Legal

Staged RIFs Qualify for Heightened Protection From Age Discrimination

By Staff Report

Apr. 23, 2013

Employers who eliminate headcount as part of a reduction in force receive special protection under the age discrimination laws. In a bona fide RIF, the employer has a built-in legitimate, non-discriminatory reason for a termination—the business considerations and economic necessities that caused the job eliminations. In such a case, an employee cannot establish a prima facie case of age discrimination without some additional direct, circumstantial, or statistical evidence showing that age was a factor in the termination. The mere termination of a competent employee in the face of economically based cutbacks is not enough to establish a prima facie case of age discrimination.

What happens, though, when an employer cuts headcount in stages? For example, what if an employer facing economic distress lays off a number of employees, and a year later lays off someone else? Can the employer claim the benefit of the more stringent age discrimination test that accompanies a bona fide RIF for the later termination?

Such was the case in Weisfeld v. PASCO, Inc. (Ohio Ct. App. 4/17/13) [pdf]. In 2009, PASCO lost a contract that accounted for 80 – 90 percent of its revenue. As a result, it laid off more than 80 percent of its employees. Most of those firings happened shortly after the lost contract. The company waited a year, though, to fire six key employees, including Todd Weisfeld, its 48-year-old director of technology, who declined a restructured job as a network coordinator.

In his ensuing age discrimination lawsuit, Weisfeld argued that the passage of time between when PASCO terminated him as compared to the bulk of his co-workers precluded the company from claiming that Weisfeld’s termination was part of a reduction in force. The court, however, disagreed:

Contrary to Mr. Weisfeld’s understanding, an employee is terminated pursuant to a reduction in force whenever “business considerations” are the driving force behind the company’s decision. It is immaterial that PASCO eliminated some positions immediately after losing the California contract and waited over a year to eliminate other positions. So long as the company’s decision was because of business considerations and it did not replace Mr. Weisfeld with another employee, his discharge was pursuant to a reduction in force.

Absent any evidence that PASCO lacked a legitimate business reason for eliminating its director of technology position, Weisfeld’s age discrimination claim failed.

This case shows the powerful advantage that employers hold in defending discrimination cases that arise out of reductions in force. It also shows that RIFs can occur in stages and over time. At least according to Weisfeld v. PASCO, an employer can retain key employees during a layoff and still claim the evidentiary benefit of the RIF when economic realities dictate a later termination of those key employees.

Written by Jon Hyman, a partner in the Labor & Employment group of Kohrman Jackson & Krantz. For more information, contact Jon at (216) 736-7226 or jth@kjk.com.

About Workforce.com

blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog

Compliance

Minimum Wage by State in 2022 – All You Need to Know

Summary The federal minimum wage rate is $7.25, but the rate is higher in 30 states, along with Washing...

federal law, minimum wage, pay rates, state law, wage law compliance

workforce blog

Legal

California’s push for a 32-hour workweek explained, and how to prepare

Summary: California is considering a 32-hour workweek bill for businesses with over 500 staff 4 day wee...

32 hour workweek, 4 day workweek, california, legislature, overtime

workforce blog

Legal

A business owner’s guide to restaurant tipping law

Business owners in the restaurant industry are in a unique position when it comes to employee tips. As ...

restaurants, tip laws, tipping