Lay-Offs, RIFs and the WARN Act Down-Sizing and Plant Closing Issues You Need to Know Presented by: Scott R. McLaughlin.

Lay-Offs, RIFs and the WARN Act

Down-Sizing and Plant Closing Issues You Need to KnowPresented by:

Scott R. McLaughlin

General Discrimination Issues

• Age Discrimination Most Common• Race and Retaliation• Example:

• Workers’ Comp Retaliation Example• Arose as single plaintiff case• Settled cheap

Stroud v. BMC Software, Inc., 2008 WL 2325639, 2 (C.A.5 (Tex.))

• Rodriguez ranked on various criteria, such as skills or abilities, short-term impact, and long-term potential. Stroud ranked last.

• On March 26, 2005, Stroud returned to work from FMLA leave.

• On April 14, 2005-three weeks later-she was terminated along with 800 other BMC employees in a company-wide reduction in force. BMC offered Stroud its standard separation package.

Stroud v. BMC Software, Inc.

• Stroud alleged gender and disability discrimination, FMLA retaliation; and intentional infliction of emotional distress.

• Made prima facie showing on retaliation claim;

• Shifting burden

Stroud v. BMC Software

• BMC asserts that Stroud was terminated due to a company-wide reduction in force that involved the termination of 800 other employees.

• Note - the more employees – the easier the defense.

Stroud v. BMC Software, Inc

• Two financial analyst positions became vacant around the time of Stroud’s termination, and both were filled by new hires.

• Stroud was not “qualified” for either of these positions because she lacked the education and experience requirements and had prior attendance problems.

• Thus, the mere existence of two open positions at the time of the reduction in force does not override BMC's legitimate reasons for terminating Stroud.

Stroud v. BMC Software, Inc.

• Stroud also alleged that the legitimate reduction in force gave BMC the ability to mask its retaliatory firing of her:

• Even if true, though, she still had burden raise a fact issue to support claim of retaliation.

• Court found that mere fact of BMC's reduction in suggests no retaliatory purpose, especially given Stroud's past poor job performance and absenteeism.

Taylor v. Albemarle Corp. 286 Fed. Appx. 134, 134-135, 2008 WL 2605054, 1 (C.A.5 (La.))

• Albemarle produced admissible evidence that, if believed, showed that it laid off Taylor because it implemented a reduction in force, which we have stated is a legitimate,*135 nondiscriminatory reason. See EEOC v. Tex. Instruments, Inc., 100 F.3d 1173, 1181 (5th Cir.1996) (noting that a reduction in force “is itself a legitimate, nondiscriminatory reason for discharge”).

E.E.O.C. v. Texas Instruments Inc. 100 F.3d 1173, 1181 (C.A.5 (Tex.),1996)

• RIF is itself a legitimate, nondiscriminatory reason for discharge;

• Fact that an employee is qualified for his job is less relevant-some employees may have to be let go despite competent performance.

• If, however, the older employee shows that he was terminated in favor of younger, clearly less qualified individuals, a genuine, material fact issue exists. I, 952 F.2d at 123.

E.E.O.C. v. Texas Instruments Inc. 100 F.3d 1173, 1182

• Comment about TI's need to make room for younger supervisors reflects “the kind of truism this court and others have held does not evidence discrimination. See, e.g., Birkbeck v. Marvel Lighting Corp., 30 F.3d 507, 512 (4th Cir.1994), cert. denied 513 U.S. 1058, 115 S.Ct. 666, 130 L.Ed.2d 600 (1994) (statement that “there comes a time when we have to make room for younger people” creates no inference of age discrimination).”

E.E.O.C. v. Texas Instruments Inc.

• “This court has observed that an employer's ‘disregard of its own hiring system does not of itself conclusively establish that improper discrimination occurred or that a nondiscriminatory explanation for an action is pretextual.’ Risher v. Aldridge, 889 F.2d 592, 597 (5th Cir.1989); see also, Moore v. Eli Lilly & Co., 990 F.2d 812, 819 (5th Cir.), cert. denied, 510 U.S. 976, 114 S.Ct. 467, 126 L.Ed.2d 419 (1993).”

E.E.O.C. v. Texas Instruments Inc.

• TI policy did not allow lay off of individuals with more than 15 years of seniority without gaining the approval of the president of the company.

• TI witness complained that the economic costs of the seniority policy were extreme since “the mix of [TI's] job grades was becoming more and more concentrated towards the higher end, which was driving our average pay up, which was *1183 driving our cost up, which was making us less competitive in the marketplace.”

E.E.O.C. v. Texas Instruments Inc.

• TI's seniority rule would force TI to displace a disproportionate number of employees with college degrees since “the majority of [TI's] degree people had less than 15 years of service while ... a high percentage of people [had] greater than 15 years of service [but no] degrees.”

