Selective application of RIF criteria might be used by a plaintiff to support a contention that the employer has engaged in illegal discrimination.
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DISCRIMINATION LAW UPDATE
Employer Hit With Age and
Sex Discrimination Lawsuit After RIF
But Employees’ Claims Fail – Mostly
By Christopher W. Olmsted
Tough economic times have forced employers to layoff employees. Layoffs can lead to litigation when employees allege that illegal discrimination tainted the selection process.
A recently published case out of the federal Tenth Circuit Court of Appeals, Sanders v. Southwestern Bell Telephone LP, provides an illustration of this problem. Southwestern Bell (“SWBT”) experienced a significant loss in customers beginning in 2001 (during our last recession). As a result, the phone company reduced its workforce, including its engineering and construction division in Oklahoma. SWBT determined that the Oklahoma C&E organization had twenty-two first-level managers and one Area Manager more than business needs required.
The plaintiffs were three female first-level managers over the age of 40. They survived two RIFs but not a third. They sued the company for age and sex discrimination.
RIF Criteria
As any prudent employer will do, SWBT formulated manager RIF criteria.
All first-level managers were first grouped by job title and work location.
Then the company determined the geographic areas where a smaller number of managers could handle the existing workload.
To determine which managers would be selected for the RIF, managers in each affected work group were placed into one of four “bands”—Bands A, B, C, and D—based on their most recent performance evaluations. Band A was the highest; Band D was the lowest. No manager within any affected work group, however, fell into Band D.
Next, five Area Managers ranked all Band C managers in each affected work group against one another. The Band C employees were ranked according to four primary criteria: performance, skills, experience, and training.
Those managers who ranked lower than the number of managers designated for retention in the affected work group were considered to be “at risk” for a layoff, or “surplus.”
The highest-ranked at-risk manager, however, could be “saved” from being laid off if a higher-ranked manager in her affected work group either voluntarily quit or accepted a job in a non-affected work group, or a different organization within the company.
Layoff Decision
Plaintiff Sanders fell into Band C. She was ranked fifth from lowest, but she was “safe” because only four were slated for layoff in her area. But that changed when an area manager exercised his right to bump Ms. Sanders.
The other two plaintiffs, Brooks and Coffey, fell near the bottom of Band C in their regions, and thus were slated for layoff.
The plaintiffs met with their respective managers, who gave them the bad news. All three meetings were routine, except that Ms. Sanders alleged that her manager told her that she was being laid off because of her age. (The company and her manager of course denied that such a comment was made.)
Lawsuit
The plaintiffs filed suit against SWBT and SBC, alleging that they were surplussed because of their age in violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621–634, and because of their sex in violation of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e et seq.
The court then granted summary judgment in favor of SWBT, reasoning
that the plaintiffs had failed to demonstrate that SWBT’s nondiscriminatory
justification for their layoffs was pretextual. The plaintiffs appealed the order of
summary judgment.
Age Comments Create
Direct Evidence of Discrimination
On appeal, the court found that Ms. Sanders had produced direct evidence that she was surplussed because of her age. She testified that Mr. Wooten, who had been part of the team responsible for ranking her fifth from the bottom among Band C managers in her affected work group, told her that her age—not her job performance—was the cause of her surplus.
It is undisputed that when Mr. Wooten informed Ms. Sanders that her job
was being eliminated, he provided her with a document that listed, by job title and
age, the number of employees selected for layoff and the number who were being
retained. This information is required to be given to employees by the Older
Workers Benefit Protection Act, which is part of the ADEA. According to Ms.
Sanders, however, and contrary to the purpose of the ADEA paperwork, Mr.
Wooten pointed to the document, explained that she was being surplussed because
of her age, and stated that this was necessary to prevent age discrimination.
Ms. Sanders’s version of events was sufficient to defeat the motion. “If the jury believes Ms. Sanders’s testimony, it could conclude—directly, without the aid of any favorable inferences—that the reason for her surplus was her age. Accordingly, SWBT is not entitled to summary judgment on Ms. Sanders’s age-discrimination claim.” It would be up to SWBT to persuade the jury that Ms. Sanders’ recollection was incorrect.
Failure To Follow RIF Procedure
Supports Discrimination Claim
The court noted that the following types of circumstantial evidence may support a finding that an employee was terminated for discriminatory reasons in a RIF:
Failure of a company to follow its own RIF criteria. For example, if the RIF criteria call for a ranking based on seniority, a plaintiff could argue discrimination where she was laid off ahead of junior employees.
Selective application of RIF criteria. For example, adding attendance as a criteria for one employee and not another.
Falsifying or manipulating the employee’s evaluation. For example, manipulating job performance data to rank a superior employee lower than an inferior one.
Failing to justify a job categorization selected for the RIF (for example, failing to explain why the RIF focused on first level managers in a specific region).
Inconsistencies in an employer’s explanation of the reasons for selecting the employee for RIF.
Other procedural irregularities in the RIF.
Plaintiffs Argue Inconsistencies
The plaintiffs in this case argued that the RIF was only a pretext for unlawful sex and age discrimination because of four reasons, each of which the court rejected.
(1) Their qualifications did not warrant their placement in Band C. The court rejected this contention, finding that the employees were properly in Band C. SWBT justifiably determined band placement based on an employee’s most recent performance evaluation. Unlike the evaluations of managers who were placed in Band A or Band B, neither of these plaintiffs’ evaluations included comments from their supervisors indicating their performance was “superior or “above average as compared to his/her peers.”
(2) SWBT inconsistently applied its ranking criteria. One plaintiff argued that she had more experience than another manager who ended up ranked higher than her. But the court found otherwise. The other manager had more outside construction experience, making him more autonomous.
(3) An Area Manager was permitted to take a voluntary demotion that resulted in Ms. Sanders’s job loss. The court found nothing improper with bumping rights in a RIF.
(4) Statistically, women and older employees were disproportionately affected by the RIF. 52%, of women were surplused, but only 13%, of men. Plaintiffs argued that suggest that sex discrimination can be inferred because a greater percentage of women wereselected for the RIF. The court rejected the claim. “Statistics taken in isolation are generally not probative of age discrimination.” The court explained that “statistical evidence which fails to properly take into account nondiscriminatory explanations does not permit an inference of
pretext.” Plaintiffs’ statistical evidence did not take into consideration nondiscriminatory explanations for the disparity—for example, differences in various individuals’ job performance, experience, and training. Because the statistics fail to account for these variables, they do not constitute evidence of pretext.
Accordingly, the plaintiffs failed to show age or sex discrimination, with the one exception noted above.
Practical Tips
(1) Determine amount of budget cuts needed.
(2) Identify business and department/group/area priorities.
(3) Set priorities within departments/groups/areas.
(4) Identify the number of positions that cannot be supported based on the best available budget projections and other relevant business considerations.
(5) Consult with legal counsel.
(6) Describe individual ranking criteria. Common criteria include:
demonstrated and documented job performance;
work experience;
longevity with the organization;
training, education, knowledge, skills and abilities;
transferability of an employee's knowledge; skills and abilities; and
other justifiable criteria.
(7) Conduct an EEO review for any adverse impact on protected groups.
(8) Consider using severance and release agreements, where workers waive legal rights in exchange for severance pay.
More Legal Update articles.
Download entire November Legal Update in PDF format.
This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2008 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.
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