Wrongful termination happens.

The Mistake.

ABC Company’s revenues were down because the sale of its product had almost come to a halt. To stay afloat, the company decided it must layoff 25% of its work force. However, through an investigation by the EEOC, it became clear that a majority of the terminated staff was over the age of 40. The terminated employees banded together to sue the company for age discrimination. The EEOC offered a right to sue letter to the class who pursued the claim directly against the company. Based upon the disproportionate number of older workers laid off, the company settled.

The Consequences

Defense costs: $172,000
Indemnity: $425,000
Total Cost: $597,000

The Avoidance

  • Test for adverse discrimination of all groups prior to conducting a layoff.
  • Seek advice from a labor attorney before conducting any layoffs.
  • Document the employment file with signed performance evaluations and other facts related to the employee job performance. Use standard evaluations so they can be compared to over performers.
  • Provide terminated employees with facts other than age or other potentially discriminatory reasons in writing.