Reducing the Risk of Discrimination Claims During Layoffs
As the threat of a recession looms, many companies are announcing mass layoffs, increasing the risk of costly bias lawsuits. Workers who are part of a protected group may allege that this employment decision has a disproportionate impact on them. So far, the layoffs have mainly affected tech companies, such as Google and Microsoft, which recently announced cuts of around 12,000 and 10,000 employees, respectively. The layoff trend is expected to spread to other industries and finance and big banks, with economists predicting a 70% chance of a recession.
Evaluate Disproportionate Impacts on Protected Groups
The term "recessionary discrimination" was first used by Wigdor after the 2008 financial crisis resulted in many employees filing bias suits due to layoffs. In 2010, he represented six former female employees who sued Citigroup for allegedly terminating thousands of women while retaining less qualified male colleagues, in violation of Title VII of the Civil Rights Act and New York state law. This case was one of several discrimination lawsuits around layoffs that claimed companies' practices had a negative impact on employees based on their race, gender, age, and other protected characteristics. Proving discrimination in a layoff context is difficult because the plaintiff must show they were terminated for a reason other than budget constraints. To do this, plaintiff lawyers may use statistical evidence of a significant disparity in the termination of employees from a protected class. The risk of gender and age discrimination claims increases during reductions in force, and companies can reduce this risk by being transparent about the reasons for termination.
Be Transparent with Employees About Termination Reasons
To avoid employee discrimination claims, companies should establish clear, neutral criteria for layoffs, such as productivity or job function, according to human resources consultant Stefanie Camfield. The company should also evaluate if the chosen criteria will disproportionately affect any protected groups, such as older workers. Some employees may bring lawsuits claiming they were included in the layoffs as retaliation for previous workplace discrimination complaints. Employers should also be aware of any employees who have raised past HR complaints or allegations of discrimination. Last-in, first-out termination policies may also lead to discrimination claims if they disproportionately affect recently hired minority or nontraditional workers. The company must also consider legal requirements such as the federal Worker Adjustment and Retraining Notification Act, which requires a 30-day notice for mass layoffs, and any contractual obligations with affected employees.
