Case 2

Case 2:

Struggling companies are often forced to lay off workers to survive. But employers that keep hiring even as they lay off workers are flirting with the possibility of litigation.

For example, Microsoft recently announced plans to lay off 5,000 workers—a move expected to save the company $1.5 billion. At the same time, the company said hiring would continue—up to 3,000 new employees who are targeted for businesses that continue to grow.

While it’s dicey, many employers say simultaneous layoffs and hiring let them get rid of underperformers and higher-cost employees and bring in upgraded talent, often at a lower cost. However, the practice can increase the chances of being served with a discrimination claim.

In 2008, for example, Dell was named in a $500 million class-action suit claiming that the company’s layoff of nearly 9,000 employees targeted female and older employees. The suit accuses management of doctoring performance evaluations to justify terminating certain employees (who were then told no other jobs were available when, in fact, open positions existed).

Hiring during a layoff presents risks. The lowest risk would occur if an organization has several business units, each affected differently by economic conditions. There, the employer could lay off workers in one division while continuing to hire in another. The risk is also lower in companies that lay off workers and then change or consolidate jobs before hiring new workers to fill them. However, the risk of exposure increases when an employer lays off workers and hires others to fill the positions without first modifying the jobs or their duties.

Here is a question that may help you in the analysis

Question

If you’re an employer who’s laying off workers but still hiring, what could you do to minimize the risk of a discrimination lawsuit?

Source: Fay Hansen, “Mass Staff Cuts Don’t Slam the Brakes on New Hires,” Workforce Management, February 2009,...