A few weeks ago, four former Hewlett-Packard employees between the ages of 52 and 63 filed a class action lawsuit in California alleging that HP engaged in age discrimination, and terminated their employment, in connection with a paring-down and restructuring of its workforce.
HP has denied the allegations of discrimination, stating that, “[t]he decision to implement a workforce reduction is always difficult, but we are confident that our decisions were based on legitimate factors unrelated to age.”
How do the plaintiffs intend to prove discrimination? They point to age-based statements made by CEO Meg Whitman during securities analyst meetings:
So, as we think about our overall labor pyramid at Hewlett-Packard, we need to return to a labor pyramid that really looks like a triangle where you have a lot of early career people who bring a lot of knowledge who you’re training to move up through your organization, and then people fall out either from a performance perspective or whatever.
And over the years, our labor pyramid doesn’t look — has become not a triangle. It’s become a bit more of a diamond. And we are working very hard to recalibrate and reshape our labor pyramid so that it looks like the more classical pyramid that you should have in any company and particularly in ES. If you don’t have a whole host of young people who are learning how to do delivery or learning how to do these kinds of things, you will be in [for] real challenges.
. . .
Now, that’s not something that changes like that. Changing the same shape of your labor pyramid takes a couple of years, but we are on it, and we’re amping up our early career hiring, our college hiring. And we put in place an informal rule to some extent which is, listen, when you are replacing someone, really think about the new style of IT skills.
Then, in response to a question in 2015 about the job cuts, Ms. Whitman again focused on the hiring of young talent:
That should be it. That will allow us to right-size our Enterprise Services business . . . to make sure that we’ve got a labor pyramid with lots of young people coming in right out of college and graduate school and early in their careers. That’s an important part of the future of the company. . . .
Do the plaintiffs have “smoking gun,” direct evidence of age discrimination? I have no idea whether HP and Ms. Whitman actually considered age in revamping its “diamond shaped” organization into a “pyraid shaped” organization, but she may now regret her public statements — particularly her focus on having a “whole host of young people” join the organization “right out of college and graduate school.”
Unfortunately, reductions in force often are part of the normal business lifecycle. How can you reduce the risk of age discrimination allegations?
- Avoid age-based stereotypes and focus on individual job performance. Yes, you may have some workers who lack the technological skill-set that you desire, and some of those workers may happen to be “older,” but you also may have “younger” workers who lack the requisite skill-set. Don’t draw a corrolation between age and skill-set.
- Prepare for a layoff well in advance, and analyze layoff data (age, race, sex, etc.) to ensure that the data does not scream-out discrimination.
- Prepare an internal memorandum summarizing the overriding reasons for the reduction in force, the layoff criteria, and the justification for each layoff decision. Better to create that memo before you’re sued; an after-the-fact explanation may not carry as much weight in the eyes of the jury.
- If you relied upon job performance as a layoff criterion, make sure you can justify the decision, preferably through objective evidence, such as performance evaluations and counseling or disciplinary statements.
- Avoid age-based buzzwords and phrases, such as “new blood,” “young blood,” “energetic employees,” “fresh faces,” or “recent college graduates.”
- Consider offering severance in exchange for a release of claims, and also remember that group layoffs may trigger various requirements under the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act.
Reductions in force are replete with legal hurdles and potential pitfalls. Be sure to work with your employment law attorney to help reduce the potential exposure.