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3 Types of Illegal Layoffs

Twitter, Google, Spotify, Microsoft, Amazon, Goldman Sachs, Coinbase…the list of companies that have recently laid off staff is seemingly endless. While the employment-at-will doctrine often means employers are within their rights to terminate staff for no reason, there are legal guardrails protecting employees.

Layoff vs. Wrongful Termination

Layoffs may qualify as illegal if the employer discriminates against a protected employee class or violates other labor laws. These are important protections for employees when a layoff, a belt-tightening measure, is discrimination or retaliation in disguise. “Employers often use mass layoffs as a pretext to get rid of employees they wouldn’t otherwise be able to fire legally,” says Eric A. Panitz, an employment lawyer with Wrongful Termination Law Group in Los Angeles, CA.

If you’re a victim of the recent spate of layoffs, here are three instances where you may have a case for wrongful termination due to discrimination, retaliation, or breach of contract.

Employment Discrimination

Discrimination is when a decision is made based on an employee’s age, race, disability, gender, sexual orientation, pregnancy, religion, or any other protected class of employee. Employers cannot legally use discrimination to make decisions about layoffs. 

The unfortunate reality is that many employers attempt to disguise discriminatory layoffs. “When the actual reason for your termination or punishment is illegal, your employer will either refuse to provide a reason or invent a false one. This false reason is called a pretext,” says Panitz.


For example, an employer may use the pretext of economic hardship to dismiss a large number of senior employees during a layoff while at the same time laying off a group of new hires to avoid suspicion of age discrimination. Luckily, employment laws like the Age Discrimination in Employment Act (ADEA) require employers to provide relevant statistics on all laid-off employees (such as age, title, and tenure) so that an experienced workplace discrimination lawyer may discover this wrongdoing and hold businesses accountable for their actions.


Retaliation occurs when your employer takes adverse employment action against you for participating in a protected activity, such as making a complaint about harassment or discrimination or reporting safety violations to the Occupational Health and Safety Administration (OSHA). Employers cannot use layoffs as a form of retaliation against employees who have reported wrongdoing or refused to engage in illegal activity.

Retaliation can take many forms, including termination, demotion, reduced pay or hours, and negative performance evaluations. However, layoffs cannot be used as a form of retaliation against employees who have reported wrongdoing or refused to engage in illegal activity.

The #MeToo movement has brought attention to the issue of retaliation in the workplace. If an employee reports sexual harassment and experiences adverse employment action, such as being fired or demoted, this may be considered retaliation. It is illegal for employers to take such action in response to an employee’s protected activity, and employees have the right to file a complaint or lawsuit if they believe they have been the victim of retaliation.

Breach of Contract

Employment contracts can provide a variety of protections, such as job security or guarantees of benefits like health insurance. If an employer lays off an employee without following the terms of their contract, then this is a breach of contract.

For example, if an employee’s contract states that they cannot be laid off unless the employer has a financial reason, they can take legal action if they are laid off without such cause. Likewise, an employee may have legal recourse if the contract states they will be employed for two years and are laid off after only a few months. 

Ultimately, it’s important to remember that employers can still lay off employees for business reasons. Still, they must do so in accordance with all applicable labor laws and regulations to ensure that their decision is not illegal and that employees are treated fairly.

Taking Action

If you fall into one of the above scenarios, your next step should be seeking legal advice. An experienced employment lawyer will be able to assess your case and advise you on the best course of action – whether that’s filing a claim with the Equal Employment Opportunity Commission (EEOC) or another agency, suing for discrimination, breach of contract, retaliation, or a joining a class action suit where the layoff affects a large number of employees in the same way.

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