Layoff Lawsuits
Layoff Lawsuits | Human Resource Executive Online
The EEOC saw a 15-percent increase in the number of bias charges filed with the federal agency -- and that's before lawsuits from recently laid-off employees are added to the total. Even severance practices predicated on a release of all claims may not be effective in the current recession.
By Andrew R. McIlvaine
If past economic history is any guide, HR leaders can expect the current wave of layoffs and downsizings to produce a bumper crop of employment-discrimination charges later this year.
"I think most of us who practice in the field of employment law expect [an increase in bias claims] to be the likely outcome of these layoffs," says Sarah Kelly, an employment attorney at Cozen O'Connor in Philadelphia.
The severe nature of today's recession could also mean that fired workers are more likely to file claims than in previous downturns, says Elaine Koch, an employment and labor attorney at Bryan Cave in St. Louis.
"It's very tough to find another job these days -- certainly tougher than during the last recession -- so laid-off employees are probably looking more closely to see whether they have a possible claim," she says.
During the previous recession, in 2001-2002, the Equal Employment Opportunity Commission saw a noticeable uptick in employment-discrimination charges.
During fiscal year 2002, such charges rose to 84,442, from 80,840 in 2001 -- before dropping to 81,293 in 2003, when the economic recovery was under way. Most economists predict this recession will be deeper and longer-lasting than the previous one.
Although the agency hasn't seen a uptick in filings that can be directly linked to the current round of layoffs, EEOC spokesman David Grinberg says, there's typically a lag between layoff notices and filings because workers have a 180-day window in which to file. Many state equal-employment agencies have windows of 300 days, he adds.
"Generally, we see these charges rise as the economy sours," says Grinberg.
Any increase in employment-discrimination charges will come on top of a 15-percent rise in such charges last fiscal year -- when 95,402 private-sector bias charges were filed -- compared to fiscal 2007, and a 26-percent increase from fiscal 2005, he says.
Charges alleging discrimination based on race and gender, along with those alleging retaliation, made up the biggest categories, according to
EEOC statistics
covering the fiscal years 1997 to 2007. (The 2008 stats are not yet online.)
Most employers -- nearly three-quarters, according to a recent Society for Human Resource Management poll -- offer severance packages that require employees to release the organization from any claims in order to receive the money. However, employers can't assume such an initiative will be effective at forestalling lawsuits, says Kelly.
"As the recession deepens and layoffs continue, what I'm seeing is employers are offering less-generous severance packages, or sometimes, nothing at all," she says. "Employees may end up rejecting these packages because, after all, why give up the potential for a claim in return for two weeks of pay?"
Although the solution may lie in offering more-generous severance packages (assuming your firm can still afford them), there are other considerations that also need to be taken into account, says Kelly.
"Simply dusting off a severance policy you haven't used for a while is not advisable," she says. "You need to make sure it complies with current laws and regulations."
For example, the Older Worker Benefit Protection Act mandates that any severance package be "drafted in plain language," provides 45 days for workers over the age of 40 to consider whether to sign it and requires employers to disclose information about the ages and job classifications of other employees who were retained or selected for termination, says Kelly.
"HR also needs to be aware of various state and local versions of the federal WARN [Worker Adjustment and Retraining Notification] Act that have been enacted in recent years," she says.
Severance packages aside, it's always best for employers to make layoff decisions in a fair, appropriate and nondiscriminatory manner, she says.
"It's safe to assume," she says, "that many laid-off employees will be thinking, 'Was this fair? Do I have a possible claim here?' "
February 16, 2009 Copyright 2009© LRP Publications
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