We’re looking at downsizing due to the current economic uncertainty. What are some practical steps to help protect our company from ADEA claims during a layoff?
Quick Answer
After ensuring that older workers are not targeted for layoff based on their age, examine whether the layoffs will disproportionately impact workers 40 or older. If they will, try to adjust layoff criteria to reduce the impact of the layoffs on older workers.
Legal Perspective
Stearns Weaver Miller
Miami, Florida
There are ways to reduce potential exposure, says employment law attorney Andrew Rodman (ARodman@stearnsweaver.com) of the firm Stearns Weaver Miller in Miami. Here are a few practical steps:
- Focus on job performance. Avoid suggesting someone’s age has anything to do with his/her skills or performance.
- Analyze layoff data in advance. Make sure it doesn’t scream “discrimination.”
- Prepare an internal memo summarizing reasons for the reduction, layoff criteria and justification for each decision. Do it before the reduction.
- Justify performance-based decisions with objective evidence – like evaluations, discipline statements, etc.
- Avoid terms like “new blood” or “college graduates.”
- Consider severance in exchange for the release of claims.
Relevant Case Law
Hodczak v. Latrobe Specialty Steel Co.
Bandy v. City of Salem, Virginia
Suárez v. Pueblo Int’l, Inc.
HR Insight
Westside Family Healthcare
Wilmington, Delaware
Downsizing comes with many factors to consider, not the least is any claims of discrimination, says HR Director Aggie Flores.
If you must lay off employees, don’t forget about WARN, which requires advance notice of layoff in certain circumstances, and don’t forget OWBPA, a part of ADEA, which requires certain notices to be included in severance agreements during a layoff.
And above all else, make sure the selection process for who is being laid off is documented, objective, and does not impact any protected group over others.
Concrete Technologies Inc.
Grimes, Iowa
Write a provisional policy that spells out what job roles/responsibilities are vital to business continuation, says HR Director Drew McConnell.
Job duties and roles, seniority, and performance are three of the top choices to determine layoffs. Beyond this, especially concerning the employment of various crews or factory workers, layoff decisions can be justifiable based on the work each crew or department has in front of them.
TBM Inc.
Dallas, Texas
HR Manager Susana Crawford says: Examine the criteria that will be used for selecting employees for layoffs, make sure it’s based on legitimate objective business reasons and not related to age.
Documentation must be on point — including the reason behind selections, performance evals, corrective actions, etc. Consider offering voluntary retirement or separation packages. Communicate openly about the layoffs and the reasons behind the reduction in force. Consult legal counsel.
The Cost of Noncompliance
Tech company pays $700K to settle age bias claims
Who was involved: Computer Science Corporation, a tech consulting company based in Virginia, and a group of employees over the age of 40.
What happened: An EEOC complaint asserted the company targeted employees aged 40 or older in a series of layoffs nationwide. The company’s decision to focus on older workers was directed by its then-CEO, the EEOC said, and amounted to a violation of the Age Discrimination in Employment Act (ADEA).
Result: The company agreed to pay $700,000 in lost wages and damages to the former employees who suffered discrimination. Under a consent decree, the company also had to:
- Review and revise its layoff procedures to ensure compliance with federal laws protecting older workers, and
- Issue a statement to all employees that age discrimination would not be tolerated.
Info: Computer Science Corporation to Pay $700,000 to Settle EEOC Age Discrimination Suit, 12/11/20.
Age bias in the spotlight after layoffs: Aviation company pays $2.1M
Who was involved: Gulfstream Aerospace, a major employer in the aviation industry, and 61 former employees who lost their jobs in a layoff at a Georgia facility.
What happened: The company allegedly targeted employees 40 years of age or older for layoffs, according to an EEOC lawsuit. The agency provided statistical evidence showing the layoffs had a significantly disparate impact on older workers. It identified specific instances where older workers were laid off while younger, less senior employees were retained in identical jobs.
Result: The employer paid $2.1 million to the affected workers who were laid off. It also agreed to:
- Provide training to managers, and
- Provide compliance reports to EEOC, and
- Post a notice about the settlement.
Info: Gulfstream Aerospace to Pay $2.1M for Age Bias Settlement, 12/11/02.
Age bias during layoffs? Space lab pays $10M to settle EEOC’s lawsuit
Who was involved: Jet Propulsion Laboratory, a center for robotic exploration of the solar system based in California, and an undetermined class of former employees over the age of 40.
What happened: According to the EEOC’s lawsuit, the company systemically laid off employees over the age of 40 in favor of retaining younger employees. The complaint also alleged that upon rehire, older employees were passed over in favor of younger, less qualified employees.
Result: The company paid $10 million to the affected employees and agreed to:
- Retain an EEO monitor, a diversity director and a layoff coordinator to monitor compliance with the ADEA and the consent decree from this action.
- Take no further action that has a disparate impact on employees in the protected age group.
- Review and revise policies and procedures to comply with the ADEA.
- Provide training to all employees on age discrimination.
- Report to the EEOC on layoffs, termination, recruitment and hiring as well as complaints about age discrimination.
- Submit to EEOC monitoring.
Info: Jet Propulsion Laboratory to Pay $10M to Settle EEOC Age Discrimination Lawsuit, 6/11/20.
Key Takeaways
- Make a list of the employees who would be laid off based on the criteria you establish for layoffs.
- Examine whether employees age 40 or older would be impacted by the layoffs more than other groups.
- If older workers would be affected more than employees in other groups, try to adjust the layoff criteria to limit the impact of the layoffs on older workers.
- Make sure that the layoffs are based on nondiscriminatory reasons.
- Decide whether to offer severance benefits in exchange for a release of claims executed by the departing employees.
INSIDER CONTENT
Q&As