With more tech sector layoffs expected in 2023, more litigation is expected for companies that are doing the paring down.
In California, where Silicon Valley has seen a large number of job cuts, attorneys for Twitter employees have brought lawsuits including claims under the California Private Attorneys General Act, a controversial statute exclusive to California that was recently curbed by the U.S. Supreme Court in the Viking River Cruises decision.
U.S. District Judge James Donato ruled earlier in January that five former Twitter employees pursuing a proposed class action lawsuit must adjudicate in arbitration in accordance with employment agreements they signed. The lawsuit was filed Nov. 3 in the Northern District of California in San Francisco.
Tom Manzo
“I think as people start to lose their jobs, trial attorneys, the PAGA lawyers are definitely going to be out soliciting a lot of those laid off employees,” Tom Manzo, founder and president of the California Business and Industrial Alliance, told the Northern California Record.
But PAGA has drawn criticism for benefiting attorneys over plaintiffs while harming businesses by leveraging high-dollar settlements from defendants.
“To me the law is severely flawed.” Manzo said. “Because even if each employee gets 100 bucks each, if it's 10,000 people, the lawsuit could bring the attorneys $10 million.”
Meanwhile, new rounds of tech layoffs in the thousands have just been announced by Google, Microsoft, and Meta, the parent company of Facebook and Instagram.
“I think people need to really look at – as the economy slows and downsizing is needed – make sure you’re taking all the right steps; that you’re doing the WARN notice, that you’re laying people off correctly, that you’re doing things to avoid these vulture-type lawsuits," Manzo said.
It doesn’t matter if the company has $100 million in sales or a $100,000 in sales, Manzo said.
“If they’re not making money, if they’re losing money and they’re forced to lay people off, the last thing they should be doing is getting penalized for it,” Manzo said. “Because all it’s going to do is either put the company out of business or have the company move out of state – one of the two things is going to happen.”