A March Conference Board report said that Americans are now more worried about their jobs than at any time since 1993. The U.S. has lost more than 2 million jobs since March 2001, the worst slump in two decades (Berenson, "Tight U.S. Job Market Adds To Jitters Among Consumers," New York Times, March 01, 2003, Sec. C, p. 1.)
Having to carry out a "reduction in force" (RIF) is difficult enough from a strictly human and economic perspective, and made only more so by the potential discrimination and other claims that "RIFed" employees may bring as a result. This article will discuss three RIF-related legal issues: the legal components of a claim; a RIFed employee's right to unemployment compensation; and a RIFed employee's right to rehire.
Discrimination claims arising from RIFs. In a reduction in force ("RIF") case, the plaintiff's burden is as follows: To make out a prima facie case of discriminatory discharge, a claimant affected by a RIF must prove: (1) that she is within a protected category (sex, race, age, etc.); (2) that she was doing satisfactory work; (3) that she was discharged despite the adequacy of her work; and (4) that there is some evidence the employer intended to discriminate against her in reaching its RIF decision. The fourth element may be established "through circumstantial evidence that the plaintiff was treated less favorably than employees in non-protected groups during the reduction in force. (Bost v. Headco Industries, Inc., 2003 WL 21939020 (D.Kan., 2003) (setting forth elements in the context of an ADEA claim).)
There are three ways that a plaintiff can prove that her RIF was a pretext for discrimination: (1) She may offer evidence that her lay-off is inconsistent with RIF criteria; (2) she may show that her evaluations were deliberately falsified or manipulated; or (3) she may show that the RIF is more "generally pretextual."
In the Bost case, the plaintiff attempted to show that his discharge was inconsistent with the RIF criteria. He did this by presenting evidence that he was a good, or even exceptional, employee who produced large profits for the company. Headco admitted that the plaintiff was a good employee, but justified its decision by the cost of retaining him: he was the second- highest paid employee in his section and had a company car and expense account.
Another issue in the case was whether the plaintiff was "similarly situated" to younger employees who were retained. The company argued he was not, because the plaintiff and the other employees had different supervisors. However, the court decided that because there was evidence suggesting a high level of involvement in all decisions by the same executive.
This case was a motion for summary judgment, so all the court was deciding was that the plaintiff presented enough evidence to avoid having his complaint dismissed. Nonetheless, the case does set forth the legal components of a discrimination claim in the context of a RIF and some of the facts and issues that a RIFed employee may raise to prove his or her claim.
RIFed employees may still be eligible for unemployment compensation. An employee who accepts a voluntary buyout agreement is still eligible for unemployment compensation, a Florida appellate court ruled in reversing a decision of the Florida Unemployment Appeals Commission that denied the employee unemployment benefits (Rodriguez v. Florida Unemployment Appeals Com'n, 2003 WL 21749529 (Fla.App. 3 Dist., 2003)). The issue in the case was whether the employee "had left work without good cause." (If so, she would be ineligible for benefits.)
In 2002, Telemundo Network Group announced pending budget cuts. As part of the cost cutting measure, Telemundo sent certain employees letters explaining the terms of a voluntary buyout agreement. The plaintiff accepted the buyout package and signed the agreement. Two months later, she applied for unemployment benefits which the UAC denied. The buyout agreement stated that it would not interfere with applications for unemployment and those who accepted the buyout would acquire layoff status. The company's HR representatives said that employees accepting the agreement would be considered "laid off" for unemployment purposes.
In reversing the unemployment commission's denial of benefits to the plaintiff, the court quoted the unemployment statute, that it
is to be "construed liberally to accomplish its purpose to promote employment security...." (most if not all state unemployment compensation statutes have the same wording) and said that the commission's interpretation was too strict. The court said: "Employers are to be held accountable for their actions and representations to employees, particularly when modifying terms of at-will employment and when seeking participation in voluntary layoffs, buyouts or other company initiated programs."
