When a company implements a “reduction in force,” or “RIF,” it is possible that one or more of the employees whose jobs are eliminated may not agree with the company’s decision. In particular, older employees—especially those who have been with the company for an extended period of time—may question the company’s decision to let them go if the company has retained younger employees. That skepticism may lead to charges of age discrimination against the employer.
The United States Court of Appeals for the Sixth Circuit recently issued a decision that highlights the legal pitfalls an employer faces when conducting a RIF. In 2003, Rockwell Software, Inc., decided to pursue a RIF in order to reduce a projected $1.7 million gap between costs and earnings for fiscal year 2004. James Coburn, a software engineer, was one of seven employees whom Rockwell laid off as part of a RIF. Coburn was 55- years-old at the time of the RIF. After Rockwell laid Coburn off, he applied, but was not hired, for two other positions at Rockwell.
Coburn sued Rockwell for age discrimination under Ohio’s anti-discrimination law. Coburn alleged that Rockwell’s decision to lay him off as part of the RIF and its subsequent failure to hire him for the other positions for which he applied were motivated by age discrimination. A federal district court ruled in favor of Rockwell. On appeal, however, the Sixth Circuit overturned the district court.
The Sixth Circuit first observed that there was sufficient “direct evidence” of age discrimination. Coburn had presented evidence that a Rockwell manager involved in the RIF decision had told others that he “was tired of letting young talented engineers go and he was going to go after the group of us.” Though these sorts of age-related comments do not support a claim of age discrimination if they are “isolated, ambiguous, or abstract,” the court of appeals found that the statement had none of these characteristics. In particular, the court of appeals rejected a characterization of the statement as “isolated,” in view of other evidence that another manager—who was also involved in the RIF decision—had stated on numerous occasions his belief that Rockwell “should look young and aggressive.”
In addition to the direct evidence, the Sixth Circuit also found it problematic that Rockwell’s personnel gave “inconsistent answers” about the company’s true motivation for including Coburn in the RIF. What’s more, there was inconsistent testimony from Rockwell officials about the company’s discussion of “financial basis and risk estimates” regarding the impact of a RIF. Not only did Rockwell officials give differing testimony about such discussions, Rockwell also failed to produce any writings from the alleged “risk assessment process” that supposedly informed its RIF decision. There was also evidence that Rockwell did not terminate any temporary employees even though the company’s written RIF policy stated that temporary employees would “generally” be the first layoffs in a RIF. Following a lengthy and detailed analysis of the evidence, the Sixth Circuit found that all of these factors could motivate a reasonable jury to conclude that Rockwell’s stated reasons for terminating Coburn were “false” and that Rockwell instead laid off Coburn because of age discrimination.
The Sixth Circuit’s decision highlights the need for employers to—
- Document in detail the reasons for a RIF;
- Follow any written policy that the company may have governing RIFs;
- Document the reasons for any necessary deviation from applicable company policies;
- Document the reasons why particular employees were chosen to be removed for the RIF, otherwise known as being “RIF’d”; and
- Ensure that those managers or executives involved in making the RIF decisions understand the reasons for the RIF and are consistent in their communications about it.
The Sixth Circuit’s decision also stands as a reminder that a RIF, which might be necessary for a company’s bottom line, carries some liability risk. Even the most well-intentioned employer may find itself accused of age discrimination if a RIF is not carried out vigilantly and documented properly.
The case is Coburn v. Rockwell Automation, Inc., Case No. 06-3663 (unpublished opinion announced June 29, 2007).