Thursday, February 4, 2010

6th Circuit downgrades importance of statistics in reduction-in-force cases

Yesterday, I discussed a 6th Circuit decision that provided guidance to employers on how not to RIF an employee on FMLA leave. Today, I’m going to examine another decision out of the 6th Circuit this week on the issue of RIFs, which clarifies what a laid-off employee has to prove to establish age discrimination following a reduction in force.

RIFs provide a built-in protection for employers in age discrimination cases, because the legitimate non-discrimination reason for the termination – the economic necessity for the workforce reduction – is established from the outset. Thus, employees challenging a RIF on account of age have a higher prima facie burden. When a termination arises as part of a work force reduction, the plaintiff must provide “additional direct, circumstantial, or statistical evidence tending to indicate that the employer singled out the plaintiff for discharge for impermissible reasons.”

In Schoonmaker v. Spartan Graphics Leasing (6th Cir. 2/3/10) [pdf], the plaintiff claimed that the fact that her employer retained younger employees in her position, and that her employer RIFed the two oldest employees, satisfied the “additional evidence” necessary to overcome the employer’s economic justification for the RIF. The 6th Circuit correctly rejected this assertion, and in doing so put a dagger through the heart of the use of bald statistics of small samples in RIF cases:

If the plaintiff’s case-in-chief is viewed as satisfying the requirements for a prima facie case of age discrimination, then every employer who terminates an employee between 40 and 70 years of age under any circumstances, will carry an automatic burden to justify the termination….

[S]tatistical evidence may satisfy the fourth element in a work force reduction case ... [but] such a small statistical sample is not probative of discrimination.

In other words, in RIFs with a small sample size, an employee will have to come up with evidence other than pure statistics to go forward with a discrimination claim – evidence that that RIFed employee was objectively more qualified than the younger retained employees.

Despite this case, employers act at their own peril by ignoring statistics. Before any RIF is finalized, businesses should be analyzing the numbers across all key demographics, in addition to comparing the relative qualities and qualifications of the departing versus the remaining. Performing this diligence may not prevent a lawsuit from being filed (especially if the raw numbers appear to look discriminatory), but it will give you the necessary ammunition to defend any subsequent discrimination lawsuits that are filed.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or