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What to consider during a layoff or RIF (Reduction in Force)

Everyone knows someone who was affected by a layoff. The corporate euphemism for a layoff is “RIF” which stands for Reduction in Force. Companies conduct RIF’s for legitimate reasons: financial losses, head count excess, outsourcing of business, loss of a big customer, change in business focus, merger with another company that causes redundancy in staffing. Employers run into problems when they do not use objective criteria to choose employees for a RIF, and do not examine the impact of the RIF. Frequently, the RIF will have a disparate impact on qualified women, minorities, or people over 40 years old.

The employer must have a legitimate, nondiscriminatory reason for choosing certain employees for layoff in favor of retained employees. An employer who wants to reduce its workforce must not make its employment decision based on impermissible grounds. The question becomes why, given the employer’s alleged need to reduce its workforce, it chose to discharge the female/minority/older employee rather than one of its other employees in the same position.

One way for an employee to challenge the RIF is to examine the group of employees who are — and who are not — being RIF’d. The employer will call this group a “business unit” or “decisional unit”, which are more corporate euphemisms. These units include the department or group of departments that are affected by the RIF. It is important for the employer to make sure the membership of the “decisional unit” compares apples to apples. For example, one way for a female employee to show bias infected the RIF process is by showing that she was treated differently from similarly situated male employees.

Example No. 1: The employer laid off dozens of people. If you looked at just the “decisional unit”, it was not immediately obvious that the employer singled out employees over 40 years old. A closer examination showed that there were 17 administrative assistants in the decisional unit but the only one who was RIF’d was a woman in her mid-60’s with far more experience and seniority than younger peers. The decisional unit was an unreliable sample group because it included managers and other employees. The decisional unit the employer used to check for disparate impact compared “apples to oranges.” If the employer used “apples to apples”, it would have seen that its RIF process discriminated against the older, more qualified employee. The result: a better severance offer for the employee.

Example No. 2: The employer said business was poor but only RIF’d an older employee who just returned from a few weeks of sick leave due to a heart condition. The employee had a clean bill of health from his doctor and was a long-time worker with solid reviews. During discovery, I obtained the company’s statement of revenues and other financial records. These records showed that the company’s financial integrity was sound. The result: A settlement for my client.

Since discrimination is often subtle or subconscious, the employee can rely on disparate impact to argue wrongful termination. An employer’s different or inconsistent explanations for the decision to RIF the employee may be evidence of a pretext for discrimination. The employee need not conclusively exclude all other possible explanations for the employment decision and prove intent to discriminate beyond a reasonable doubt.

Pamela A. Smith
Law Office of Pamela A. Smith
233 Needham Street, Suite 540
Newton, MA 02464


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