Bank of America's Attempts to Strong-Arm Fired Employees May Result in Legal Liability
Recent media reports have confirmed that Bank of America Corp. is barring ex-employees from accepting job offers from competitors unless they release claims against the bank or voluntarily forego their deferred compensation. As a general rule, this type of tactic is of doubtful legal validity.
According to a Reuters Report dated May 12, 2009, reports that Bank of America is forcing its former employees to take so-called "gardening leaves," that is taking several months off without seeking new employment with a rival. But, the bank also demands that fired staff give up their right to sue or else be classified as resigning, thereby forfeiting previously earned compensation. Lawyers quoted in the Reuters Report correctly refer to the Bank of America practice as "warped" and "offensive."
Although Page Perry has not reviewed the relevant documents in question, in most cases an employee's rights upon termination by the firm are governed by a variety of federal and state statutes, many of which guarantee certain benefits. Additionally, if benefits are characterized under a so-called "qualified plan," the terms of the written plan govern how employees can be treated and a plan cannot easily be amended. Any deviation from the plan documents may give rise to a claim for special or for discrimination under the Employee Retirement Income Securities Act (ERISA) of 1974.
Additionally, courts frequently hold that releases are invalid when they are not made voluntarily. Conditioning payment of already-earned deferred compensation from the signing of a release may ultimately be deemed involuntary and therefore unenforceable. This is particularly true since a large portion of any Bank of America employees' compensation were bonuses that were to be paid in deferred compensation.
So-called non-solicitation provisions such as those Bank of America seeks to force upon its departing employees are also closely scrutinized and subject to a rigorous set of tests before the courts will hold them to be enforceable. In economic times such as the present, employers are being more aggressive in the hopes of handcuffing employees who otherwise might succeed in taking their business to another firm. Under some state laws, the move may be deemed anti-competitive, ultimately hurting consumers but certainly having a negative impact on a terminated employee's ability to become re-employed in the industry in which she is trained and experienced.
Bank of America said in December 2008 that it planned to cut 30,000 to 50,000 jobs over the next three years to save over $7 billion in annual costs.
Page Perry, LLC is an Atlanta-based law firm with an active practice in representing individuals in employment disputes with firms in the financial services industry. The firm is currently involved in representing several employees in such disputes. In the past year, the firm has won arbitration award for clients in employment disputes in the amounts of $1.7 and $3.9 million. For further information, please contact www.pageperry.com.
