Is it illegal to lay off employee shortly before vesting?

An employee is about to reach the 5 year mark in employment at a company. We are looking at reducing staff in the 4th quarter of this year. Will we be liable for a lawsuit if we lay this person off just before he's eligible for full vesting in our savings plan? We are located in New York State.

Rita Risser's Response:

It is definitely illegal to lay someone off for the purpose of preventing them from vesting. It is not illegal to pick someone for layoff based on legitimate business reasons such as low seniority, elimination of function, lack of skills, relative low performance, etc. From your question it sounds like you have a legitimate reason, so it would be legal to pick him for layoff.

But being able to win a lawsuit is not as good as preventing one in the first place. Why not let this person stay until he vests? In fact, your severance agreement could provide that he would be laid off as of his vesting date in exchange for his agreement not to sue. Most people would be happy to sign that. Of course, in order to do this, you must have a local employment lawyer write the agreement for you, and consult on what other provisions may be required.

Disclaimer: This information is provided with the understanding that the author and publisher are not engaged in rendering legal or other professional services. The publishers disclaim any liability, loss or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this information. This information is not a substitute for the advice of a competent legal or other professional person.