What are employee rights when a business temporarily closes?

Written by nicole devlin
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What are employee rights when a business temporarily closes?
An employee temporarily out of work has rights. (business image by david levasseur from Fotolia.com)

Due to economic uncertainty or lack of business, a company may decide to close its doors temporarily. In this situation, employees may feel they have little or no recourse in collecting unpaid salary or in continuing health coverage. However, companies and local and federal governments have some steps in place to help protect employees during this uncertain time.

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Notice of Termination

Most states allow a company to terminate employment at any time for any reason with no prior warning. Dependent on individual company policy, employees have no legal recourse when not notified of employment termination prior to business closure.

Employees of larger businesses -- defined as those with 100 or more employees -- must be notified of closure or large-scale layoffs at least 60 days in advance. According to the Department of Labor, however, companies can work around this rule if it can be proved that the company was "faltering" or met with "unforeseeable" circumstances.

Final Pay

An employee is entitled to payment for hours worked up to the closure of the business. Additionally, depending on company policy and length of business closure, an employee may be entitled to pay for unused vacation and holiday time, unused sick time and any earned bonus payments.

Extension of Benefits

If a business is temporarily closing, the company may or may not continue to pay for benefits for its employees. If the business does not, an employee can receive temporary health care coverage through the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA. Depending on an employee's current health care coverage, continuation of the coverage paid in part out of the employee's pocket can occur for a set period of time following termination.

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