Recently, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced that Providence Alaska Medical Center (“Providence”) has agreed to pay $220,000 and provide other relief to settle an age discrimination lawsuit on behalf of five (5) workers who were laid off and denied rehire because of their age. The EEOC charged that Providence laid off and refused to rehire five (5) long time employees following a restructuring of the hospital’s operating room. The five employees, between the ages of 46 and 56, had between 11 and 24 years of employment as surgery aides and anesthesia technicians. The employees were replaced by new hires in their twenties and thirties. During fiscal year 2008, the EEOC received a record 24,582 age discrimination charge filings, a 29% increase from fiscal year 2007 and a 65% increase from fiscal year 2005.

When restructuring a work force, employers must identify the business reason(s) for the action. In addition, when actually selecting employees for the reduction-in-force, employers must carefully analyze the reason or reasons why certain employees are selected for termination over other employees. Once the listing is complete, employers should review the listing to determine if the reduction-in-force will have a disparate impact on a particular class of employees based on their age, race, sex, national origin, disability status or any other classification protected by federal, state or local law. When conducting a reduction-in-force, employers should consider requiring employees to sign a waiver of claims against the company. In exchange for some type of consideration (severance pay or continued medical insurance at the company’s cost), the employee executes a release of claims against the company relating to his or her employment and termination of employment. Employers should consult with legal counsel to make sure that their plans are lawful and the releases are valid.