Brace for [Adverse] Impact: EEOC Rules IBM Layoffs were Discriminatory
Reductions in force (RIFs). Layoffs. Downsizing. No matter what you call it, workforce reduction is no HR professional’s dream. However, when layoffs are unavoidable, it’s important that they’re handled as thoughtfully and carefully as possible. RIFs alone can easily cause your thoughts to spiral into the courtroom before a single notice is issued, but statistical analysis can help identify areas of concern before they become, well, concerning.
IBM’s layoff process was recently scrutinized, and the company will be paying for it for quite some time. When the U.S. Equal Employment Opportunity Commission (EEOC) took a closer look at IBM’s layoff practices from 2013 to 2018, the numbers simply did not compute. Upon analyzing IBM’s process, the EEOC found that employees aged 40 and older comprised more than 85 percent of the total potential pool of employees considered for layoff. Not only did IBM’s practices raise questions under the Uniform Guidelines on Employee Selection Procedures (UGESP), but the company violated the Age Discrimination in Employment Act (ADEA), since employees 40 years and older fall into a protected class.
After crunching the numbers, the Equal Employment Opportunity Commission was convinced that IBM’s employment practices had an adverse impact. This meant there was “a substantially different rate of selection in hiring, promotion, or other employment decision which works to the disadvantage of members of a race, sex, or ethnic group” (UGESP). Because the layoffs disproportionately affected older employees, IBM’s process was deemed discriminatory.
As part of any RIF, it's imperative for employers to check for bias by conducting an adverse impact analysis. This analysis should consider whether the layoffs will disproportionately affect any protected groups. If the analysis reveals a statistically significant layoff rate based on any prohibited factors (e.g., age, race, or gender), it’s crucial to delve deeper to understand the underlying reasons. It's important to note that numbers alone don’t necessarily indicate discrimination. However, an upfront adverse impact analysis can draw attention to potential areas of concern, potentially averting future scrutiny. And yes, Onwards HR can assist in analyzing your severance events for compliance with ADEA (and WARN, ADA, and Title VII, for good measure).
Employees in protected groups should be eliminated at a rate equal to or below the average rate for all employees being laid off. If one group has a surprisingly high percentage of layoffs, you know you’ve found an area that might raise eyebrows. The UGESP has made it clear that “any procedure having adverse impact constitutes discrimination unless justified.” Chances are that your RIF was driven by financial reasons, and the last thing you want is to open yourself up to the economic burden of litigation.
When it comes to managing a RIF, compliance is critical. By automating the offboarding process, employers can benefit from compliance assessment tools, a priceless perk if it means steering clear of discrimination and wrongful termination lawsuits. Layoffs aren’t fun for anyone, so it’s imperative they’re done correctly – with adverse impact top of mind. Otherwise, your workforce reduction could quickly transform from a chaotic quarter to a multi-year legal battle. Just ask IBM.
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