Dire economic conditions or loss of contracts sometimes require that employers make reductions in force, commonly referred to as a “RIF.” Such reductions may trigger unexpected consequences for employers, such as disparate impact claims, if a group of employees who are members of the same protected category, is affected at a higher statistical rate than a different group. For example, if a company reduces its workforce by 100 employees and 60 of those employees are Hispanic, the company may face a discrimination claim as the RIF had a disparate impact on the Hispanic employees when compared to employees of other races.
Before implementing a RIF, a company must establish criteria for selection of employees to be included in the RIF. The selection criteria should not include any categories protected under the law. Instead, it should include objective criteria to be evaluated prior to implementing the RIF.
There are federal laws under which employees could bring claims of disparate impact discrimination as a result of the RIF. For instance, the applicable federal law is Title VII of the Civil Rights Act of 1964 (“Title VII”), and the equivalent state law is the Florida Civil Rights Act (“FCRA”). Both statutes apply to employers with 15 or more employees.
In addition, the Worker Adjustment and Retraining Notification Act of 1988 (“WARN Act”) requires employers with 100 or more employees to provide advance notice of at least 60 calendar days prior to any plant closing or mass layoff. If the employer meets the requirements under the WARN Act, notice must be given to the employees, labor unions, local chief elected official like the mayor, and the state dislocated worker unit.
There are many considerations involved in determining whether the WARN Act applies and to what extent. In a recent case in the Southern District of Florida, Hartel v. Unity Recovery Ctr., Inc., No. 16-80471-CIV-COHN/SELTZER, 2017 U.S. Dist. LEXIS 11628 (S.D. Fla. Jan. 26, 2017), Unity placed plaintiffs on paid leaves of absence, indicating that they would be on leave for at least 30 days. In addition, Unity promised plaintiffs that if it terminated their employment during the leave, they would be entitled to severance. Unity never informed plaintiffs that their leaves were over after the 30 days ran out. Instead, almost two months later, Unity informed plaintiffs that they were being terminated. Unity later closed its operations and laid off all of its employees. Plaintiffs filed a lawsuit against Unity under the WARN Act.
The court granted summary judgment in part and dismissed the WARN claims. The court found that plaintiffs failed to establish that they were “affected employees” under the Act because they did not have a “reasonable expectation of recall” after their leave period was exhausted, which was before Unity closed its operations and laid off all of its employees.
Lawyers from BT Law Group have extensive experience advising clients about, and litigating, claims involving the WARN Act. If you need assistance navigating this complex area of the law, please contact the attorneys at BT Law Group for a consultation.