> - Companies aren't required to pay severance when doing layoffs.
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'd be surprised if they did a meaningful staff reduction without hitting 50 employees at their main office in south SF. A 5% reduction (alleged in the tweet) is something like 400 people for Stripe.
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.
Fair point about Canadian law being different than US law. For the < 5% of Stripe employees there, that does appear to be true. Though I would again point to my 2nd bullet point:
- There is no evidence that Stripe isn't paying severance when firing for performance (I'd be shocked if they aren't)
Stripe operates a single office in Toronto, Canada. No one would be qualified for severance since severance is only eligible after 5 years of employment and Stripe's office has only been open for 2 years.
Although layoffs often involve severance pay it is not a requirement. Also, in most states being fired for poor performance vs misconduct doesn't disqualify you from receiving unemployment.
Stripe had 1500 employees in 2019. Today it has over 8000. The same pattern has applied throughout the tech industry during the pandemic, and it is obvious that not all of these mass hires are well suited for the job. Now that the unlimited money printer has dried up and companies are forced to tighten budgets, low performers will start to face the pressure everywhere.
I'm not sure that it has anything to do with a given individual low performer. It could very well be that these companies over-hired and were not structured to manage a giant influx of software developers. Having an unlimited money printer seems like a breeding ground for mismanagement.
- Although unethical, stripe is hardly the only company to do it.
- 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.
are you just saying, in detail, that exploitative practices are normal in the countries they operate in? these practices are laughably abusive or illegal in some countries, why should we respect status quo here? that's an impressive display of solidarity with capital
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.
> Countries that have more pro worker legislation, also tend to have lower wages
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.
Right but both of us know the context of this conversation. I clearly specified we’re not talking about minimum wage jobs. Software engineering jobs in China do tend to pay quite a bit.
your comment is built on a nonsense foundation: budgets are "fixed" by owners and investors. budgets are a "zero sum game" against ownership returns and investor cost. budgets increase with reduced shareholder returns and increased cost of investment. it's really straightforward.
> 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.
Yes, some positions do not have severance, but if a company is trying to get around severance, then that must not be the case. Otherwise, why wouldn't they just have layoffs?
A layoff is an elimination of a position often because of economic issues. After the layoff is done, that position is gone.
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.
Severance is voluntary unless they signed a contract up front. Legally, the company could flip a coin and give every other person severance. If they wanted to “get around” severance they just decide not to do it regardless.
Individually, even people with $500k/year salaries are minnows compared to the resources of the company, especially a VC backed behemoth like Stripe. Only collectively do you have strength.
Presumably he means severance that is agreed in the employment contract which, as you've noted, is extremely unusual in the US below the executive level.
To everyone reading this - we live in a free country. Nothing stops you from creating a new business as a co-op or employee owned collective or whatever.
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!
As a member of a union, I will work towards promoting unionization and the benefits of a union. I’m not calling you unscrupulous, and I think not every company needs a union to represent labor. But companies at scale absolutely do. If you’re treated as a disposable cog in the machine that can be replaced at will then your labor is not valued. They will pump you and everyone else dry with the rawest deal they can get.
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's true! It's also true that nothing stops your employees from walking out until they are treated better! There's no need (or, morally, any possibility) of banning them from forming a group of their coworkers to organize this process.
Honestly you get more protections if they are part of a recognized union than if their only choice is a wildcat action.
Why should me, as the owner, be unable to fire people trying to unionize? If someone doesn't like a job they can leave. The union is anti-freedom - it restricts what I am able to do with my property (my business).
You shouldn't be able to because it's a condition of our allowing your company to exist at all, and it's a law. Incorporation is not a right, it comes with strings attached, though fewer and fewer over time.
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.
Business and commerce are emergent phenomena and they would exist without the state “allowing” me to organize freely with other people for financial gain.
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.
> As a business owner I would never do this. But you could do that yourselves without coercing me into them!
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?
> To everyone reading this - we live in a free country. Nothing stops you from creating a new business as a co-op or employee owned collective or whatever.
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.
That isn't "freedom" - that's coercion. If you want to bargain collectively, go ahead. But in a free country I would be able to fire all of you and replace you immediately.
Strange I’ve never worked for unionized workplaces, from retail and fast food to high tech, and they were wonderful places to work with happy coworkers. It’s almost like your vision of a miserable capitalist hell hole is a fantasy, while socialist places like Europe are declining in living standards.
Who said anything about nonunion workplaces being hellholes. I was saying I would hate to live somewhere with no restrictions on employer retaliation to free labor organizing. This is a policy that all advanced democracies have had for over a hundred years, hardly radical.
I'm skeptical that layoffs are the real reason behind this, since it seems like a pretty ineffective way to trim headcount. Even if this results in an additional 10%[0] of employees getting "partially meets" where they would have previously gotten "meets," that'll only generate what, 2% additional attrition per year? I know "tech layoffs" generates more clicks right now than "tech performance management," but to me the framing here just doesn't make a lot of sense.
[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.
If everyone is doing their jobs, there's no reason for an arbitrary % of them to get low scores.
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.
There's a big difference between giving low scores to people who aren't performing up to some standard (whether than makes up 2% or 10% or 40% of your workforce), and always giving low scores to 15% of staff even if they're actually fine. 'Stack Ranking' is widely considered poor management.
I'd be willing to bet every manager in the company believes all their employees are in the top 60-70% in terms of performance and every employee believes similar.
Right? Also these companies probably hired a lot of folks during the pandemic, and also relaxed their performance criteria while everyone was adjusting to remote work... So this just sounds like some folks are being caught off guard by the fact that yes, there are real performance expectations and you might not be meeting them.
They have (had?) performance-based RSU bonuses so my guess is that the status quo was giving "meets expectations" to everyone but top performers so everyone was happy getting their bonus.
> 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).
> As of this writing, no federal or state law obligates employers to pay severance to employees upon termination. Under the federal Worker Adjustment and Retraining Notification (“WARN”) Act and some state equivalents, employers may be required to pay terminated employees wages and benefits for a certain period if they fail to provide adequate notice to those employees as part of a qualifying mass layoff or plant closing. However, these payments under the WARN Act are penalties for non-compliance with the notice requirement rather than true severance and, moreover, can easily be avoided by providing the required notice.
1. More than the US exists. Stripe has a headquarters in Ireland (which does have severance laws) and employees in many countries. And my point was general, not just pertaining to Stripe.
2. If (and I don't know the specifics) Stripe has made a contract that spells out particular severance policies, the employees are legally entitled to that. Contracts are legally binding.
3. The WARN Act requires notice in layoffs, but it's almost unheard of in tech companies to say "hey, we're going to lay you off in 60 days". People get permissions revoked and walked out the door. In those cases, severance is required. You can call it "penalties for non-compliance with the notice requirement" but if it looks like a duck and quacks like a duck, well, it's severance.
It seems pretty reasonable to me to feel entitled to receiving honest, good-faith performance reviews from my employer. Am I literally legally entitled to that? Perhaps not. But this is clearly more than just "getting more money is nicer than getting less money." If Stripe is instructing its managers to dishonestly give out negative performance reviews in order to be able to fire a predetermined portion of employees without having to disclose the firings, that seems like a very reasonable thing to be upset about.
That's goes with what I said, companies and managers are not your friends and family. It sucks, we need to learn that when its good for the company they will screw the employee without hesitation
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.