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Avoiding claims of discrimination after post-merger downsizing

On Behalf of | Oct 8, 2024 | Business Law - Mergers

A variety of different workplace scenarios may result in workers filing discrimination claims against businesses. Sometimes, a single employee has experiences that lead to allegations of company misconduct. For example, if a worker loses their job after requesting disability accommodations, they may try to claim that the employer discriminated against them based on their disabling medical condition.

Employers typically need to be proactive about avoiding scenarios that can look discriminatory to outside parties. In theory, large-scale layoffs or staff reductions due to a merger are standard procedures for most companies that combine their operations with other organizations. However, workers may still take umbrage at the loss of a job and may look for means to secure financial compensation or regain their employment.

Occasionally, groups of workers may try to claim that an employer discriminated against them by considering their protected characteristics when laying them off or firing them after a merger. How can companies avoid such allegations when making widespread hiring and firing decisions?

Establish clear standards for retention

Deciding who keeps their job and who gets let go can be a very difficult part of merging with another company. Employers should not let nepotism, favoritism and personal bias influence that process. Before the organization makes any major decisions about staff reductions, leadership within the company may need to establish clear standards for who stays and who goes.

Seniority and job performance are often among the most important factors when deciding who keeps their job and whose position has become redundant. Employers should be very clear about what standards they use when making decisions and should enforce those standards consistently.

Review decisions before announcing them

Even when companies have clear standards in place, the employees applying those standards have inherent biases that can influence the decision-making process. Most people in managerial, executive or human resources roles know better than to overtly and openly discriminate against certain groups of workers.

However, their unconscious beliefs and preferences can have an impact on the choices they make. When presented with multiple employees with relatively similar seniority or performance metrics, they may select workers with certain protected characteristics for retention or termination even though doing so is technically illegal.

It is therefore beneficial to have at least one other professional review the list of workers selected for termination or layoff before making any official announcement. They may be able to identify a pattern to those choices that the workers who compiled the list may have failed to notice. The company then has an opportunity to make adjustments to avoid allegations of discrimination against certain types of employees.

Proactively preparing for employee-related complications that frequently arise after mergers can help companies take some of the risk out of a major business transaction. Being objective and fair when eliminating redundant positions can prove to be consequential when it comes to a company’s long-term success.