It’s a scary fact: The economy’s forcing many companies to reduce their workforces. Most HR managers don’t want to think about letting people go, but careful planning will help employers avoid bias claims from employees looking for a big payday.

A recent court case provides an example of how to reduce staff and avoid lawsuits:

Three women sued after losing their jobs in a company-wide reduction-in-force (RIF) targeting front-line managers.

The women were all over 40 years old, as were 14 out of the 19 terminated managers.

Also, before the RIF, 19 managers were female and 83 were male. Ten women (52% of all female managers) were laid off, compared to 11 men (13% of all males).

According to the women, those facts showed that the RIF targeted older, female employees.

Not necessarily, the court ruled.

Statistics like those don’t prove discrimination. The company can still show employees were chosen for the reduction based on consistent, non-biased criteria.

Fair and consistent decisions

In this case, the company did just that. Here’s an overview of the RIF plan:

First, the company grouped the managers by location and figured out which areas could be handled by fewer people. Then, they were placed into three tiers based on their most recent performance reviews.

Employees in the lowest performing tier were then ranked against each other. Their supervisors were all given the same set of criteria to complete the evaluation. The lowest-ranked employees on that list were terminated.

Long story short, the terminated employees were chosen based strictly on performance — not age or gender. The case was thrown out.

Some more keys to avoiding discrimination suits after layoffs:

• Document the planning – Before any individual employees are considered, write down the reasons the RIF is needed, which departments/locations will be targeted and how employees will be selected.
• Be consistent – If the focus is on performance, managers should do more than come up with a subjective list of who they think their best employees are. Supervisors should be given a list of factors to consider so that all employees are rated the same way.
• Don’t make exceptions – Managers may argue to keep or get rid of certain employees, regardless of the planned method’s results. But, as the court noted in the case above, selectively applying the RIF criteria may leave the company open to bias charges.

Cite: Sanders v. Southwestern Bell

The three big employment cases the Court will rule on:

1. AT&T Corp. v. Hulteen

The case involves an employee who’s suing over lost pension benefits. She claims her benefits were lowered because of time she missed while taking two pregnancy leaves. That’s a violation of the Pregnancy Discrimination Act (PDA).

But there’s a twist: The leave was taken decades ago, before the PDA was passed. Under the company’s old policy — which was legal at the time — the time off wasn’t counted as hours worked for her pension eligibility. She won in both the district and appeals courts on the grounds that the law was in effect at the time she suffered the financial loss (i.e., when she retired).

2. Crawford v. Metropolitan Govt. of Nashville

An employee was fired after she served as a witness during an internal sexual harassment complaint investigation. She sued for retaliation.

The employer claims the laws barring retaliation against witnesses only apply to people who participate in formal EEOC investigations. The employee claims the law applies to her case, as well.

3. 14 Penn Plaza v. Pyett

As part of a collective bargaining agreement, employees signed a document waiving the right to sue for age discrimination. They sued anyway, claiming the waiver was unenforceable because the Age Discrimination in Employment Act guarantees them the right to sue.

We’ll keep you posted on how the Court rules.

In one recent case, a 54-year-old woman sued for age discrimination. The problems started when she got a new supervisor, who was transferred from another location. During the transition, he started working part-time at the woman’s location.

He referred to her by the nickname “Grandma.” And despite the fact that she’d gotten mostly positive reviews up until that point, he placed her on a performance improvement plan (PIP) — before he was even her full-time boss.

While the woman was on vacation, the employees who worked under her made a few screw-ups. The problems were held against her, and her supervisor gave her a demotion. Instead of accepting it, she quit her job and sued the company, claiming the boss tried to demote her because of her age.

In court, the company pointed to the documented PIP as evidence of the woman’s performance problems. But the judge didn’t buy it.

Based on the evidence, the PIP was necessary in the first place — the person behind the decision wasn’t even the woman’s full-time supervisor yet. Also, his nickname for her certainly didn’t help. So it looked like the supervisor preparing to discriminate and used the PIP as a way to justify his actions.

The lesson: Only legitimate documentation will offer protection in court.

Cite: McDonald v. Best Buy Co., Inc.

That’s right, the national advocacy group for Americans over 50 is being accused of bias against older workers.

The employee, 63-year-old Bonita Brady, says she was passed over for nine promotions before she lost her job in a reorganization — right before she would’ve been eligible for retirement benefits.

She claims her age was the reason she lost her job and is seeking $25,000 in damages. The AARP hasn’t commented on the case yet. We’ll keep you posted.

The suit was filed after the company laid off 31 employees — 30 of whom were over the age of 40. The company argued that age played no part in the decision. The case was initially thrown out when the plaintiffs failed to prove the layoffs were age-related.

But the Supreme Court overturned that decision, saying the company had the burden to show the “disparate impact” was based on “reasonable factors other than age.” Previously, courts in similar cases ruled it was up to employees to prove there was bias.

The case now goes back to the circuit court to decide if the company met that burden.

What’s it mean for employers? Some experts say the decision will lead to more age discrimination suits, especially as more companies reduce their workforces due to a sluggish economy.

It’s a good reminder that when companies do have to lay people off, they need strong documentation of the decision-making criteria so they can prove age and other protected categories didn’t play a role.

Cite: Meacham v. Knolls Atomic Power Laboratory

Answer: stray remarks by a supervisor. Take this recent example:

An employee brought his prescription medication into work. Allegedly he offered to give or sell the so-called “happy pills” to some of his co-workers. After finding out and investigating, the company fired him.

He denied handing out the drugs and sued, claiming his age was the real reason he was fired. After failing to get the case thrown out, the company agreed to pay a $210,000 settlement.

Why’d the company lose? According to the employee, his supervisor had told him he might be “too old to handle this job” and “carried too much baggage.”

The comments were enough evidence for the judge to conclude that the investigation might have been pretext for age discrimination.

Cite: Tower v. City of Denton