Discriminatory failure to rehire after RIF. A company's inconsistent explanations for its decision not to rehire the plaintiff call into question the credibility of its alleged explanation, the Seventh Circuit ruled in Zaccagnini v. Chas. Levy Circulating Co., 2003 WL 21741636 (C.A.7, 2003), thereby reversing the district court's grant of summary judgment to Chas. Levy (CLCC).
The plaintiff, a truck driver, had been discharged in a RIF. He claimed CLCC failed to rehire him because of his age (51). At the time of his layoff, the plaintiff told the VP of operations that he would like to be rehired should the company's need for drivers change. The plaintiff said that the VP told him that if CLCC were in the position to hire drivers in the future, he would rehire him. A few months later, the company's business did improve, and it hired four new drivers, whose ages were 30, 35, 31 and 32.
When the plaintiff complained, he was told that his layoff had been reviewed, the company had the right to recall or not recall drivers, and no laid off driver had been recalled, nor were there any plans to recall any of them. The district court found these to be legitimate, nondiscriminatory reasons not to rehire the plaintiff and so awarded summary judgment to CCLC.
Thus, the company justified its refusal to rehire the plaintiff on its policy of not rehiring laidoff drivers, and that was the explanation it gave when the plaintiff initially sued ("In its initial briefing before the district court and during discovery, CLCC maintained that Zaccagnini was not rehired because the company had a policy not to rehire workers who had been laid off.") However, in replying to the plaintiff's motion for summary judgment, the company said that the reason it did not rehire the plaintiff was because he was not referred to it by the union. ("For the first time in its reply brief at summary judgment, CLCC made clear that it was offering another explanation for its decision not to rehire Zaccagnini: the company has a practice of only hiring drivers through the union and Zaccagnini was not referred by the union.") Moreover, CLCC's own human resources policy explicitly allowed for the rehire of former employees.
Intentional discrimination may be inferred from an employer's untruthfulness, the Seventh Circuit said: "[The plaintiff] argues that CLCC's current argument--that [the plaintiff] was not rehired because he was not referred by the union--is unworthy of credence because CLCC did not rely on this second explanation until its reply brief at summary judgment. We agree." Later, the court was even more explicit: "We find CLCC's reliance on this explanation beginning at such a late date in the proceedings to be 'fishy,' [cit. om.]"
With respect to the VP's alleged statement to rehire the plaintiff, the court of appeals did say: "Although this assurance is not sufficiently concrete to constitute an offer, in combination with other evidence it may indicate some flexibility in the company's rehire policies."
There is one final point in the Zaccagnini case that readers should be aware of: in response to the company's argument that it should win because the plaintiff presented no evidence that his age was a factor in the company's decision, the Seventh Circuit said: "We emphasize that [plaintiff's] failure to bring any evidence regarding age does not defeat his claim per se, the special virtue of the indirect method of proof is that it allows victims of age discrimination to prevail without presenting any evidence that age was a determining factor in the employer's motivation. Holding to the contrary would violate one of the purposes of [age discrimination jurisprudence], which is to permit plaintiffs to recover, even if they are unable to discover evidence of discrimination, simply by proving that the employer's proffered justification is unworthy of credence."
First published October 2003 in Fair Employment Practices Guidelines, a
semimonthly publication by Aspen Publishers, 1185 Avenue of the Americas.
New York, NY.
About the Author:
Gerard P. Panaro has more than 25 years' experience in employment law and is
available to assist readers on an individual basis. You may reach him at
202-861-1314. Mr. Panaro is of counsel with Howe & Hutton, in the
Washington, DC office.
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A March Conference Board report said that Americans are now more worried about their jobs than at any time since 1993. The U.S. has lost more than 2 million jobs since March 2001, the worst slump in two decades (Berenson, "Tight U.S. Job Market Adds To Jitters Among Consumers," New York Times, March 01, 2003, Sec. C, p. 1.)