As a European, I never realized that this is allowed under US labor law. That is absolutely insane.
EDIT: some commentors have pointed out that the workers collect severance and unemployment --- I was not aware this is law in California, and that changes matters. I would, though, still find being suddenly out of a job fairly traumatic.
When someone is fired, they generally stop working immediately while getting paid through the notice period.
Unemployment benefits in California are capped at $450/week, and you only get 26 weeks of it. It's helpful, but doesn't even cover housing costs for many individuals, let alone for families.
I don't think there's a state law requiring severance. It's often offered by the employer if the terminated employee agrees to sign an NDA.
In California, it is illegal to require a terminated employee to sign an NDA to receive severance paid to waive the required WARN notice. A company attempting to enforce such an NDA would key face judicial sanction in court (including paying the former employee's legal fees) and likely pay fines to the CA Labor Dept as well.
If they have to fire twenty percent of the company, shouldn't that be a signal to investors that the people in charge are morons for overhiring thirty thousand people in the first place? Software engineers aren't cheap; assuming an average compensation of $250,000/year (which I think is pretty conservative if you count total comp like insurance and stock) then that's 7.5 billion dollars of investor money they're wasting per year.
Unemployment is not enough for people to live on. In some cases, it barely covers health insurance which can be 800$/month for a single person. (You can get cheaper plans but they start you back on your deducible)
Personally, I'd rather just get the money and not have to work, rather than be forced to come into the office knowing I was getting canned in 3 months or whatever
Oracle software engineering compensation for mid-level software engineers is in the $200-300K range. The top of their scale extends into the $400K to $1 million range.
From what I've seen, laid off employees will receive a minimum of 1 month of their compensation with 1 week of pay for every year worked, plus any remaining unused vacation time. So a mid-level employee who has worked their a few years and hasn't drawn their vacation balance to 0.0 could receive $30-50K or more beyond this date.
Sure the company still has to payout salary, as per the contract, but plenty of companies do not want laid of people around.
on the head-roll day HR sends a friendly message asking you to pay a visit in their office. While you do that, security folks clear your desk, and a few minutes later you are outside the building with the signed paperwork in your hands. And suddenly another guy gets a friendly message from HR...
Of course the severance is paid according to the law - but such sudden (mass)termination does happen here too.
I once was given about 6 weeks notice in the US, with a promise that if I completed a project I would be given severance. Given the situation I was in, where the product would be "done", it was a good situation to be in.
A buyer and seller should be free to start and stop buying and selling whenever they want, absent contracts stating otherwise.
The government should be there to directly support all of the people, not to police and cajole businesses to support some of the people that happened to be hired by a business.
