Employers considering layoffs or other restructurings should carefully develop a plan for evaluating and selecting employees who will be affected by the changes. In many situations, age discrimination claims become a major source of potential legal liability given the tendency for reductions in force to disproportionately affect older workers. A new unpublished decision from the Fifth Circuit Court of Appeals reinforces the need to carefully evaluate the criteria used for such decisions and its impact on older workers before finalizing layoff selections.
In Hoang v. Microsemi Corp., the plaintiff was the oldest of three comparable managers and the only one selected for layoff. He alleged that the employer used subjective criteria in order to target him for selection due to his age along with other criteria. The district court granted summary judgment to the employer, but on appeal, the Fifth Circuit reversed this decision, remanding the matter for jury trial.
In its decision, the court noted that the plaintiff had never been disciplined and had been recommended for promotion shortly before the layoff. The employer admitted that it used largely subjective criteria to determine which of the three managers was least suited to lead the restructured department. The Fifth Circuit noted that the criteria used for selection raised questions whether age was a factor used in making these decisions. In addition, the average age of workers selected for layoff was almost 17 years older than the average age of the workforce.
While the employer may have prevailed if only one of these factors was in place, the combination of subjective layoff criteria and a large statistical disparity in the ages of the selected and non-selected workers resulted in a reversal of the earlier dismissal. Employers should carefully review initial layoff selections to determine whether there is a statistical disparity that negatively affects members of a protected classification. This disparity does not mean that the selections were based on age, but when combined with the inability to demonstrate objective selection criteria, the method used to determine the layoffs could expose the employer to expensive discrimination claims.