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RIF Leads to $6.2 Million Age Discrimination Verdict

When a company reduces its workforce, it is typically to reduce costs after a decline in business.  It is therefore ironic when such expected cost-saving measures cost millions of dollars in damages and legal fees.  That is exactly what happened in the Pennsylvania case of Marcus v. PQ Corp., where the jury awarded two laid off employees a total of $6.2 million on their age discrimination claims.

As part of PQ Corp.’s reduction in force, eight of the 56 employees in the research and development unit were laid off, including the two plaintiffs.  The problem for PQ Corp. is that while only 17 of the 56 employees in that unit were 55 or older, all eight laid-off employees were at least 55.  Moreover, the average age of retained employees was 45, while the average age of terminated employees was 62.

The two plaintiffs argued that those statistics proved willful age discrimination, particularly since there were younger employees who met the criteria for termination but were retained.  Although the company offered age-neutral explanations in response, the fact that those reasons changed over the course of the litigation (which began in 2006) undercut the credibility of those explanations.

Because the jury found willful age discrimination, the plaintiffs were awarded double their back pay under the federal Age Discrimination in Employment Act.  Worse yet, the majority of the total damages were “compensatory” emotional damages awarded under Pennsylvania law.

The lesson for employers is that when a RIF is necessary, make sure you have an appropriate, documented explanation as to why employees were selected for termination, particularly if your statistics show a disproportionate number of older workers have been selected.  Also, be sure you’ve completed an adverse impact analysis so you know when a disproporationate number of protected employees are going to be laid off.  With this knowledge, competent legal counsel can help you take appropriate steps to minimize the risk of liability down the line.

Brody and Associates regularly provides counsel on civil rights issues and employment litigation in general.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.