The shutdown of Florida based Taylor, Bean & Whitaker Mortgage Corp., the 12th largest home-mortgage lender, focuses attention on the plight of workers who are told their jobs are safe one day, and laid-off the next. The sudden loss of their jobs and company health insurance when their employer files bankruptcy, which often occurs, causes many employees immense hardship and draws attention to their legal rights, according to the national employee rights law firm of Outten & Golden LLP.
By the morning of Wednesday, Aug. 5, Taylor Bean, as reported by the Wall Street Journal, had lost its ability to provide government-insured loans. Employees in at least one office were reassured in a late-morning meeting that their jobs were safe. When they came back from lunch, however, employees were informed that they were terminated.
According to Jack A. Raisner, a partner in the New York office of Outten & Golden LLP, which represents employees throughout the nation in pending layoff-related litigation, "The Taylor Bean flip-flop is a dramatic instance of what we call 'pump-and-dump'. Employers get the hopes and spirits of employees up in bad times by telling them not to worry - they won't be fired. The next thing you know, the employer is frog-marching the same employees out the door."
Raisner points out that the pump and dump scenario has been playing out across the nation during this Great Recession, leading to many angry workers and lawsuits. "Employees especially resent the sudden reversal of fortune. They feel deceived. Everyone expects they may lose their jobs. What they don't expect or forgive easily are the lies. That is why plain, honest notice is so important. In fact it's the law under the WARN Act.
The WARN Act (Worker Adjustment and Retraining Notification Act) requires covered employers to provide employees with 60 days advance written notice that will be losing their jobs in a mass layoff or shutdown. According to Raisner, it does not appear from reports that such notice was given to the employees of Taylor Bean.
Outten & Golden is pursuing WARN Act claims on behalf of more than 25 groups of laid-off or terminated employees from around the nation, including imploded mortgage lenders in Florida such as First NLC (U.S. Bankr. Ct., Dist. of Florida, Adv. No. 08-01130-PGH)), as well as American Home Mortgage (U.S. Bankr. Ct., Dist. of Delaware, Adv. No. 07-51688 (CSS)); and Homebanc (U.S. Bankr. Ct. Dist. of Delaware., Adv. No. 07-51695 (KJC)) Attorney René S. Roupinian, who co-chairs Outten & Golden LLP's WARN Act group, urges employees to investigate whether they might be covered by the WARN Act, which provides eligible employees who receive less than 60 days termination notice up to 60 days back pay and benefits which include medical expenses incurred due to lack of health insurance during the notice period.
"Many employees do not realize that when an employer goes out of business, health insurance plans are usually terminated along with the employees," Roupinian says. "Although Taylor Bean has not filed for bankruptcy, if it does, loss of health insurance is nearly a certainty. Employees are often let go with no insurance to pay for necessary prescriptions and medical procedures for themselves and their families. It's a harsh reality and can often be more devastating than the sudden loss of income."
It remains to be seen how Taylor Bean's shutdown will affect the terminated employees, but they should know that they may have rights that will help soften the blow of unemployment affecting so many workers in the mortgage industry and economy to date.