Articles Posted in Downsizing

Yarelyn Mena and Edgar M. Rivera, Esq.

On October 15, 2013, after twenty-five years of employment Dr. Farrokh Seifaee was one of fifteen employees terminated from AREVA, Inc. (AREVA) as a part of a reduction in force (“RIF”). The group of fifteen all had one thing in common: every member was over the age of fifty-five years old. On May 12, 2014, Seifaee filed a complaint alleging age discrimination in violation of the Massachusetts Anti-Discrimination Law and the Age Discrimination in Employment Act (ADEA).

In 2011, AREVA lost funding on major projects, resulting in several layoffs in an initial RIF. For the next several years, Seifaee’s team and various others had little work to do as projects began to diminish. In September 2013, AREVA’s management began preparing for another RIF. Department heads, including Seifaee’s supervisor Bret Boman, created criterion to determine which employees would be laid off. The criterion considered business needs, current and past evaluations of each employee, and the employee’s critical or unique skills. Each employee was rated on a scale from one to ten, along with written documentation supporting the evaluation.

On September 15, 2014, the Federal Court for the Southern District of Georgia denied summary judgment for the defendant on all but one part of the plaintiffs’ complaint in Dyals et al v. Gregory et al. In this age discrimination case, plaintiffs claim that newly-elected Sheriff Tommy Gregory terminated both plaintiffs Roger Dyals and Dee Grant Porter because of their age, in violation of the Age Discrimination in Employment Act (ADEA). Plaintiffs also allege they were subject to unlawful retaliation when they were not called back to their jobs after filing age discrimination complaints with the EEOC. Dyals also asserts a claim for unpaid overtime under the Fair Labor Standards Act (FLSA), along with a connected FLSA retaliation claim. The court rejected both of these retaliation claims, but found that the plaintiffs had provided plenty of evidence to support prima facie ADEA and FLSA claims.

The plaintiffs were both deputies in the Camden County Sheriff’s office, Dyals for about nine years and Porter for about six years, until both were laid off on June 29, 2011. Sheriff Gregory justified the layoffs of these two employees by pointing to a reduced department budget, which required him to decrease labor costs, claiming that the budget had decreased by about $600,000 from the previous year.

Section 623(s) of the ADEA states that it is “unlawful for an employer to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age.” A plaintiff may establish a claim of illegal age discrimination by citing either direct or circumstantial evidence. When the evidence is circumstantial, as in this case, the court employs the McDonnell-Douglas burden-shifting framework–the plaintiff first establishes a prima facie case of discrimination, then the employer asserts some legitimate non-discriminatory reason for the adverse employment action, then the plaintiff tries to show that this proffered non-discriminatory reason is pretextual and that the real reason for the employer’s action was discriminatory.

On September 18, 2014, the Equal Employment Opportunity Commission (EEOC) filed a complaint in the case Equal Employment Opportunity Commission v. GAF Materials Corporation (GAF). GAF is accused of discriminating against employee Irvin Carter by denying him the opportunity to retain his job by “bumping” a less-senior employee and taking his or her job, as allowed under the company’s collective bargaining agreement, during a layoff. The EEOC alleges that GAF denied Carter this opportunity based on incorrect and extremely outdated information about his ability to do a different job given his well-documented disability.

Mr. Carter had been injured while working at GAF in 2003, resulting in the amputation of his right hand below the wrist. The loss of his hand substantially limited his ability to perform manual tasks at first; most relevantly, he could only lift 5 pounds with his prosthesis and 11 pounds with both arms. These limitations rendered him unable to perform his old job, but since he had seniority over many other workers he was transferred to a different job that he could perform.

Meanwhile, he continued to go through physical rehabilitation and therapy, and he eventually became able to lift 90 pounds, which is the limit for his prosthesis. Meanwhile, the company went through a succession of layoffs. During the first layoff, in 2012, Carter bumped a less-senior worker to obtain a forklift driver position. Then, during a second layoff later in 2012, Carter was himself bumped from this position by a more senior co-worker. He still had seniority over many other employees, so he sought to bump a different employee and claim one of the many other positions he was qualified to perform. However, the company then decided that he was not physically qualified for any other available positions because of physical limitations and effectively terminated his employment.

On May 27, 2014, a a judge from the U.S. Discrict Court for Arizona granted a Petition for Temporary Injunction in Overstreet v. Gunderson Rail Services LLC under Section 10(j) of the National Labor Relations Act. The Court found that NLRB Regional Director Cornele A. Overstreet was likely to succeed in showing that Respondent Greenbrier Rail Services (Greenbrier) had violated the NLRA by engaging in a broad and sustained campaign to prevent employees at its Tuscon facililty from joining a union. The Court found that several different actions by the company were in violation of the NLRA, and that the Court must “take into account the probability that declining to issue the injunction will permit the alleged unfair labor practices to reach fruition and thereby render meaningless the Board’s remedial authority.” In the end the Court determined that the appropriate remedy under Section 10(j) was to “take measures designed to recreate the conditions and relationships that would have been had there been no unfair labor practices;” thus, the Order requires the company to do things like rehire employees who had been laid off, re-open its Tuscon facility, attempt to restore its business relationship with customers, and undertake collective bargianing with the union.

The Court found that the Petitioner “has shown that he is likely to prevail on his position” regarding several allegations regarding illegal union-busting activities, including:

1. Laying off 1/3 of its Tucson workforce in response to union activities:

Employers who fail to provide their employees with timely notice of expected employee downsizing or closing of operations may be liable for back pay and employment benefits even after shutting down operations. Under the Federal Worker Adjustment and Restraining Notification Act (“WARN Act”), employers are required to provide employees with 60 days’ notice that it may shut down or lay off a significant number of workers. The state of New York has its own version of this federal law, the New York State WARN Act, which requires 90 days’ notice. These mandatory notice periods are intended to provide employees with an opportunity to begin seeking another job, or make adjustments he or she may deem appropriate to compensate for an expected loss of their job.

The NY WARN Act provides a broader protective scope than the federal WARN Act because it includes workers whose employers have more than 50 full time employees, while the federal law only applies to employers with more than 100 full time employees. The New York law also defines the status of shutting down operations as the termination of at least 25 employees, as opposed to the 50-employee minimum under federal law, at a single site of employment. Also, under the New York WARN Act, multiple offices of an employer may be considered as a “single site of employment” if they are located in “reasonable geographic proximity.” Other factors that are taken under consideration to determine whether different subsidiaries or affiliates are a “single employer” include common ownership, common directors or officers, consistency of personnel policies coming from a single source, de facto control and the dependency of operations.

Each law allows for recovery of $700,000; however, a recent decision by the Southern District of New York (S.D.N.Y) established that employees are not able to collect maximum damages under both laws for claims arising out of a single incident. Courts are required to reduce any liability imposed by state law with liability already imposed by federal law; this way, employers would not have to face double liability. In 1199 SEIU United Healthcare Workers East v. South Bronx Mental Health Council, Inc., the court reduced the amount of damages available to the employers to $500,000, denying them the ability to recover under both statutes because the employer’s violation of both statues arose from a single act.