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The implosion of Silicon Valley Bank has saturated the news, as venture capital funds and other high-net-worth individuals scramble to ensure their billions of dollars are safe. One group of individuals is footnoted in these media articles and blog posts—the vulnerable employees of start-up companies. Media suggests that employees will be fine, because the federal government has backstopped funds necessary for making payroll.

As employment lawyers, we know that is not the full story. Despite federal assurances, some technology companies will use a climate of fear as justification to terminate the most vulnerable—older workers, disabled workers, pregnant workers, minority workers, or anyone who does not fit the company’s definition of the “perfect” employee. Many of these terminations will be illegal.

Mass Layoffs in the Wake of the SVB Crisis

We expect to see “RIFs”—or reductions in force following SVB’s shutdown. Companies use RIFs to eliminate large swaths of employees. Companies state these layoffs are impersonal, justifying layoffs as part of expansive cost-saving measures or strategic reorganizations. When executed thoughtfully, RIFs are legal. However, RIFs are often a cover-up for illegal terminations.

We expect that companies will send out letters saying, “We sincerely regret to inform you that in the current financial climate, we must lay off a group of employees to ensure the future stability of the company. With our deepest regrets, you as part of a larger reduction in force.” 

We expect that as individuals look around at who received the letters, they will notice a pattern. The “marketing department” will be eliminated, which consisted of two people—a pregnant woman and an employee on temporary disability leave.  The “accounts payable” section of the accounting department will be consolidated with the accounts receivable department, and the only employee terminated will be one who raised suspicions about an accounting practice.  An administrative assistant to a manager will be let go. He was almost 60 and starting to develop arthritis. A few young employees, who are inexperienced but very marketable, will be terminated as well. The company knows they will bounce back.

We see this all the time, including in the most recent mass layoffs at large technology and entertainment companies. The company states that the RIF is impersonal, but a suspiciously large number of the individuals selected for termination are members of protected classes.  Remember, it is unlawful in California for an employer to terminate another employee due to their race, religious creed, color, national origin, ancestry, physical disability, mental disability, reproductive status, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or veteran or military status. There are other protections as well.

Contact Our Silicon Valley Employee Rights Attorneys

You have rights against discriminatory termination practices, whether or not your termination is part of a RIF. If you believe you have been unfairly targeted in the wake of the banking system shakeup, contact us today to discuss your potential case today. You only pay us if you win.

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Julian Burns King graduated with honors from Harvard Law School and founded King & Siegel in 2018. As head of the Firm’s discrimination and harassment practice areas, she champions the rights of working parents and victims of workplace discrimination and harassment. She has been recognized as a “Rising Star” by Super Lawyers annually since 2018 and has recovered tens of millions of dollars on behalf of her clients.

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