer Jane Christie, did not return four phone calls seeking comment Wednesday.
Susan Gard of California's Division of Labor Standards said such offers are not permitted under the state labor code.
"It's not legal for GA to provide this type of separation package to its employees," she said.
Section 201 of the labor code states: "If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately."
Michelle Reinglass, a Laguna Hills employment lawyer, said "immediately" means all the money owed to the employee must be paid on the employee's last day at work.
"And there's no obligation to accept stock in lieu of pay," she said. "This is absolutely nuts."
Hornby, of Capistrano Beach, was a computer programmer for GA when it was a database-infrastructure firm and figures he is owed more than $4,200 - two weeks of salary and 40 hours of vacation time.
GA recently overhauled its operations to become an e-commerce software developer, designed to help the company recover from debt. The changes included layoffs.
That Hornby was going to be laid off was not his concern. He was slated to move to General Automation Services, a new company that had purchased GA's database business, and would work out of the same Irvine headquarters.
What flabbergasted Hornby was how GA planned to pay him and the rest of the laid-off workers.
"I objected strongly," he said. "I said, 'What are you doing here? This is against the law.' That's assuming a lot -- that there was going to be a business in nine months."
GA's two options were spelled out in a letter to the workers:
- Take 50 percent of the salary and vacation owed them in a single payment Feb. 15 - then receive 100 percent of the money owed in stock.
- Take 50 percent of the salary owed in a single Feb. 15 payment, then receive the remaining salary and all vacation hours in monthly payments over nine months. In consideration of the delay, GA additionally offered to give 25 percent of the money owed the employees in stock. The stock, valued at 26 cents a share on Feb. 5, could not be sold for at least a year after being issued.
Daniel Walcott, a logistics manager at GA who moved to GA Services on Feb. 1, also received the offer.
"I felt like someone stole something from me," he said. "The sad part is, the people who got hurt the most are the ones who helped the company the most."
He was referring to employees who he said spurned vacations to help the company turn things around.
Walcott said he is owed about $12,000 in salary and vacation. He accepted the offer with the stock option but has yet to receive the 50 percent payment due Feb. 15.
He also said he has $7,000 in medical bills from treatment in January because GA's health-insurance provider canceled the company's contract retroactive to Dec. 1.
Walcott wasn't told of the cancellation until Jan. 29 in an e-mail to employees. He said he has no intention of paying the bills.
Gard said that if employees signed the deal, that doesn't negate their claim.
"Even if the employees agreed, it's a violation of public policy and void," she said.
Hornby said a lawyer told him it would cost more to take General Automation to court than the money he was owed, unless he could round up enough support for a class action.
He has filed a claim with the state Department of Industrial Relations' Labor Enforcement Division.
Gard said employees have two years from the layoff date to file a claim, but the sooner the better.
"I don't care if they're trying to save the company," Hornby said. "It doesn't give them any right not to pay us." |
