One way to reduce your labor budget is to terminate staff members who are paid the most and replace them with employees who earn less. But be careful before you implement a layoff based on seniority.
If you have a significantly older workforce, and those older workers are also the most senior, you may end up with an age discrimination lawsuit on your hands.
However, if you run the numbers and see that a layoff based on seniority actually has more of an effect on those under age 40, then go for it.
But the hospital was able to show that more employees under age 40 lost their jobs than did those older than 40. Therefore, the court ruled the layoff policy did not disproportionally impact older employees. (Allen, et al., v. Highlands Hospital, No. 07-6414, 6th Cir., 2008)
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