ABC Company’s revenues were down because the sale of its product had almost come to a halt. To stay afloat, the company decided it must layoff 25% of its work force. However, through an investigation by the EEOC, it became clear that a majority of the terminated staff was over the age of 40. The terminated employees banded together to sue the company for age discrimination. The EEOC offered a right to sue letter to the class who pursued the claim directly against the company. Based upon the disproportionate number of older workers laid off, the company settled.
Defense costs: $172,000
Total Cost: $597,000
- Test for adverse discrimination of all groups prior to conducting a layoff.
- Seek advice from a labor attorney before conducting any layoffs.
- Document the employment file with signed performance evaluations and other facts related to the employee job performance. Use standard evaluations so they can be compared to over performers.
- Provide terminated employees with facts other than age or other potentially discriminatory reasons in writing.