Restructuring? How to Avoid Layoff Discrimination

A business restructuring can be a positive time of evolution for an organization. The ensuing changes, however, often require layoffs that can be emotionally challenging for all involved-as well as complicated to manage from a legal standpoint.

One important legal concern to keep in mind are the federal laws against employment discrimination enforced by the U.S. Equal Employment Opportunity Commission (EEOC). Although layoff discrimination may seem like a clear-cut issue-you either intentionally discriminated against an employee or you didn’t-real-life cases are not always so cut and dried. It is possible to inadvertently conduct a reduction in force in a way that opens your company up to layoff discrimination lawsuits.

Here are six things to keep in mind to avoid layoff discrimination.

It may seem obvious that companies shouldn’t knowingly discriminate against protected groups. After all, don’t all companies already know that doing so will get them in legal trouble? And in this day and age, aren’t companies socially motivated as good corporate citizens not to discriminate?

When deciding which employees to lay off, your company should take care to make sure the criteria employed are objective, fair, and measurable. For example, if you decide to lay off the most recently hired employees, apply that rule consistently throughout your workforce. Or if you create your layoff list based on employee productivity, have an objective methodology by which that productivity is assessed. Once you select your criteria, apply them unilaterally so there can be no accusations of layoff discrimination.

Even if you selected employees based on what you felt were neutral criteria like seniority, you may find that your resulting list disproportionately affects some protected groups. For example, more female employees than male may end up on your layoff list. In such a case, the EEOC recommends comparing the ratio of female to male employees to be laid off to the ratio in your general workforce, with the goal to ensure female employees aren’t disproportionately affected by your plans.

If some protected groups have indeed been disproportionately affected by your layoff selection criteria, it may be necessary to adjust your list. In such a case, the EEOC recommends considering “alternative layoff criteria, such as employees’ profitability, productivity, or expertise” that will not disproportionally affect a protected group.

Since companies usually engage an employment lawyer to create or look over employee termination agreements and other documents needed during layoffs, you might consider asking the attorney to also look over your layoff selection criteria and the resulting list of employees to be laid off.

Of course, it is possible that even if you follow the steps above, a laid-off employee might feel they’ve been let go for discriminatory reasons and bring forward a lawsuit. This is one reason why many companies, in addition to instituting measures to avoid layoff discrimination, use other tools like severance packages to help exiting employees part on a positive note and mitigate the possibility of lawsuits.

Many such severance packages include outplacement benefits that support exiting employees in finding new jobs quickly and easily. Outplacement can help shift departing workers’ attention away from the anxieties about the job they lost to the possibilities of the job they will have in the future.

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