Tough times spur laid-off workers to sue

NEW YORK (Reuters) - Miron Berenshteyn lost his job at Lehman Brothers Holdings Inc days before its bankruptcy. Now, the software developer is suing the financial firm for lost wages in what is becoming a more common route for laid-off workers in the sputtering economy.

Staff stand in a meeting room at Lehman Brothers offices in the financial district of Canary Wharf in London September 11, 2008. REUTERS/Kevin Coombs

With the U.S. jobless rate at a 14-1/2-year high, more workers being shown the door are expected to explore court action against their former employers, according to lawyers on both sides of labor disputes.

Among the expected complaints will be arguments from dismissed workers that they are owed wages and benefits, or complaints they did not get adequate warning their jobs were about to disappear, lawyers say.

But attorneys say the anticipated increase in lawsuits is not likely be a tidal wave, in part because the fragile economic conditions will discourage both laid-off employees and employers from getting into lengthy and costly court fights. There will likely be more litigation, but many potential plaintiffs may seek to resolve grievances out of court.

“We will see an uptick” in lawsuits, said Daniel Schwartz, an attorney at law firm Pullman & Comley LLC in Hartford, Connecticut, who defends companies in employment cases. “People, when they don’t have a lot of options, tend to look to the courts for a remedy.”

The monthly jobs report on Friday showed a weakening U.S. jobs market, with the jobless rate rising to 6.5 percent in October, the highest since March 1994. Employers cut 240,000 job from payrolls, bringing the total to 1.2 million jobs lost this year.

With that backdrop, workers in industries such as banking, retail and manufacturing are out of work, and many are consulting lawyers if they think they were let go unjustly or were possibly denied pay and benefits, attorneys said.


At Lehman, ex-employee Berenshteyn was laid off on September 9 from his job at the financial firm in Jersey City, New Jersey -- less than a week before it filed the biggest U.S. bankruptcy, according to a copy of his lawsuit.

The case, filed in federal bankruptcy court in New York, seeks class-action status on behalf of about 1,000 other employees. It contends that Lehman improperly stopped Berenshteyn’s severance pay in violation of federal employment law after the firm filed for bankruptcy protection.

His lawyer, Jack Raisner, a partner at law firm Outten & Golden LLP in New York, said he received hundreds of calls from others who worked at Lehman who say they, too, are owed lost wages and benefits. Berenshteyn was not available for further comment on the case.

Even law firms are not immune from lawsuits. After mass layoffs at now disbanded law practice Heller Ehrman LLP in San Francisco, three dismissed employees brought a lawsuit seeking money they say they are entitled to. The law firm dissolved last month amid the rough economic conditions.


Companies can expect other types of claims from dismissed workers, legal experts said. One area is likely to be disputes brought by employees who say they were not adequately compensated for overtime they worked.

Discrimination claims may also be pursued by some workers, although these cases can be particularly tough to win.

In one recent case, Dell Inc was sued by a group of female former top executives who say they were singled out during recent layoffs. They are seeking $500 million in damages in a class-action lawsuit. The computer maker has said it believes the claims are without merit.

A lawyer for the former Dell employees said that when workers lose their jobs they may be more willing to bring a discrimination case because they no longer fear perceived reprisals from speaking out.

“They suddenly find themselves in the situation where they have nothing to lose,” said David Sanford, a partner at law firm Sanford Wittels & Heisler LLP, which specializes in filing employment discrimination cases.

Schwartz, of Pullman & Comley, said many companies have worked to better shield themselves from discrimination claims by conducting workforce analyses ahead of layoffs to ensure no particular minority group is disproportionately affected by job terminations.

More companies also are using severance agreements, which typically require terminated employees to sign a release agreeing not to sue in exchange for receiving departure benefits, as a way to avoid potential lawsuits, said Howard Lavin, a partner at law firm Stroock & Stroock & Lavan LLP in New York who represents employers in labor matters.

Advising workers and employers is keeping employment lawyers occupied at a time when other attorneys, such as those in real estate or mergers law, have seen business decline.

“When companies are in distress and they are laying people off, that means that employment lawyers are busier,” Lavin added.

Reporting by Martha Graybow; Editing by Andre Grenon