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When handing out RIF pink slips, avoid age bias claims by offering good business reasons

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in Discrimination and Harassment,Human Resources

When a company reorganizes and consolidates several positions into one, the resulting reduction in force (RIF) may affect an older employee. The employee who loses a job may feel the real reason is age and that the employer took advantage of a RIF to eliminate older workers.

You can structure your RIFs to avoid losing an age discrimination claim. The key is to lay out a strict, business-based rationale for any changes, including consolidated positions. Then document why the employee who got the new position was the best qualified for the job.

Caveat: If supervisors have made ageist comments, it will be much tougher to argue that age wasn’t a factor in the RIF.

Recent case: Mike worked for the Belk department store chain until he lost his job at age 63 during a RIF.

His position, director of customer relationship management, was consolidated with that of the company’s vice president of marketing and customer research. The new job was then offered to the woman who had held the VP position. She was 20 years Mike’s junior.

Mike was offered several other positions, but declined each because they were lower-ranked jobs that didn’t pay the $160,000 he had earned before.

Mike then sued, alleging he should have received the new position and that the reason he didn’t was age discrimination.

Belk explained to the court the exact process it had used to consolidate the positions. The HR director in charge of the RIF and reorganization described her decision-making. She said she identified positions with common functions and looked for ways to avoid duplication and streamline processes. One of these ways was the creation of a new position responsible for everything Mike had done before and most of what the VP had done before.

Then, Belk explained to the court that it chose the VP for the job because she held an MBA and had experience in areas the chain wanted to focus on going into the future.

Mike couldn’t refute Belk’s business reasons for making changes. Nor could he point to any past incidents that would create the impression the department store was hostile to older managers. There had been no name-calling or comments about “new blood” or other such ageist statements. The court dismissed his case. (Duffy v. Belk, Inc., No. 11-1757, 4th Cir., 2012)

Final note: The more information on the RIF you can document, the better off you will be. You don’t have to give this information to the affected employees, but you should have it ready should you ever be challenged.

It is also a good idea to involve your attorney from the start. He or she can help you focus on clear business reasons and may be able to fashion reasonable severance packages for employees who will lose their jobs in the RIF. By offering something extra beyond a pink slip and a final paycheck, you will be able to offer a release of claims. It may be well worth a few thousand dollars to get one.

Get guidance, though. There are very specific rules when you ask em­­ployees to waive age-related claims.

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