When making layoff decisions, focus on worker performance, cite business necessity

When it comes to reductions in force, employers must make sure that they develop a fair, reasonable and explainable selection process. Be prepared to show that the selection was based on sound business decisions and that the layoff wasn’t an excuse to terminate employees who might otherwise have a legal discrimination claim.

Employers also have to show that the layoff itself was legitimate. Fortunately, that’s the easy part, especially if you have solid economic reasons such as a downturn in business or simply find that you could reduce cost by organizing the workplace more efficiently.

Recent case: Isidora, a 63-year-old woman, worked for Morris National, a candy maker. It was a job she had held for 23 years. Isidora had mainly worked on a machine that made liqueur filled chocolates.

The company suffered financially in 2008 due to the recession, leading to the decision to reduce costs. A production planner calculated that the company could reduce the number of full-time employees from 39 to 20, saving $600,000 in salaries and benefits. Under this plan, the company would need to rotate the core group of 20 employees through various departments and otherwise rely on part-time, temporary or seasonal workers.

Based on the production planner’s study, the chocolatier laid off 13 employees in 2009. Isidora was spared.

But by 2010, the company determined it needed to further reduce costs, and decided to lay off three more full-time employees. The production planner met with other supervisors who had direct knowledge of the production employees’ work performance. He determined the three employees who should be laid off as part of the RIF based upon various factors, including reliability, experience, versatility and efficiency—a mix of subjective and objective factors.

This time, Isidora was one of the employees slated for termination, even though she had worked for the company for decades. Unfortunately she was not as versatile and efficient as other remaining employees, according to her supervisors. Two other employees, aged 39 and 40 years old, were laid off at the same time.

Isidora sued, alleging age discrimination and arguing that her selection for layoff was merely an excuse to get rid of an older worker.

The company insisted that wasn’t the case and offered a lengthy and detailed look at the process it used for selecting employees. A manager testified that he did not know Isidora had worked on other production lines, but he had consulted with her direct supervisors. Although those supervisors acknowledged she had worked on other production lines, they testified that she could not do the work required at many of the positions on those lines and therefore she would not work at those jobs.

Since two direct supervisors provided first-hand observations about Isidora’s inability to work at some positions on the production line, and since she had complained about being assigned to certain work, the court concluded the employer acted honestly and didn’t use the layoff as a pretext to get rid of her. (Armenta v. Morris National, No. B255575, Court of Appeal of California, 2015)