Planning layoffs? Check age demographics before and after proposed RIF
Before you implement an involuntary reduction in force, make sure you determine whether you’re vulnerable to an age discrimination lawsuit. You can do this by seeing what percentage of the workforce was over age 40 before the planned layoff and what percentage will be over age 40 after the planned action takes place.
You can probably prevail in a lawsuit alleging a disparate impact on older workers if the difference is less than 4%.
Recent case: James Peterson was one of a group of Seagate employees over age 40 who were terminated in a reduction in force. The company claimed it had to cut back on personnel because of a business downturn.
The older workers sued, claiming they had been targeted because of their age. They argued that whatever process the company had used to pick those who would be cut had a disparate impact on older workers, even if the process itself was neutral on its face.
But Seagate presented evidence that before the RIF, 66.64% of its employees were 40 or older. Afterward, 65.23% were. That was too small a change for the court to conclude age discrimination was at play. Previous 8th Circuit Court of Appeals decisions have found that even a 4% shift is not big enough. (Peterson v. Seagate, No. 07-2502, DC MN, 2011)
Final note: Of course, if a manager selects someone for the RIF based on age, the individual will have a case.