We’re about to go through a reduction in force (RIF), and some older workers will be affected. How can we best shield our company from age discrimination claims?
Quick Answer
Be prepared to show there was good cause for the older workers’ inclusion in the RIF, such as poor job performance or misconduct. If you apply a neutral policy that has a disparate impact on older workers, be ready to show their inclusion was based on a reasonable factor other than age. In some cases, age may be a bona fide occupational qualification, such as for airline pilots.
Legal Perspective
Shulman Rogers
Potomac, Maryland
When conducting a reduction-in-force (RIF), it is important to take steps to minimize the risk of age discrimination claims, according to employment law attorneys Meredith Campbell, Joy Einstein and Alex Castelli.
Employers should use consistently applied objective criteria to determine which employees will be terminated, such as job performance. It’s also important to document the decision-making process, including the criteria used to determine which employees will be terminated.
Finally, employers should consider offering severance agreements to the affected employees. Since the RIF will involve employees who are age 40 or older, the employer will need to follow special requirements under the Older Workers Benefit Protection Act if the employer wants to obtain valid releases of age discrimination claims. By taking these steps, employers can help minimize the risk of age discrimination claims and protect themselves during a RIF.
Relevant Case Law
Meacham v. Knolls Atomic Power Laboratory
Mendelsohn v. Sprint/United Management Co.
Jones v. RS&H, Inc.
HR Insight
Commonwealth Senior Living
Charlottesville, Virginia
You will need to document and define the factors that you are utilizing for determining who and how many employees will be affected by the RIF, says Marybeth Showalter, VP of Associate Learning, Training, and Retention.
Track employees — by gender, age, race, tenure with the company, time in current position, and last performance rating for your entire workforce. Then, run some possible scenarios you’re considering for the RIF and see if any of these classes are disproportionately affected.
Oriana House Inc.
Akron, Ohio
Determine whether your company is subject to the WARN Act, and if so, be sure to comply with it, says Director of HR Jodi Glitzenstein.
With older workers, the Age Discrimination in Employment Act will apply. Therefore it is critical to determine what criteria you will use to reduce your workforce and to be consistent (e.g., Will tenure be used – first in last out or will performance criteria be used?). Look at the group that will be affected by the RIF. If this group is predominantly over 40, there may be a possibility of age discrimination claims.
The most important thing is to document everything so if an age discrimination claim arises, the company can clearly demonstrate the criteria that was used and that it was used consistently. It is strongly advisable to consult with legal counsel about this process and to document this discussion.
CertiK
New York, New York
It is still possible to lay off older workers during a RIF, says HR Leader Erin ImHof.
The safest way to do this is to complete a disparate impact analysis and have it reviewed by external counsel to ensure that age group isn’t being unfairly targeted, even if it is by accident.
I would carefully evaluate the race, gender, veteran status and age of each person being laid off and compare it to the individuals who will stay. What are the reasons they are being laid off? Length of service? Salary?
Ensure that you have legally defensible reasons for laying off individuals. If there is a question about someone, review it with your counsel.
The Cost of Noncompliance
Company pays $460K to end ADEA suit
Who was involved: Fischer Connectors, Inc., a Swiss-based national manufacturer of circular connectors used in medical devices, and a 67-year-old HR director who was fired.
What happened: According to the EEOC’s lawsuit, in 2019, the company hired a new president and made plans to “eliminate all older management and sales employees” and replace them with younger workers “under the guise of job eliminations.” The HR director, a 67-year-old, said she witnessed the company “repeatedly turning down qualified older employees in favor of less-qualified, younger employees and forcing out all older upper-management employees.” When the HR director “attempted to educate Swiss executives about anti-discrimination laws in the U.S., she was fired and replaced by two significantly younger individuals,” the suit alleged.
Result: The company agreed to pay $460,000 to the former HR director to settle the dispute. It also agreed to:
- Train all of its U.S. employees and managers on the ADEA.
- Distribute its ADEA policies to all employees.
- Post a notice about federal anti-discrimination laws and employee rights in the workplace.
- Submit to EEOC monitoring on how it handles future ADEA discrimination complaints.
Info: Company to Pay $460K to Settle Age Discrimination Suit, 2/28/23.
Key Takeaways
- When implementing a reduction in force, ensure the individuals chosen for layoff are chosen for legitimate business reasons.
- Document performance issues in case you need to produce evidence supporting your decision.
- To combat a claim of disparate impact discrimination, prepare to prove that a reasonable factor other than age was behind your decision.
- Remember that for some occupations, age is a bona fide occupational qualification.
- Employers who violate federal or state laws banning age discrimination may be held liable for monetary damages and may also be required to provide affirmative injunctive relief.
- Employees generally have 180 days to file an administrative charge of age discrimination. This period begins on the date of the alleged discriminatory action. If a state law bans age discrimination in employment and a state agency or authority enforces that law, the limitation period is extended to 300 days. Employees generally can sue under the Age Discrimination in Employment Act 60 days after they file their administrative charge. Once it receives the charge, the EEOC or state agency will investigate the allegations. If no resolution is reached, the agency typically will issue a right-to-sue letter to the employee, who then has 90 days to file a lawsuit.
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