Age Litigation during Uncertain Times

Economic downturns bring out employment litigation. Today's decision of the Sixth Circuit involved economic uncertainty and a downturn in the telecom industry during the early part of the decade. Like most companies, Lucent, faced with a need to restructure, offered voluntary reduction packages to its union employees; participants were then selected based on their relative seniority. For reasons, unnecessary to explain here, Lucent later offered a second, more generous buyout, the first group of employees sued, claiming they were the victims of age discrimination.

The employees' age discrimination claimed failed for two reasons. First, when employees accept a voluntary reduction offer, they can't establish an adverse employment action, even when there is economic pressure (i.e., take it or lose it) on the employees. Second, the employees could not prove an unlawful motive because basing a buyout program on employee seniority is not intentional discrimination because of age.

The employees might have better luck trying to establish a disparate impact claim, a claim where employees need not show intentional discrimination, just a practice that unreasonably disadvantages older workers. After all, there is likely to be a statistical correlation between high seniority and age. The employees tried to argue this, but the first rule in bringing a disparate impact claim is to show a discriminatory impact. That requires statistics, specifically, identification of a practice that causes a statistically significant imbalance. No statistics, the court said, no luck. Even if they had statistics, they would probably have still lost because the union contract obligated the employer to select employees by seniority. (That would have been an interesting issue to litigate.)

The case is a lesson for the current economic times. Two Supreme Court decisions allowing disparate impact age claims have created huge uncertainty right when many employers must make significant cutbacks. Wise employers plan workforce reductions carefully, using, as much as possible, well-designed voluntary reduction incentive programs.