As a European, I never realized that this is allowed under US labor law. That is absolutely insane.
EDIT: some commentors have pointed out that the workers collect severance and unemployment --- I was not aware this is law in California, and that changes matters. I would, though, still find being suddenly out of a job fairly traumatic.
When someone is fired, they generally stop working immediately while getting paid through the notice period.
In the US, one day you can have a job, the next none and you'd better hope you've got enough money saved up to cover rent/mortgage, food etc.
That was by far the biggest culture shock when I moved to the states, and really acted as the big "Oh shit, it really is a government by the businesses, for the businesses".
Many states copied the statute.
There are some exceptions, like a company going out of business or natural disasters, but those don't apply here.
(I'm not saying I _know_ better, just how I think I would _experience_ such a thing.)
Losing a job happens everywhere, but there are different ways to handle it, I guess.
Let me tell you, though. All of the gestures that come from the company doing the layoff like coaching services or transition resources felt pretty useless. They were actually trying, but everything in it seemed more like it was to soothe their conscience than to help me out.
When other people get laid off I recommend they try not to put a lot of expectations into any transition services provided by their ex-employer because your time is better invested in your own job search.
Mass layoffs, or RIFs, operate under slightly different rules, but I still saw a stark difference between US and EU employees when I went through one at a different corp.
US accounts were deactivated same day. EU employees were given until end of week to look over the proposed terms etc.
That is being laid off, not being fired - big difference. Being fired means being let go for poor performance / bad behaviour. No severance or grace period is necessary there (will be written in the contract). Being made redundant, particularly a redundancy of this size is quite well protected in EU. Typically negotiations between HR and representatives of the laid off group are required, you will continue to work (officially at least) until negotiations are over, as you are not officially out yet. This usually takes a few weeks.
I can tell you this from personal experience...
Unemployment benefits in California are capped at $450/week, and you only get 26 weeks of it. It's helpful, but doesn't even cover housing costs for many individuals, let alone for families.
I don't think there's a state law requiring severance. It's often offered by the employer if the terminated employee agrees to sign an NDA.
In California, it is illegal to require a terminated employee to sign an NDA to receive severance paid to waive the required WARN notice. A company attempting to enforce such an NDA would key face judicial sanction in court (including paying the former employee's legal fees) and likely pay fines to the CA Labor Dept as well.
If they have to fire twenty percent of the company, shouldn't that be a signal to investors that the people in charge are morons for overhiring thirty thousand people in the first place? Software engineers aren't cheap; assuming an average compensation of $250,000/year (which I think is pretty conservative if you count total comp like insurance and stock) then that's 7.5 billion dollars of investor money they're wasting per year.
The US law isn't translated directly to other countries, but every country allows companies to do layoffs. They just have different requirements for including someone in a layoff.
In some countries the requirements are as minimal as saying that there's not enough work for the person to do. It's basically the same thing with extra steps.
The real difference is requirements for notice periods or severance. Note that in tech companies like Oracle they're giving severance as well.
The other side of this debate is that companies in the United States are much less resistant to hiring people when they know it's easy to scale back later. In our European offices we had to be much more cautious about hiring because the managers in our various European offices were afraid of getting stuck with a bad hire for a long or costly notice period. They also had a lot of games with "trial period" work that I don't fully remember, but I can think of several trial period employees who were dismissed because they were borderline and their managers didn't want to take the risk of having them past the period where letting them go was easy.
That's one of those things that sounds like bullshit, so I don't know that I believe it, but that's what I've heard anyway.
Oracle is not a high payer of salaries.
I disagree that its a "signal that they overhired". Laying off people means:
1. They didn't plan well enough
2. Their business wasn't attractive enough to customers
3. Their business people aren't good enough to support the people who are developing their product.
If anything, it should be a red flag to investors that they're working with someone they can't trust to give money.
All three of those points, to me, would still indicate that the CEO and executives are very bad at their jobs.
Even without acquisitions, business conditions can change rapidly things like tariffs, interest rates , war or competition due to newer tools etc , as an investor you can would want leadership to move fast and course correct, rather than be held by the sunk cost fallacy.
All else being equal, the way investors would see a change like this - is now the company is no longer wasting 7.5B/yr in the future and their current cost was already priced in.
However all else is rarely the same, there could be other factors, like slowing sales growth projections which can bring down the multiples .
Oracle is still trading at 28x P/E historically they typically traded at 15x, given the growth and risk profile a more realistic number .
Since 2022 (ignoring 2020 spikes) the number has been going up are basis the expectation that their cloud business will really benefit from AI significantly.
If the market no longer has the confidence —- it has already cooled a bit since October then stock will keep dropping, layoffs will only slow it down a bit .
The timing is critical, because leverage/sale of Oracle stock is how the Warner Bros Discover acquisition is being funded .
The increasing doubts about that financial viability is why that stock risk premium is increasing on Warner .- Currently trading at 27 although acquisition price is 31 and it was trading at 29 a month back . Also senior executives like Zaslav are selling now at 27 which they less likely to if they believed deal will close at 31 soon.
TLDR; this 30k layoff is an attempt to strengthen/save the other acquisition Oracle is indirectly financing.
[1] although the Cerner acquisition added 30k employees to Oracle 3 years back. This doesn’t seem related to that. Oracle did not have a strong overlapping BU, there were/are some redundancies as in any acquisition but certainly not 30k
Unemployment is not enough for people to live on. In some cases, it barely covers health insurance which can be 800$/month for a single person. (You can get cheaper plans but they start you back on your deducible)
Personally, I'd rather just get the money and not have to work, rather than be forced to come into the office knowing I was getting canned in 3 months or whatever
Oracle software engineering compensation for mid-level software engineers is in the $200-300K range. The top of their scale extends into the $400K to $1 million range.
From what I've seen, laid off employees will receive a minimum of 1 month of their compensation with 1 week of pay for every year worked, plus any remaining unused vacation time. So a mid-level employee who has worked their a few years and hasn't drawn their vacation balance to 0.0 could receive $30-50K or more beyond this date.
Sure the company still has to payout salary, as per the contract, but plenty of companies do not want laid of people around.
on the head-roll day HR sends a friendly message asking you to pay a visit in their office. While you do that, security folks clear your desk, and a few minutes later you are outside the building with the signed paperwork in your hands. And suddenly another guy gets a friendly message from HR...
Of course the severance is paid according to the law - but such sudden (mass)termination does happen here too.
I once was given about 6 weeks notice in the US, with a promise that if I completed a project I would be given severance. Given the situation I was in, where the product would be "done", it was a good situation to be in.
A buyer and seller should be free to start and stop buying and selling whenever they want, absent contracts stating otherwise.
The government should be there to directly support all of the people, not to police and cajole businesses to support some of the people that happened to be hired by a business.
