An Analysis of Employment Discrimination Claims Associated with Layoffs

Article excerpt

Furloughs are on the rise in the U.S. For the first time in more than a decade, most major employers reported layoffs in the 12-month period ending in June 2001 (Bureau of National Affairs, 2001, p. 1101). Prudent employers are hiring lawyers and statisticians to examine the impact of their proposed layoffs on women and other protected minorities. The authors examine actual employment discrimination claims filed after layoffs and present their findings as challenges that employers face when managing reductions in force. Smart managers will avoid the occurrence and perception of discrimination during layoffs.

Managers have ethical and practical interests in understanding patterns in employment discrimination claims. Those who want to create a discrimination-free workplace need to know the characteristics of employment discrimination associated with layoffs. Characteristics can highlight the most common perceptions of discrimination, and thus help managers intervene to prevent such perceptions. Moreover, resulting claims can be costly whether or not managers have legally discriminated when laying-off employees. To reduce costs, managers need to know where to devote extra attention and careful communication to reduce even perceptions that layoffs are discriminatory.

While many articles discuss hypothetical discrimination concerns associated with layoffs, no research to date has examined actual discrimination complaints. Some articles present philosophical perspectives on the ethical treatment of employees during retrenchment (Gilbert, 2000). Others report analyses of employee perceptions of fairness (or unfairness) and how managers can reduce perceptions that layoffs are discriminatory (Davy, Kinicki, and Scheck, 1991). Still other articles offer legal advice and discuss legal standards for nondiscriminatory treatment (Kleiman and Denton, 2000).

Examining actual discrimination claims provides real insights for action. The study reported in this article identifies characteristics of discrimination claims filed by employees following layoffs. It identifies the industries and jobs in which the discrimination claimants worked, the bases for their claims, the employers' reasons for laying them off, and other important characteristics. With this information managers should be better positioned to conduct layoffs in ways that reduce discrimination and claims.

The Problem of Discrimination During Layoffs

* Layoff trends

Announcements of layoffs have become common in the U.S. in recent years and are currently increasing. One trend causing layoffs is the decline of the manufacturing sector over the last two decades. In addition, U.S. corporations restructured and reengineered at a high rate during the late 1980s and early 1990s. Greatly assisted by advances in technology and pressures from global competition, a trend toward widespread layoffs of middle managers and professionals began. The recession of the late 1980s and early 1990s exacerbated that trend. Even during the rapidly growing economy of the mid- to late-1990s, announcements of reductions-in-force were commonplaces.

The boom economy of the mid- to late-1990s decreased the rate of layoffs, but the recent recession brought a new torrent. In November 2001, the National Bureau of Economic Research (NBER) reported that three of four economic indicators suggested that the U.S. economy was in a recession. Employment, industrial production, manufacturing, and retail trade indicated an economic downturn. Income, the fourth indicator, was the only one that did not point to recession. According to the NBER, employment is the most reliable indicator of recession (Bureau of National Affairs, 2001a). Amazingly, most major U.S. employers announced layoffs in the 12-month period ending in June 2001 (Bureau of National Affairs, 2001b). More recently, the number of mass layoffs has declined somewhat, but they continue to be common. …