Better.com has been in the news a lot this week. How could it not be?
First, the CEO, Vishal Garg, fired over 900 workers in a three-minute Zoom call in the middle of the holiday season. We heard from at least a few employees, and a number of people, some in the media, and others not, who blasted him. Then about a day later, he apologized. Now, a Fox News host has not only endorsed the firing but trashed the terminated employees.
What’s going on here? Aside from being a sensationalized story, what can managers, executives, and business owners learn from this continuing saga?
As an employment attorney I do have a take on what’s unfolded so far, which I’ll share below, so read on…
OK, first, let’s get that nutshell version of what went down:
Last week, Wednesday, December 1, to be exact, Better.com CEO Vishal Garg announced via a 3-minute Zoom webinar that the company would be laying off more than 900 employees: “If you’re on this call, you are part of the unlucky group that is being laid off,..Your employment here is terminated effective immediately.” He also, notably, said: “This is the second time in my career I’m doing this and I do not want to do this. The last time I did it, I cried,”
He told the terminated employees to expect an email from HR regarding benefits and severance. (At least one former employee has indicated that he was shut out of company email immediately and so had to wait longer for the email from HR.) Garg blamed market efficiency and employee productivity for the layoffs. (I’ll come back to these and other points after I finish laying out the key factual points.)
On December 8, after much backlash on social media, Garg issued an apology in a message posted to the company’s website:
“I want to apologize for the way I handled the layoffs last week,…I failed to show the appropriate amount of respect and appreciation for the individuals who were affected and for their contributions to Better.” He also admitted that “I blundered the execution.”
Finally, Fox News Host Emily Compagno cheered the layoff on December 8: “I loved this, actually. I loved this so much.” She said Garg let the fired workers know “that their theft was no longer tolerated. So for me, good riddance. And I feel bad that he’s now having to capitulate to the other execs at his company and apologize for it.” She referred to the fired workers as “snowflakes”, and probably millennials and Zs,” who need to learn work ethic.”
Compagno did acknowledge the “indelicate nature” of the firing, adding that when she worked as a federal attorney she had to fire employees, and claimed that “I did it with the utmost respect and care,” That would not be readily apparent from her comments on the air.
Let’s look at each of these in order.
Let me first say that generally, I do not see a problem, legally, with an employer that feels the need to terminate employees due to market/financial issues. Similarly, if one or more employees are not productive I do not see a problem with termination on those grounds. That said, I do see a few problems with Varg’s actions in this situation.
First, there’s a way to fire employees, and this wasn’t it. Whatever reasons you have, or feel you may have, to terminate employees, you can and should allow employees at least some measure of dignity. A mass layoff via a three-minute Zoom meeting does not even begin to do that. Employees who feel they have been mistreated are more likely to look for reasons to sue. We have also heard many stories of that one disgruntled, fired employee that either returns to the workplace (or to some alternative place) and resort to violence.
Second, this type of layoff likely qualifies as a mass layoff, under the federal WARN Act (and possibly under state statutes as well). Such layoffs, under the federal WARN Act, generally require at least 60 days advance notice. Employers who do not provide such notice are liable for at least 60 days’ back wages and benefits. Varg reportedly offered 4 weeks’ severance and 3 months’ benefits to the terminated employees, which may offset at least some of that obligation. Additionally, severance benefits can be conditioned on waiver of WARN (and other claims). The waiver, if there is one, may or may not be enforceable. Without seeing the severance agreement I can’t say for sure. Employees do not have to accept the severance (though most do) and if they don’t they can still sue.
Varg is reputed to resort to abusive, bullying tactics. If any of the terminated employees belong to classes protected under federal and/or state anti-discrimination laws, and if they can show that he did in fact bully them, he could face discrimination claims. Again, while the severance packages likely contain waivers of such claims, if even one employee does not accept the package, s/he will not be subject to that waiver. Moreover, even an employee who accepts severance conditioned on a waiver can still file a charge with the EEOC or state counterpart. S/he will not be able to receive any money as a result, but s/he can participate in an investigation and imposition of penalties (monetary or not) by the applicable agency.
Beyond that, Varg’s stated reasons for the layoffs do not seem to hold up under even mild scrutiny. Market conditions? Better.com was reported to have just received a $750m cash infusion days before the layoffs. Productivity? Varg claimed that up to 250 employees were not productive, that they worked two hours a day and were paid for 8. That raises a few questions: 1) Why were they not fired sooner if they weren’t productive? 2) Why were they offered severance if they were paid for work they didn’t do? and 3) What about the other 650+ employees? The assertion doesn’t appear to add up.
But Varg apologized, right? Arguably, yes. He issued a written apology of sorts, on the company website — to existing employees, not the terminated employees, after the fact, after having done a lot of damage and facing a lot of criticism on social media. The “apology”, without more, seems, at best, to be too little too late.
Now, for Emily Compagno’s comments. The most charitable adjective I can come up with is tone-deaf.
Compagno’s comments for one thing ignore the fact that even Varg only claimed that 250 out of the 900+ employees were not productive. Furthermore, as I pointed out above, I doubt that Varg would have provided severance benefits to employees that had only worked 2 hours a day.(I’d be interested if he has proof of that.)
Moreover, Compagno’s comments about workers were just in poor taste. Did she have any knowledge of the age or demographics of the fired employees? Were all of them millennials or Gen Z? Probably not. How does she know that none of them have a work ethic? She doesn’t. This is an attorney? Even if she didn’t work as an employment attorney, surely she knows or should know that Varg’s actions are not the way to fire employees. Surely she knows that her comments are in poor taste even if she hadn’t been on the air when she made them. Would she advise a client to act the way Varg did? Finally, her comments were devoid of any of the “respect” and “care” she says she exercised when she terminated employees. It would behoove Fox News to look into disciplinary measures against Compagno for her on-the-air comments. Whether it will remains to be seen.
OK, I think we’ve unpacked enough takeaways for now. See you next time.
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