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REDUCTION IN FORCE
AND
AVOIDING LIABILITY TO OLDER
WORKERS
Susan N. Eisenberg, Esquire
Akerman Senterfitt
1 S.E. 3rd Ave.
28th Floor
Miami, FL 33131
305/374-5600
[email protected]
CLIMATE
• Aging workforce
• Unemployment at an all time high
• RIF attractive tools
– Outsourcing of functions
– Efficiency of technology
– Cost cutting measures
• Class Action Lawsuits
THE ADEA
• They are members of the protected class
• They suffered an adverse employment
consequence
• They were qualified for the position or another
position
• Defenses
–
–
–
–
Good cause
BFOQ
RFOA
After-acquired evidence
The Way We Were…
• Prior to March 2005, in order to prove age
discrimination under the ADEA, employees had
to establish that:
– The employer intended to discriminate
against them on the basis of their age; or
– That the policy or practice complained of
was "discriminatory on its face"
Smith v. City of Jackson, Mississippi,
125 S. Ct. 1536 (2005)
•
Supreme Court ruled that
employees can sue over
employment decisions that
have a "disparate impact"
on older workers, even if the
discrimination was not
intentional.
Smith v. City of Jackson, Mississippi,
125 S. Ct. 1536 (2005)
FACTS:
•
•
City implemented a pay plan that
granted a higher percentage raise
to all police officers with less than
5 years of service.
30 police officers sued under the
ADEA claiming that the
employer's pay plan discriminated
against them on the basis of their
age.
Smith v. City of Jackson, Mississippi,
125 S. Ct. 1536 (2005)
DISTRICT COURT:
•
Followed trend applicable in five other circuits
(including the Eleventh Circuit)
•
Granted summary judgment in favor of the
employer – holding that "disparate-impact"
claims are categorically unavailable under the
ADEA.
•
The Appellate Court Agreed
Smith v. City of Jackson, Mississippi,
125 S. Ct. 1536 (2005)
SUPREME COURT:
•
Held that "Disparate Impact" claims are
available under the ADEA.
•
But – held that the scope of that theory is
narrower for age claims under the ADEA
than it is under Title VII for other types of
discrimination
Smith v. City of Jackson, Mississippi,
125 S. Ct. 1536 (2005)
•
Even if an employment
practice or policy has a
disparate impact on older
workers…
•
An employer can prevail if
the age based distinctions
are based upon
"reasonable factors other
than age" (a/k/a, a "ROFA")
"Reasonable Factors Other Than Age"
•
"Unlike the business necessity test,
which asks whether there are other
ways for the employer to achieve its
goals that do not result in a disparate
impact on a protected class, the
reasonableness inquiry includes no
such requirement."
PROBLEMS
• Easier to state claim
• Statistics only
• Point to specific practice
• Class actions become norm
BURDENS
• Employee
– Adverse impact
– Specific Practice
– Causation (statistics)
BURDENS
• Employer
– RFOA
• Court does not address
BIGGEST PROBLEM
• Improper planning
• Leads to class actions
• Cost of defense and liability reduce cost
savings
LEGAL ANALYSIS
• Business necessity
• Selection process
BUSINESS NECESSITY
• Everything is evidence
• Put business ducks in a row
• Reason is not as important as being able
to prove it and consistency
HAVE A CLEARLY
ARTICULATED GOAL
PLANNING THE RIF
• Establish a Task Force
• Educate regarding discrimination and
contract considerations
• Establish realistic time table
TWO PHASES
• Voluntary
• Involuntary
VOLUNTARY
• Remember jury appeal
• Exit/early retirement incentives
• Benefits
• Problem
MAKE IT LEGAL
• Completely voluntary
• No retaliation for refusal to participate
• Avoid negotiating terms
• Avoid misrepresentations
• Document
• Provide adequate time and information to
consider
• Get a release
RELEASES - OWBPA
• Written in plain English
• Specifically refer to ADEA
• Additional consideration
• Consult with attorney
• Time to consider
– 21 vs. 45 days
• Revocation period
LEGAL INCENTIVE PLANS
• A flat dollar amount
• A fixed amount, e.g., dollar amount
multiplied by the number of years of service
or by the years until normal retirement date
• A percentage of salary to all employees
above a certain age
• Flat dollar increases in pension benefits,
e.g., $100.00 a month or percentage
increases (example: 15%)
INVOLUNTARY LAYOFF
• Written Termination Policy
– Articulate business reasons for the RIF.
– Identify existing or define new selection criteria
– Designate employee notification responsibilities
– Determine termination pay and benefits
– Decide on recall provisions.
– consider review/appeal mechanism to centralize the
process
– Provide support services, especially counseling and
out placement
INVOLUNTARY LAYOFF
• Meet with decision makers to explain
process and criteria
– Recommendation comes from first line
managers who may not understand the legal
ramifications
SELECTION CRITERIA
• Objectivity is key
• Different departments may have different
criteria
• Document Document Document
POSSIBLE SELECTION
CRITERIA
• Performance
• Employee comparisons
• Seniority
• Highest paid
ADVERSE IMPACT STUDY
• Organizational structure
• Discrimination claims
• ULP claims
• Public policy claims
• Breach of contract
• Cross examine decision makers
CONSIDER WAIVERS
IMPLEMENTING THE RIF
• Institute hiring freeze
• Announce RIF
• Document selection process
• Conclude terminations in short time
• Anticipate post termination inquiries
• Give neutral references
CONSIDER WHAT JURY WILL
ASK
• Was the employer fair
• Were the lay off criteria reasonable
• Was the employer consistent in its decision
• Was the employer candid with the employee
• Was the employer sympathetic
• Did employer try everything short of layoff
COMPLY WITH STATE LAWS
WARN CONSIDERATIONS
• 100 Employees
• 33% and at least 50 affected employees
• 30-day period
• 90-day look back
• 60-day notice
REDUCTION IN FORCE
AND
AVOIDING LIABILITY TO OLDER
WORKERS
Susan N. Eisenberg, Esquire
Akerman Senterfitt