Finding help when an employer suddenly goes out of business

Earlier this week Keys' Kitchen, a deli and sandwich delivery business in Lodi's industrial district, suddenly closed its doors after being unable to pay a $20,000 electric bill. Many of its more than 70 employees said they had not received paychecks or that the paychecks they received in recent months had bounced.

Employees have rights, and Dean Fryer, spokesman for the California Division of Labor Standards Enforcement, said it's important for employees to know what to do when an employer closes its doors without notice.

"No employee is stuck in that situation," he said. "They certainly have plenty of rights."

Companies must expressly give notice at least 60 days before conducting a "mass layoff" of 50 or more employees, Fryer said. This also applies to companies that go out of business.

According to employee reports, Keys' Kitchen employees were given no such notice.

If not notified, employees may be entitled to that 60 days in pay immediately, along with any other pay they may be owed.

"They can't mail it or give it out later," Fryer said. "(Employers) have to pay that right away."

He recommends that any employee who feels they are not paid properly or is worried that they will not be paid should file a claim with the DLSE, either at the county office in Stockton or online at http://www.dir.ca.gov/dlse.

"If an employer is responsible and knows they're going out of business, there's a lot that can be done," said Ricarda Spivey, employment program representative with the Lodi branch of the California Employment Development Department. "We can actually step in there and help,"

EDD offers a service called Rapid Response. After an employer notifies the DLSE that they are going out of business, the EDD helps employees find new jobs before they're left out in the cold without a paycheck, Spivey said.

However, employees who work for smaller companies may have a tougher time, Fryer said. Because almost all employment in California is at will — employment can be terminated anytime by the employer or employee — companies with fewer than 50 employees that go out of business do not qualify as a mass layoff and employees are not entitled to such penalties.

"All employees in this situation have the right to apply for unemployment insurance," Spivey said.

Any employee who loses their job through no fault of their own may be eligible for unemployment insurance, as certainly would be the case in a situation like Keys' Kitchen, she said.

EDD, located at 631 E. Oak St., also has a wide range of programs to help those who may suddenly be without a job. Aside from helping employees file for unemployment, they help place people in jobs that fit their skills, and offer seminars and one-on-one help with everything from building a resume to polishing interview skills.

They can even help workers file a claim with DLSE if they haven't received pay they're owed. Many of the EDD services are even online at http://www.edd.ca.gov.

Contact reporter Scott Kaul at scottk@lodinews.com

First published: Friday, February 2, 2007