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Lawyers Blast Waiver of Workers' Rights

Courts: Attorneys say WorldCom is forcing employees to forfeit legal rights in return for pay.

July 12, 2002|ELIZABETH DOUGLASS and LISA GIRION | TIMES STAFF WRITERS

Attorneys for WorldCom Inc. employees say the company is improperly trying to limit future claims and participation in class-action lawsuits by forcing workers to sign away their legal rights in return for severance pay and paid health benefits.

The attorneys Thursday asked a judge to order WorldCom to stop distributing the so-called general release agreements and to recall the agreements already in circulation among laid-off employees.

The court agreed to consider the request at an expedited hearing set for Tuesday in U.S. District Court for the District of Columbia.

Telecommunications giant WorldCom, teetering on the verge of bankruptcy amid a vast accounting scandal, is laying off more than 17,000 employees to save money.

The Clinton, Miss.-based company is offering dismissed employees severance pay and paid health insurance--but only if they sign an agreement, within 10 days, that relieves the company, its officers, executives and others from liability in all potential claims and lawsuits, including suits already underway.

Such broadly framed liability releases have become common among large corporations, and have been upheld as legal in many circumstances as long as the signing employees are adequately informed before waiving their rights, employment law experts said.

Companies are restricted from making earned wages and accrued vacation pay contingent on waiver agreements.

But if a company offers anything in addition to what it is legally or contractually required to provide in severance, it can ask for a waiver of rights in return, said Rene Barge, a West Los Angeles employment lawyer.

"That's fair, that's legitimate," she said. "I give you something and you give me something in return. I've had a lot of people call me and say they want the money and they want to sue, and I have to say, 'Sorry.' "

In WorldCom's case, a series of fraud investigations at the company are in their infancy, making it impossible for employees to have complete information before signing a waiver, according to attorney A. J. De Bartolomeo. Her firm sued the company this month on behalf of employees whose retirement accounts were decimated when WorldCom's stock plummeted below $1 a share.

"What's different about this case is that it releases the future and current officers and directors and the company for wrongdoing of any kind, and at a time when the company's executives just took the 5th Amendment before Congress," De Bartolomeo said.

"What WorldCom is trying to do here is to buy themselves an insurance policy against illegal acts," she said. "It's particularly egregious, because they are asking people to sign away rights which are the subject of lawsuits right now, not some lawsuit that could be filed in the future."

Julie Moore, a spokeswoman for WorldCom, said the company would not comment on the issue because it is the subject of litigation.

WorldCom has been sued by at least nine other law firms over alleged violations of the federal Employee Retirement Income Security Act, or ERISA.

The lawsuits accuse the company of fraudulently hiding the firm's true financial condition from employees whose retirement money was invested in WorldCom stock.

The release agreement being distributed by the company could prevent employees who sign it from participating in lawsuits involving ERISA claims.

Given that scenario, "there might even be an unconscionability argument that their use of these agreements is deceptive or abusive," said attorney Barge. "But it depends on what the employees are getting. If they are getting something they already deserve, then they shouldn't sign it."

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