California Employees of Nokia Siemens Bracing for a Landslide of Layoffs

On November 3, 2009, leading infrastructure service provider Nokia Siemens Networks (NSN) announced that it plans to cut between 4500 and 6000 jobs in an effort to improve the company’s dismal financial performance.  The impending round of layoffs or “strategic workforce rebalancing” is part of a plan to cut $733 million from the company’s operating expenses and collapse its five business units into three (Business Solutions, Network Systems, and Global Services). Nokia Siemens employs 64,000 workers worldwide and operates in 150 countries.  The company provided no details as to where the layoffs would occur other than to state that they would be spread evenly across its operations.

Despite its prior cost-cutting efforts, NSN cites “changes in the global economy and competitive environment” as justification for additional layoffs and consolidation.  The infrastructure market has been hard hit by the recession as businesses have cut spending and put off investing in new wave technology.  CEO Rajeev Suri explained that NSN’s customers are now looking for more than just a “traditional discussion of technology.” Failure to keep up with these changes has caused NSN to suffer from decreased sales, increased operating losses, and a lower market share.  In the third quarter, the company’s sales fell to 2.8 billion euros and operating losses rose to 1.1 billion euros.  These numbers reflect NSN’s inability to keep pace with its two primary competitors, L.M. Ericsson and Alcatel-Lucent . When it was formed in April 2007, NSN held 21% of the wireless equipment market and Ericsson held 26%.  Today, NSN accounts for only 20% of the market while Ericsson holds strong with 32%.  

NSN promises that restructuring will return the company to a period of growth, but this is little comfort to the employees who are now facing layoffs.  If you are one of these individuals, don’t wait to be buried in debt.  It is time to get proactive and take steps to protect your financial future.  If you have a profit sharing plan or you have all or part of your 401K invested in your employer’s stock, try to diversify it with investments in other companies.  You should also determine what services are covered under your employer’s health insurance plan. Coverage often ends on the day of your layoff or shortly thereafter.  The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to continue coverage at your employer’s rate plus a two percent administration fee. An employee guide to COBRA can be found at www.dol.gov/ebsa/pdf/cobraemployee.pdf.  Regardless, it is wise to look at private plans, which may be less costly.  Private plans are the only choice in the case of life and disability insurance since COBRA does not apply.  Once you have secured the benefits available from your current employer, you should prepare yourself for future employment opportunities. Request a copy of your official personnel file from the company’s human resources department. You are entitled to any and all documents you have signed in relation to your employment. Also collect written recommendations from your supervisors and compile a list of individuals that will serve as references.  These items will be invaluable to you in a job search.  Never indicate to your current employer that you are preparing for a layoff, but rather pose your inquires as a “just in case” scenario.

In the event that you are chosen to be laid off, it is important to know the voluntary and mandatory obligations of your employer. At the time of your layoff, you will most likely be offered a severance package.  This may range from 2 weeks to 6 months of pay at your current salary, plus payment for unused vacation and sick days.  Your employer may also offer “outplacement services” such as career counseling and access to office equipment (phone, fax, computer, etc.) to assist with your future job search.  It may be possible to obtain a better severance package if you sign a separation agreement. This agreement is a contract that outlines the terms of your layoff and stipulates that you will not disclose trade secrets or hold the company liable for your termination.  A separation agreement is legally binding; therefore, it is wise to consult a California labor attorney before signing.

Severance packages are benefits and therefore optional for employers; however, there are several federal and state laws that employers must comply with when conducting layoffs.  Under the WARN (Worker Adjustment and Retraining Notification) Act, employers must give employees 60 days notice of a mass layoff or plant closing.  If an employer fails to give notice, it may be liable for back pay and benefits.  California wage and hour laws require an employer to make final payment of wages and accrued vacation at the time of the layoff.  Employers must also conduct layoffs in accordance with the provisions of Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Family Medical Leave Act. 

More importantly, most IT and computer personnel are entitled to overtime pay under California law regardless of whether their employers have classified them as salaried exempt from overtime. Numerous class action cases have been filed in California courts for employers wrongfully misclassifying employees as exempt from overtime pay.  Fortunately, in California, an employee can seek back overtime pay for up to 4 years after leaving employment and in most instances California class action attorneys charge no legal fees or costs unless the case is settled or won.

If you may be laid off or have been laid off, contact a California labor attorney to determine your legal rights.