• TI instead favored a RIF policy which would make “those decisions on a merit basis ... as opposed to, you know, a fixed set of rules that did not allow [TI] the flexibility to make decisions that were dictated by business conditions.”

E.E.O.C. v. Texas Instruments Inc. 100 F.3d 1173, 1182 -1183 (C.A.5 (Tex.),1996)

• TI rejected use of the performance evaluations after determining that neither report provided worthwhile information about the comparative worth of a particular employee.

• For instance, of the 135 evaluations performed on a group of 45 manufacturing supervisors during the three years preceding the RIF, only two evaluations gave a summary rating below the group median.

• Another drawback of the performance evaluations is that they provide no useful information regarding the ability of an employee to adapt to changing technology.

Older Worker Benefit Protection Act

• Release must be written in a manner calculated to be understood by employee. 29 U.S.C. § 626(f)(1)(A).

• The release must refer specifically to rights and claims available under the statute, i.e., point out that the rights being waived are rights arising under the ADEA. 29 U.S.C. §626(f)(1)(B).

• The release must not waive an employee’s claims that arise after the execution of the release. 29 U.S.C. §626(f)(1)(C).

• The release must provide consideration in exchange for the release beyond something of value the employee to which the employee is already entitled. 29 U.S.C. §626(f)(1)(D).

OWBPA (Cont’d)

• The release must advise the employee in writing to consult an attorney. 29 U.S.C. §626(f)(1)(E).

• The release must give the employee at least 21 days to consider the agreement (or at least 45 days in the case of an exit incentive or other group termination program). 29 U.S.C. §626(f)(1)(F).

• The release must give the employee at least 7 days to revoke the agreement. 29 U.S.C. §626(f)(1)(G).

OWBPA (Cont’d)

• If the release is obtained in connection with an exit incentive or other group termination program, contain info regarding:• Job titles and ages of all individuals eligible or selected for the

program and ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program (the “decisional unit”);

• Any eligibility factors for the program; and• Any time limits applicable to the program.

Syverson v. International Business Machines Corp., 472 F.3d 1072 (9th Cir., 2006)

• That agreement provided that “this Release covers, but is not limited to, claims arising from the ADEA”, and also stated “[t]his covenant not to sue does not apply to actions based solely under the ADEA, as amended.” Id. at 1081-1082.

• IBM was sued by some of the employees who alleged that the agreement was not written in a manner to be understood by the average individual eligible to participate because it misled participating employees to believe that in addition to their unaffected right to file an ADEA claim with the EEOC, such individuals retained an independent right to pursue an ADEA claim in court. Id.

Syverson v. International Business Machines Corp., 472 F.3d 1072 (9th Cir., 2006)

• The plaintiffs also argued that there was confusion as to whether ADEA claims were covered by the agreement or exempted from it. Id. At 1082-1083. The agreement, on one hand, provides that all claims, including claims arising under the ADEA were released, and includes a covenant not to sue whereby the plaintiffs would never institute a claim of any kind against IBM.

• On the other hand, the agreement provides that the covenant not to sue does not apply to actions based solely under the ADEA. Id. at 1083. The Ninth Circuit found that the release did not satisfy the “manner calculated” requirement of the OWBPA and held IBM’s release to be invalid

Pagliolo v. Guidant Corporation, 483 F. Supp. 2d 847 (D. Minn. 2007)

• Guidant conducted a reduction in force for a number of companies under the Guidant umbrella and terminated 700 employees out of the approximately 8,700 employees that were considered for termination.

• Guidant provided the employees with a 184 page spreadsheet, containing 8,791 lines, setting forth the job titles, subtitles and birthdates of the employees considered for termination and identified about 700 employees eligible for severance.

Pagliolo v. Guidant Corporation

• Guidant listed 196 employees as terminated, who were not actually terminated, but were transferred.

• Had effect of understating the percentage of employees over 40 who were terminated by up 10 percentage points.

• Guidant asserted that it disclosed the decisional unit by listing nearly all of the United States-based employees, who were covered by the program.

• Guidant aggregated parts of 6 separate corporations into a single decisional unit.

Pagliolo v. Guidant Corporation

• Guidant did not identify the eligibility factors for the severance plan, as required by the OWBPA.

• “Eligibility factors” refers to the factors used to determine which employees were selected for the program, not just when and how selected employees become eligible for severance.

• OWBPA requires only a short statement setting forth all eligibility factors considered in general and not a disclosure of the factors that led to each individual employee’s selection for the termination program.

• Guidant provided DOBs, not ages.

WARN Act – 60 Days Notice

• Employer with 100 or more full-time employees must provide advance notice of any mass layoff or any plant closing. 29 U.S.C. § 2101(a)(1)(A).

• Employers that have 100 or more full-time employees and/or part-time employees, and those employees work more than 4,000 hours per week must also provide notice. 29 U.S.C. § 2101(a)(1)(B).