Practice Areas Employment Law Reduction in Force in Maryland

Learn About Your Legal Rights During (or After) a Reduction in Force from an Experienced Maryland Employment Attorney

In Maryland, most workers are employed “at will.” This means that their employers can terminate their employment for any lawful reason (or for no reason at all) at any time. But, there are some important exceptions, including exceptions that apply to reductions in force (RIFs). If you are facing a reduction in force—or if you have recently lost your job in a RIF—a Maryland employment lawyer at The Law Firm of J.W. Stafford can determine if your employer is in compliance with the law.

“At Will” Employees Are Entitled to Advance Notice of Reductions in Force in Some Cases

Due to the potential economic impacts of large-scale reductions in force, both federal and Maryland law require employers to provide advance notice of RIFs. The federal requirements exist under the Worker Adjustment and Retraining Notification (WARN) Act, while Maryland’s state-specific requirements exist under the Economic Stabilization Act that took effect in 2020:

WARN Act Requirements for Reductions in Force

Under the federal WARN Act, employers in Maryland must provide 60 days’ advance written notice of a covered reduction in force. To be covered under the WARN Act:

• The employer must have 100 or more employees, not including employees who average less than 20 hours per week or who have worked less than six months in the last 12 months; and,
• The reduction in force must involve either a plant closing or a mass layoff of 50 or more employees at a single location if the number of terminated employees constitutes at least 33 percent of the total qualifying workforce at the location.

However, there are some exceptions. Specifically, the WARN Act does not require 60 days’ advance written notice of a reduction in force if it is due to (i) unforeseeable business circumstances, (ii) a “faltering” company, or (iii) a natural disaster. All three of these exceptions have specific requirements under the WARN Act, and, if your employer is claiming that it isn’t required to comply with the law, a Maryland employment attorney at our firm can determine if this is actually the case.

Maryland Economic Stabilization Act Requirements for Reductions in Force

While the Maryland Economic Stabilization Act is similar to the WARN Act in that it requires 60 days’ advance written notice of reductions in force, there are some key differences between the federal and state requirements for RIFs in Maryland. For example:

• The Maryland Economic Stabilization Act applies to employers with 50 or more employees (with exclusions similar to those under the WARN Act); and,
• The reduction in force must involve either the shutdown of a workplace, relocation of the employer’s operations to a new workplace, termination of at least 25 percent of the employer’s workforce within three months, or termination of at least 15 employees over a three-month period.

Similar to the WARN Act, the Maryland Economic Stabilization Act includes certain exceptions. For example, along with exceptions for “faltering” companies and natural disasters, employers are not required to provide advance notice under the law if a reduction in force is the result of (i) a labor dispute, (ii) closing a construction site or other temporary workplace; (iii) seasonal operations; or, (iv) a corporate bankruptcy.

What if Your Employer Violates the WARN Act or Maryland Economic Stabilization Act?

Let’s say your employer violates the WARN Act or the Maryland Economic Stabilization Act. What are your legal rights?
The answer to this question depends on the specific circumstances surrounding your employer’s reduction in force. If your employer has violated the federal WARN Act, a Maryland employment lawyer may be able to file a lawsuit against your employer on your behalf. In WARN Act cases, employees can seek damages for their financial losses resulting from their employer’s violation of the law.

Unlike the WARN Act, however, the Maryland Economic Stabilization Act does not provide employees with a right to sue under the law (referred to as a “private right of action”). Instead, employers that violate Maryland’s notice requirements for reductions in force can face penalties imposed by the Maryland Department of Labor (DOL). While these penalties are substantial, they do not compensate employees for their lost income and benefits.

But, even if you can’t sue under the Maryland Economic Stabilization Act, you may be able to sue on other grounds. For example, if your employer chose who to fire on a discriminatory basis, you may have a claim for wrongful termination under Title VII of the Civil Rights Act of 1964 or Maryland’s Fair Employment Practices Act (FEPA). Here, too, an experienced Maryland employment attorney can assess your legal rights and help you make an informed decision about how best to proceed.

Severance Agreements and Reductions in Force

In some cases, employers will seek to avoid liability for WARN Act violations by offering severance packages to affected employees. Since the WARN Act requires 60 days’ advance written notice of a reduction in force, severance packages will often include two months’ worth of income and benefits.

If your employer offers you a severance agreement in connection with a reduction in force, you should have the agreement reviewed by a Maryland employment lawyer before you sign. If you sign a severance agreement, you will almost certainly waive your right to take legal action against your employer. As a result, it is essential to make sure that your severance agreement provides just compensation—as once you sign, you may not be able to go to court to ask for more.

Request a Confidential Consultation with a Maryland Employment Lawyer Today

Do you need to know more about your legal rights in Maryland during (or after) a reduction in force? If so, we invite you to contact us for more information. To request a confidential consultation with an experienced Maryland employment lawyer at The Law Firm of J.W. Stafford, call us at 410-514-6099 or send us a message online today.