Disney continues to face legal repercussions from the company’s 2014/15 layoffs of numerous American IT workers, and the outsourcing of their functions to two Indian companies employing H-1B workers. On Monday, Dec. 12th, thirty former Disney workers filed a complaint in the U.S. District Court for the Middle District of Florida seeking compensatory and punitive damages and reinstatement to their old positions under Title VII of the Civil Rights Act of 1964 (“Title VII”), Section 1981 of the Civil Rights Act of 1966 (“Section 1981”), and the Older Worker Benefit Protection Act (“OWBPA”). The lead plaintiff, Leo Perrero, also seeks class certification on behalf of other impacted former Disney workers.
This lawsuit follows charges previously filed by former Disney employees with the EEOC, and a lawsuit against Disney and the consulting firms that employed the H-1B workers (Cognizant Technology Solutions and HCL), that Disney retained to assist in the job outsourcing alleging violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act. The plaintiffs argued in the latter lawsuit that, in light of the termination of Disney’s American workers, the H-1B employers’ representations in their visa applications violated the requirements of the H-1B program, and Disney was jointly liable under RICO. However, U.S. District Court Judge Gregory Presnell dismissed this lawsuit on October 13, 2016, finding that the claim relied upon a misunderstanding of the H-1B program’s obligations.
The new complaint alleges that Disney unlawfully terminated the plaintiffs because of their race, national origin, and age. The complaint also states that Disney failed to meet certain procedural requirements under the Older Workers Benefits Protection Act (“OWBPA”).
As we previously examined, this type of lawsuit represents a novel application of anti-discrimination law as a means of seeking redress for employees who lose jobs due to foreign outsourcing. In the past, employers have avoided liability in similar situations by showing that the outsourcing was motivated by legitimate business factors (such as cost cutting). It remains to be seen whether the increased scrutiny on immigration and foreign trade characterizing this year’s presidential election will impact how the EEOC and/or the courts treat these issues going forward. We will continue to monitor this and similar cases and report on any new developments as they occur.
For now, employers who are considering outsourcing jobs to foreign workers should carefully consider both the political and legal ramifications of any decision that will result in the movement of work outside of the U.S.