Avoiding Unlawful Layoffs

Avoiding Unlawful Layoffs | Human Resource Executive Online Are certain groups of workers more likely to lose their jobs in these lean economic times? Statistics offer mixed findings, but HR professionals must be especially careful to avoid even the appearance of discrimination when making layoffs.

Thursday, July 30, 2009
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The U.S. Equal Employment Opportunity Commission recently held a public hearing to analyze recent developments under the Age Discrimination in Employment Act and the impact of widespread layoffs on older workers.

At the July 15 hearing, a panel of leading authorities on age-discrimination law and policy testified about the effect of age stereotyping.

"Layoffs have a particularly harsh impact on older workers, as they may again be exposed to stereotyping when they try to find new jobs," testified Michael Campion, a management professor at Purdue University.

"Research on reemployment after layoff show that older workers who have been laid off take longer to find new jobs than younger workers," he said. "It also reveals that older workers are less likely to gain reemployment than younger workers, and that workers who are laid off generally do not recover the wage rates they had before being laid off."

Witnesses also testified that some recent judicial decisions, such as Kentucky Retirement Systems vs. EEOC and Gross vs. FBL Financial Services Inc., "have curtailed the ability of older workers to successfully challenge age discrimination," according to the EEOC.


The commission will consider proposals for regulatory and legislative action. At the same time, the EEOC issued some guidance on the inclusion of legal waivers when included in severance agreements.

It's not just older workers that may be vulnerable to receiving pink slips during the current economic downturn.


According to data from the New York City's comptroller's office, there were about 80,000 more unemployed blacks than whites in the city this past March, according to the New York Times.

Nationwide, federal government statistics put the rate of joblessness among blacks at 13.6 percent in the first quarter of 2009, compared to 8.2 percent for whites, according to the Times.

"These numbers by themselves don't mean a whole heck of a lot in regards to how the recession is affecting African-Americans, insofar as African-Americans -- even in good economic times -- on the aggregate have a disparate joblessness rate in comparison to Caucasian comparators," John T. Anthony III, attorney in the Los Angeles office of labor and employment law firm Carlton, DiSante & Freudenberger.

And in some areas of the country, it appears white males may be feeling the biggest effects of the current recession.

In Georgia, for example, historically male-dominated industries such as manufacturing and construction have been decimated by the poor economy, and white men appear to be taking the brunt of the blow, judging by Georgia Department of Labor data.

More than 107,000 jobs in the manufacturing and construction sectors have been lost since December 2007, according to the Georgia DOL.

Back then, black women made up 27 percent of the unemployment insurance benefit claimants in the state; white males, 25.2 percent, according to the state DOL. By May of this year, white males comprised 33.5 percent of claimants in the state.

National numbers indicate that males in general are losing jobs at a brisker pace than women.

June's unemployment rate for women was 7.6 percent, compared to 10 percent for men nationwide, according to U.S. Bureau of Labor Statistics. According to data from the BLS Current Establishment Survey, men account for 74 percent of all jobs lost since the recession began in December 2007.

"Macro data like this only lead to general findings," says Dave Ulrich, a professor of business at the Ross School of Business at the University of Michigan. "To be accurate, we would need to control for African-Americans and whites for education, experience, tenure and performance. ... Without this more refined data, it is difficult to draw real conclusions."

In a recession, the last employees in are often the first out, regardless of race, age or other variables, says Ulrich, who is also co-founder and partner with the RBL Group, a Provo, Utah-based consulting firm.

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Seniority doesn't mean untouchable, however. In fact, salary considerations may sometimes leave veteran employees more susceptible to layoffs than their younger colleagues, says Ulrich.

"Salary often goes up with tenure in a company, and if younger people can do much the same work, they may cost less," he says.

Anthony notes that "older workers generally are the most tenured in many organizations."

"As such, they generally have the highest income and in many cases cost their employers more money than their younger counterparts. ... For sure, there are cases of insidious unlawful discrimination. However, in my experience," he says, "older workers' high salaries expose them to job loss more than deliberate unlawful discrimination."

When faced with the unpleasant task of reducing the workforce, organizations must be careful to guard against unlawful discrimination -- or even the appearance of discrimination, Anthony says.

First and foremost, HR leaders must make sure that all termination decisions are based as much as possible on objective criteria, he says.

Seniority should be weighed in an employee's evaluation, along with disciplinary record and hard numbers to demonstrate an employee's productivity, or lack thereof. An employee's professional attitude, fit with company culture and overall job performance are more subjective, less documented factors that can enter into the equation as well, Anthony says.

Of course, HR should conduct a statistical analysis to ensure that no inference of disparate-impact discrimination exists, he adds.

"Lastly, HR professionals should meet with and do a personal analysis of the termination decision-makers," says Anthony. "This is important, because many times an HR professional will be able to get a feel for a situation and sense where there might be foul play or the appearance of such."

Ultimately, employees simply wish to be treated fairly when layoffs must be made, Ulrich says.

Being let go is difficult for any employee to bear. But employees should at least understand the process behind the decision, and feel that course of action is fair and just, he says. HR has a responsibility to outline the process for terminated employees as well as those still with the organization.

"In layoffs, people seek fairness and transparency ... in that people know what should happen and when," Ulrich says. "Transparency means that employees are aware of what is going on and why. When employees understand the why, they are more likely to accept the what."

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