Stripe is just trying to do layoff without paying severance
twitter.com
twitter.com
Everything in the tweet is factually incorrect.
- Companies aren't required to pay severance when doing layoffs.
- There is no evidence that Stripe isn't paying severance when firing for performance (I'd be shocked if they aren't)
- Employees fired for performance are absolutely eligible for state unemployment benefits.
- There is no evidence that Stripe isn't paying severance when firing for performance (I'd be shocked if they aren't)
The WARN act requires advance notice of 60 days. I think most companies prefer to pay severance, but it's pretty much equivalent. California has more strict rules (mostly excluding a bunch of excuses to skip complying).
So yes, Stripe would technically not be required to give severance in the case of a layoff. But they'd be required to keep the people employed for 60 days after telling them they're going to be laid off. I'm not sure there's much of a distinction?
I'm honestly not sure how this would apply for a remote workforce. Consult your friendly HR or legal team counterpart. :)
Furthermore, the DOL has already described what this means for employees without a clear single site:
> a home base from which work is assigned
> a home base to which workers report
Which arguably will make it worse for a remote team, because all the remote workers may count towards the main hub. This is all vague though, I think there are colorable arguments either way.
None of them were fired for cause in the sense they wouldn't have gotten a severance or unemployment.
Usually fired for cause i.e. no severance or unemployment is reserved for gross misconduct.
- If you get cut for performance reasons, most companies still provide severance.
- This is not a one off thing. Most companies have 10-15% quotas for “low performance” every year and people are let go on a regular basis.
- Most other employers in tech know this as a practice and getting fired is not that big of a deal.
- if you’re let go for performance, you can still file for Unemployment as long as there was no misconduct on your end.
Although I don’t agree with these tactics and in my long career, have been at the receiving end of it a couple times, I would still say the tweet is a little alarmist. It makes sense in other industries, but in tech, it hardly matters if it is a layoff or a performance related loss of employment.
Besides we are all talking as if the employees don’t know the risk of working for Companies like stripe. For every stripe engineer that makes 400k, there is an engineer working at another company at 200k that is equally capable of getting that 400k job. There is a reason they don’t do that.
Countries that have more pro worker legislation, also tend to have lower wages? At the end of the day, it’s not a minimum wage job we are talking about, it is a multiple of 6 figures job.
[edit] Besides, we are all talking about the downside of the current setup as if there is no upside. If there is only upside to fixing the problem being discussed here, then there is a very straightforward solution: Unions. But somehow, tech workers are very less likely to enter unions. Why is that? [hint: money. With more protections, you get paid less] It is a zero sum game. There is only a fixed budget that companies have. If you want more benefits, it comes at a cost of lower income. It’s really straightforward.
Got a citation for that one?
The US has probably the highest wages, then for example EU has lower wages and generally more protection, but then again you can go to china and have even lower wages and even less protection.
> Severance pay is often granted to employees upon termination of employment. It is usually based on length of employment for which an employee is eligible upon termination. There is no requirement in the Fair Labor Standards Act (FLSA) for severance pay. Severance pay is a matter of agreement between an employer and an employee (or the employee's representative). The Employee Benefits Security Administration (EBSA) may be able to assist an employee who did not receive severance benefits under their employer-sponsored plan. Please contact EBSA if you have any questions.
Letting someone go because of performance doesn't remove the position and it can be filled again.
If the company is realizing that there are people who are just coasting and not doing work and that they're not getting fired previously because it really is a pain and paperwork to fire someone and they want to let those low performers go but not eliminate the position, this is the way to go about it.
Microsoft's old stack rank wasn't a layoff - it was a cold hearted "people who aren't preforming get let go."
Stripe is recognizing that they've got people coasting and not contributing at the expected level. Somewhere an estimate was made that the lowest performing staff based on manager ratings aren't matching the actual performance. If someone is let go for performance (severance or no - that isn't part of the calculation), that position remains and can be filled again. If it was a layoff, then that position would be eliminated after the person was laid off.
So many smart people here who are passionate about labor. Just make that into your company from day 1!
As a business owner I would never do this. But you could do that yourselves without coercing me into them!
Honestly you get more protections if they are part of a recognized union than if their only choice is a wildcat action.
In fact, in the US (and many other countries), it's illegal to do so.
Even more fundamentally though, why should your employees care about your property? If you're worse off but they're better off, they should do it. Your wellbeing doesn't enter into the decision, just as their wellbeing doesn't enter into yours.
Property rights are the foundation of civilization. Please - go start your own commune as so many fantasists have and see how well it goes. I prefer to own my own stuff and keep thieves from taking it.
The only way for labor to get a square deal is through a union. The fact is obvious because large corporations do everything possible to try and prevent their labor from unionizing.
You may be a good person running a business that respects your employees and if you are, I have no issue with you. But if you’re someone stocking the shelves at Home Depot or working in an Amazon warehouse you aren’t respected by your employer and you aren’t getting a square deal.
That freedom is a two-way street, and it's equally true that nothing stops labour from coming together to bargain collectively. In fact, in the US and many other countries, that freedom is explicitly enshrined in law.
Nothing stops you from operating a business at full personal liability. As a worker, I would never do this, but you can do it yourselves without coercing me into supporting the existence of liability-shielding legal entities with more power than ordinary humans.
See how you can kinda do that with anything, so it's not very convincing?
[0] The article says they're going to be enforcing their "10% to 15% target" now, and presumably some people are already getting those ratings.
Giving low scores is, as called out in the twitter thread, stack and ranking managerial BS which is toxic to its employees. Low and high performing employees.
If you don't have strong incentives to fire low performers (aka stack ranking), end up with a slowly deteriorating engineering culture as more capable people end up carrying the weight of worse hires that don't get managed out. Those devs enjoy their jobs less and leave for better pastures (because they're options are good), while worse devs stick around longer (because their options aren't as good).
If you do have strong incentives to fire people, you end up breaking up high performance teams, and create a culture of hire-to-fire and "mercenary" devs. This impacts your culture and forces out "good enough" employees and causes higher recruiting costs.
I don't fully understand if either of those are right in this situation, but I understand how people who felt they were with one type of company can be upset if that company changes its "culture" without a lot of heads up.
You could presumably still give low ratings before when it was merited.