For employment and labor lawyers, the economic downturn means more work
Working Through It: Part 2 of 6
December 27, 2010 5:00 AM
Stacey Vernallis, head of litigation at Goehring Rutter & Boehm, Downtown, helps small businesses "navigate the considerations that come into play when terminating an employee."
By Joyce Gannon Pittsburgh Post-Gazette
The economic collapse of 2008 and the sluggish recovery period that has dragged on since have sent a wave of work to attorneys who specialize in labor and employment issues.
As companies downsize and restructure, "There's been a huge increase in activity ... whether it's dealing with unemployment matters, severance or separation agreements, or construing non-compete agreements," said Beth Slagle, of counsel at Downtown firm Meyer, Unkovic & Scott where she focuses on business, insurance and employment law.
"From the law firm perspective, obviously it's a good thing -- but not for the people it's impacted."
Among the situations that Ms. Slagle has assisted corporate clients with during the downturn is workforce reduction.
"You always hope a client who is going to do any type of layoff has planned for the number of issues they have to look at that could get them in trouble if they don't plan appropriately."
Those issues include potential age discrimination lawsuits from older employees who are laid off; violations of the federal Worker Adjustment and Retraining Notification (WARN) Act that requires companies to provide 60 days notice of layoffs; and the legal ramifications of hiring independent contractors to pick up the workload.
Some companies planning layoffs also need refreshers on fine points such as whether terminated employees' paychecks can be withheld until they return all office keys and work files. They can't, said Ms. Slagle. "That's a no-go under the [Pennsylvania] Wage Payment and Collection Law."
Meyer, Unkovic primarily represents medium-sized companies, Ms. Slagle said, but the firm has also worked with some individuals negotiating severance and separation packages with employers.
"There's been a huge increase in executive-level work in the last two years," she said.
She advises business clients who consider non-compete agreements for departing employees to conduct a cost-benefit analysis of that individual's potential worth to competitors.
"Is it worth going through the time and expense of costly litigation to go after an individual who's competing or soliciting your clients?"
In many cases, she said, employers are driven by anger because they trained an individual who is now working for a rival. "You need to determine what kind of impact that individual will have on your business before stepping into court."
To handle the uptick in employment-related cases, Meyer, Unkovic has spread the work among more attorneys, including associates "who might not have had exposure to certain employment issues they hadn't faced before."
At Goehring Rutter & Boehm, another Downtown firm that represents many small, privately held businesses with 100 employees or less, the attorneys are being consulted by their clients much earlier in the process of downsizing, said Stacey Vernallis, head of the firm's litigation group.
"Employers want to make sure ... they are clearly in line with the statutes and not in violation of wage payments or how to calculate bonuses, vacation pay or wages due.
"We really help the small business navigate the considerations that come into play when terminating an employee."
She has also seen an increase in inquiries from workers asking about their rights. "Unfortunately, everybody knows someone who has a lost a job. So they're asking, 'what rights do I have' and 'if I'm being treated fairly.'"
To handle the larger volume of employment cases, Goehring Rutter is "performing a lot of triage to prevent claims from happening," said Ms. Vernallis. "We're helping in the decision process."
Employment and labor law as a practice area "has been growing steadily" in all regions of the U.S. for at least eight years and is "almost money in the bank for a law firm," said Robert Denney, a law firm consultant based in Wayne, Pa.
Besides lawsuits stemming from workforce layoffs during the recession and its aftermath, a decline in union membership spurred more labor-related legal work, said Mr. Denney.
But the biggest driver in employment-related cases, he said, is a spike in wage and hour class action suits -- particularly in the health care industry where the federal government has been investigating claims of unpaid overtime among other issues.
Larry Bodine, a law firm marketing consultant based in Glen Ellyn, Ill., blames the "harshness of the recession" for the surge in employment cases.
"People who ordinarily would never file a claim or lawsuit against their employers are so desperate now. They are taking the risk and filing the claim ... because what's happening is a lot of employers are being ham-handed when it comes to laying people off.
"[Employers] don't learn about the federal and state laws until after the layoff when they contact lawyers. They've made themselves open to claims. A huge industry has grown up over plaintiff attorneys asserting rights for people who have lost their jobs. And there's an equally large group of attorneys defending all these corporations.
"The days when you could just do a blanket layoff without planning carefully with lawyers is over."
Mr. Bodine, a former litigator who now advises attorneys on business development, said he urges law firms to "ramp up their labor and employment practices."
"I wasn't emphasizing it before the recession; now I stress it."
Working Through It continues all week:
: Starting a career during a recession posed challenges for young workers.
: Getting laid off can mark the beginning of a new entrepreneurial career chapter.
: Part-time, temporary and contractor has become the norm at many places and for many people.