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In RIFs, Show That Economics (Not Age) Drove Your Decision

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in Discrimination and Harassment,Employment Law,Firing,Human Resources,Leaders & Managers,Management Training

Age discrimination cases are on the rise, with more employees suing under the federal Age Discrimination in Employment Act (ADEA) and the Texas Commission on Human Rights Act. And age-bias cases can be particularly expensive, because older employees typically earn considerably more than their younger counterparts.

But take note: You can sometimes consider an employee’s salary level when you decide to downsize. Just be prepared to show that economics is driving your decision, not the employee’s age.

Be prepared, though, to explain your business reason, especially if every employee you cut was older than 40. It also goes without saying that you must make sure that no one utters sentiments that smack of ageism.

Recent case: Frank Horak had held a management job at a liquor company for more than 30 years when it was acquired by Glazer’s Wholesale Drug Co. At the time, Horak was 57 years old, earning $144,000 in salary and a $22,000 bonus.

Glazer’s retained Horak and created a key account-manager’s position for him. He retained his salary and bonus structure.

Then Glazer’s execs became concerned about the profitability of their Texas operations and looked for ways to cut costs. Since Horak earned more than twice the salary of others at his level, he was fired. Horak filed suit, claiming that he was wrongfully terminated because of his age.

But the company pointed out that Horak was one of 65 Texas employees discharged as part of a statewide effort to increase profits. The court noted that the employees who absorbed his duties were in their 40s and 50s. Plus, some of the other terminated employees were younger than Horak.

Because he couldn’t show that anything but concern over finances was behind his discharge, the court dismissed his case. (Horak v. Glazer’s Wholesale Drug Company, Inc., No. 06-10854, 5th Cir., 2007)  

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