Do More Layoffs Result In More Discrimination Lawsuits? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Do More Layoffs Result In More Discrimination Lawsuits?

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Employers are always at risk of being sued for discrimination. As layoff numbers swell, that risk isn't likely to go down any time soon. While employees who are still working may be less inclined to want to "rock the boat" and be seen as a troublemaker, those who have already received their pink slip may feel they have nothing to lose. And if they have been unemployed for an extended period of time, they may feel they have everything to gain.


The Equal Employment Opportunity Commission (EEOC) recently reported receiving a record high 95,402 discrimination charges in fiscal year 2008, which ended September 30. This is a 15% increase from fiscal year 2007. Charges based on age and retaliation saw the largest increases — 29% and 23%, respectively. "The EEOC has not seen an increase of this magnitude in charges filed for many years," said EEOC acting chairman Stuart J. Ishimaru. The EEOC speculated that the surge in filings may be due to multiple factors, including economic conditions, increased diversity and demographic shifts in the labor force, employees' greater awareness of the law, the agency's focus on systemic litigation, and changes to its intake practices.


Besides EEOC charges, class action lawsuits are also on the rise. Seyfarth Shaw's fifth Annual Workplace Class Action Litigation Report found that the financial meltdown during 2008 fueled more class action litigation, especially age discrimination and Worker Adjustment and Retraining Notification Act (WARN) claims.


There's no doubt that companies have a legitimate need to cut staff. The question becomes whether the companies have a legitimate basis for deciding to whom pink slips will go.


Employees can claim either disparate treatment or disparate impact discrimination. Disparate treatment claims require a showing of intentional discrimination. For example, four female managers at Dell filed a class action lawsuit last fall. They claimed that the company targeted women and older workers in layoffs that occurred in 2007 and 2008. Dell is accused of lowering the favorable performance ratings of the female managers in order to justify their termination.


Disparate impact claims, on the other hand, rely on statistical evidence that a facially neutral policy or practice had a disproportionate impact on a group of employees; an intent to discriminate need not be established.


In its last term, the U.S. Supreme Court held in Meacham v. Knolls Atomic Power Laboratory (No. 06-1505, 2008) that an employer must show evidence of a reasonable factor other than age in order to defend against a disparate impact claim, and it must also prove that the factor is reasonable. The Court acknowledged that this would make it "harder and costlier" for employers to defend against such claims, thus making it all the more important that your company has all of its ducks in a row throughout the layoff process.

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