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Aug 24, 2017

Objective layoff criteria fend off age discrimination claim in California

Harassment & Discrimination 

A California employer successfully defended itself against an age discrimination claim when it relied on objective reasons to implement a reduction in force (RIF). A 60-year old employee claimed that his hotel employer selected him for a RIF due to his age and that this violated California’s Fair Employment and Housing Act (FEHA). The employee had worked at the hotel for 20 years, and by then was director of property operations with substantial job responsibilities.
 
The employer successfully proved its layoff decision was based on legitimate, nondiscriminatory reasons. Employees were selected based on overall performance, disciplinary actions, and length of service. At the same time, decisions were to be “heavily weighted at the senior level,” so 29 managerial-level employees were considered for layoff. Managers became candidates for the RIF if they had little direct interaction with guests, didn’t generate additional revenue for the hotel, and didn’t supervise large numbers of workers. There was an effort to avoid departments that had been previously impacted by an earlier RIF, and to achieve payroll savings with as few layoffs as possible. In the end, the decisionmakers realized that laying off just this one employee would generate their target payroll savings and that he met all the other layoff criteria.
 
The employee sued for age discrimination but the U.S. Ninth Circuit Court of Appeals ruled in the company’s favor, noting that the company had considered the employee for transfer to another position by providing him with a list of current job openings. The court deferred to the employer’s business judgment in evaluating the layoff criteria. Finally, the employer had been undergoing a series of RIFs due to lost profits during several years of economic downturn, and the employee had not been selected in any of the earlier RIFs despite his age (Merrick v. Hilton Worldwide, Inc., 9th Cir, August 2017).
 
Tips: If you are ever faced with the necessity of a RIF, remember to use measurable criteria based on business objectives and to document the entire process from planning through layoff. Engage your Vigilant employment attorney at an early stage to help you through this difficult and complicated process. Also see our Legal Guide, “Downsizing and Layoff Checklist” and Model Form, “Downsizing Evaluation” (3331).
 

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