It goes without saying that employers are entitled to eliminate positions—and eliminate employees—based on economic business considerations. Known colloquially as a “layoff,” termination of employment because of a reduction in force has important legal ramifications with respect to potential employment discrimination claims brought by former employees. Simply put, in Ohio if a reduction in force occurs because of economic necessity, a former employee’s burden of proof in establishing discrimination is higher. For example, in the context of a reduction in force, a prima facie case of age discrimination is only established once the employee shows that he or she was actually replaced by a younger person, and an employee must come forward with additional direct, circumstantial, or statistical evidence that age was a factor in the termination.
When confronted with a legitimate reduction in force defense, it is not surprising that plaintiffs tend to argue that their termination was not actually a result of a reduction in force. One strategy for doing so is to demonstrate that the termination occurred “too long after” other layoffs and/or the economic event precipitating those layoffs—especially where the layoffs occur in stages or gradually over time.
A recent Ohio appellate decision undermines the significance of the time between the events that result in the reduction in force and the time of a particular employee’s termination. In Weisfeld v. PASCO, Inc., 9th Dist. No. 26416, 2013-Ohio-1528 (Summit Cty. Apr. 17, 2013), the Ninth District determined that a plaintiff could not overcome an employer’s reduction in force defense simply because the plaintiff was terminated more than a year after the economic event precipitating the reduction in force. In Weisfeld, a consulting company lost the contract of its largest client in 2009, and as a result the company was forced to lay off around 80% of its workforce. Most of these layoffs happened shortly after the contract expired, but a handful were not made until the following year. Plaintiff, in fact, was not terminated until more than a year after the loss of the contract. He brought suit against the employer for age discrimination. In moving for summary judgment, the employer relied on the reduction in force defense. Plaintiff countered that the company’s actual reduction in force occurred at or near the time the contract was lost—long before plaintiff’s termination—and thus his release was not the subject to a reduction in force.
Upholding summary judgment in favor of the employer, the 9th District found that the time gap between the loss of the contract, the primary layoff, and plaintiff’s termination was immaterial despite that fact that more than a year had elapsed before plaintiff was terminated. Weisfeld makes clear that a plaintiff must demonstrate something more than a mere delay in termination to defeat a summary judgment motion based on reduction in force. Even more than a year delay does not create an issue of fact sufficient to overcome evidence that the termination of an employee is motivated by economic concerns.
The Weisfeld decision strengthens the reduction in force defense by eliminating an argument that laid-off plaintiffs might use to create an issue of material fact based on the passage of time. This is important because often reductions in force do not take place at once. To ensure stability and a smooth transition, downsizing generally must be completed in phases. Weisfeld reassures employers that they need not hastily reorganize personnel—or rush to institute layoffs—for fear of losing a legitimate reduction in force defense to discrimination claims.
With that being said, employers should be aware that an employee is not eliminated as part of a reduction in force where he or she is replaced after his or her discharge. A redistribution of a laid off employee’s work among other existing employees already performing related work tasks does not constitute a “replacement” and will not forfeit the reduction in force defense.
If you would like a copy of the Weisfeld decision, or have any questions with respect to employment law or any other employment practices liability issues, please contact a member of our D&O and Employment Practices Group.
