Is it a Lay Off, Early Retirement, or big lawsuit waiting to happen?

Craig B · January 2004

My company is planning to eliminate two work groups due to cost effectiveness (very easy and defendable). Well, in the process we decided we should look at other areas around the company to maximize efficiencies. Very quickly, my President and CFO required each department to give up a couple of names to be let go. Today I met with the Directors and have this sketchy list of names of people to let go. I have people that have been with the company for 35 plus years. I questioned as to why them and the manager stated that 25% of their work was eliminated due to automation and the rest would be absorbed by another (younger) worker. I have individual’s names that are undocumented poor performers and the manager now sees as it as their opportunity to get rid of the poor performer.

My question is this, what is the best way to get rid of the older eligible to re-tire workers? Do you see a problem with laying off a poor performer while the rest of the lay off are due to other business reasons?

We are a non-union company in an at will state. We do not have any official seniority system.

I am a little nervous about making the final decision due to some of the reasons we will be giving.

Thanks in advance for your help

mwild31 · January 2004

I met with an employment attorney (just for education) awhile back and he told me something that has stuck with me, "I love it when HR folks use common sense, it means more money for the attorney's." You need to do your research on age discrimination laws & you need to put together a statistical analysis of who you let go (a history), their ages, gender and ethnicity. Between these two things alone, you should see a pretty good pattern as to what's in the company's best interest as a go forward plan - and then let your legal team/attorney know, so they can advise yeah or nay. (I would feel better if my history included a broad range of ages, rather than all within a bracket of 40+ years.)

Common sense begs me to ask the following - at what point was it discovered that automation would eliminate positions - only when the board said get more efficient, or has it been documented all along and the ee's in question has been cautioned about their lackluster performance? Does the manager have a written plan in place for who would do what & why these other ee's with the years of experience are not be able to do the job? I would put the manager on the hot seat for 1) not documenting poor performance & now putting the company at potential legal risk, and 2) ask them how they would justify the terminations of the ee's in question, by role-playing what they would say on a witness stand.

Don, Parabeagle, Hunter1, HRSage, Marc, Leslie and others will probably have better advice than me - but definitely back up your decision with cold, hard facts - without more information, it does seem ripe for a lawsuit.

ray a · January 2004

Sure, you can terminate them as part of your cost reduction measures. But, they will qualify for UI. As Mwild says, whenever we have a layoff I perform an analysis of those targeted. We rank our ee's quarterly, so the layoff list includes those at the bottom of the rankings in the effected areas. These are people who may be doing an acceptable job and during peak times can be productive. But, when work is slow, they are the most expendable based on their lower performance. My analysis involves comparing the percentage of targeted people in various protected classes, such as age, sex and minority, against the percentages in our entire population and in the respective departments. So, if it appears we are unfairly targeting women, minorities or older ee's, then we will take appropriate action to eliminate the appearance of unfairness. It does sound like you could have to defend yourself against age discrimination, but if you do your homework and can demonstrate your decision was based on sound business reasons and those targeted came from a broad spectrum of ee's, you should be OK.

Rockie · January 2004

I can just about guarantee you that if most of your group that is let go is over the age of 40, you WILL have ADEA lawsuits staring you in the face.

I think the statistical analysis is a great idea and I would also present it to your attorney before implementing. At least you can see how this plays out on paper and look at it from the perspective of what a Plaintiff's attorney might see if he/she were looking at it.

Early retirement can be presented and there may be some that would willingly like to retire early for the right consideration. In dealing with any layoffs/RIFS, etc. of over 40 employees, it's almost a given that you will offer some type of consideration whether it be a severance package, a lump sum, early retirement with some type of benefit continuation, etc.

Legally, this is a very slippery slope and even if you have performance documentation on the older workers...if it's found that most of the "disciplinary" problems are with "older workers", then this can also be seen legally as some type of set up to get rid of the older employees in the firm.

I would definitely get legal advice before I leapt off this cliff.

Shadowfax · January 2004

[font size="1" color="#FF0000"]LAST EDITED ON 01-14-04 AT 07:28AM (CST)[/font][br][br]Booting 35 year,'undocumented poor performers' over the age of 40 is, of course, problematic. Mwild and Ray give good advice though: have a plan, have statistics, do a comparison and get ready for problems. But, how about offering the several likely candidates an early out? If you have a list of several, and really don't care which, ask for volunteers. You can afford to spend some money upfronmt to make and exit easy and maybe desirable, because you will undoubltedly spend it on defense anyway. There are nor real obsticles to doing what you wanat to do, except, you must be able to prove that the decision to go after emp/ee x and y was based on reasonable business decision. Without the initial work form your managers, your are doomed to trouble.
Rockie - sorry, was writing during you post, didn't mean to steal your thunder. Great minds etc...

deniseE · January 2004

You must have a concrete methodology for layoffs...although I understand what your board is trying to do.

As has been suggested, see if some of the older guys will take an early retirement. You may be amazed at how many jump upon that...but your company will have to be willing to really make it worthwhile.

As for the poor performers...why lump them into a layoff...start documenting under your policies and terminate when appropriate.

You can separate these actions without as much difficulty as trying to roll them together.

Your instinct was right!

marc · January 2004

As you can tell Craig, you have some work to do before you pull the trigger. The advice you have received is excellent. I do have one small question though, and it is minor in the scheme of this thread, what is the manager smoking that wants to lay off an EE whose job has been 25% reduced with the rest (75%) being absorbed by another worker. While I would like to be the one keeping my job, I would not want to be required to work my job and 75% of someone elses. If this person is hourly, the additional cost from OT would exceed the savings from the layoff. You probably have to look down the road a bit about the impact of some of these lay-offs. Also, consider the poor performers being let go. No real savings if the work still needs to get done and you have to replace the EEs with better performers. The supervisors who are cleaning house probably need a bit of a reality check.

Craig B · January 2004

Thank you all for the great advice. For the Age Discrimination, 48% of the employees who we will be let go are over 40. If I remove the 2 whole work groups then 55% of the others are over 40.

I individually met with the managers and we discussed the list and I feel much more compfartable because we changes some of the names.

Thanks again

marc · January 2004

Did you type compfartable like that on purpose? Yes or no, it's funny.

Craig B · January 2004

My typing skills make me uncomfortable as well. That was a mistake but I needed a good laugh.

Carey · January 2004

We don't let our managers get away with trying to use a RIF to get rid of poor performers. They will not be allowed to hire for one year, so if they end up short-staffed, tough luck. We have a ranking process that's based on performance management ratings and I check them against previous years scores to make sure the low rankings aren't convenient to make the rankings fall where they want. They have to justify any selections that deviate from the rankings. Then I run a report of the entire work group that includes race, gender, age, etc. to check for adverse impact. That doesn't mean we can't lay those people off, but we have to make sure our documentation is sufficient.

Good Luck.

Don D · January 2004

Craig: Excellent! Attorneys all over the country will be printing your question off and passing it out as the 'after lunch ice-breaker' at the next employment law seminar. It will wake up the soundest of the nappers and a deep chuckle will resonate through the entire group.

Yours is the perfect example of 'How not to effect a layoff or RIF'. Enough has been said already in the way of recommendations for your company. The only questions I have for you in light of your question are these: Have you found an attorney stupid enough to take your company's case, and secondly, are you interviewing for a job beginning tomorrow?

I realize you are not the decision maker here. My comments are 'leveled at' your decision makers. But, I do hope you are interviewing.

Is it a Lay Off, Early Retirement, or big lawsuit waiting to happen?

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