This is an important age discrimination case for the times we are in: Carras v. MGS 782 Lex, Inc.. The Second Circuit Civil Rights Blog writes about it here.
In this previous post here, I have written about how targeting for layoff those employees who are costing the company more when it comes to health care costs or pension costs is unlawful under ERISA Section 510. The Carras case, however, involved targeting for layoff an older employee who was costing the company more when it came to his salary. (Benefits were not discussed.) Unfortunately, the case involves what is probably a likely scenario in our day: an older higly-paid worker being replaced by a younger less-experienced worker for “cost-cutting” reasons. Excerpt from the case:
Although the record shows that MGS was in a difficult financial position and was attempting to cut costs, the District Court’s repeated references to the company’s financial situation reflect, in our view, an impermissible weighing of the evidence. For example, although the District Court acknowledged plaintiff’s offer to work for a reduced salary, the Court concluded that “even a $60,000 salary would have presented a substantial [financial] issue.” (Opinion 14.) However, a jury could have determined, based on plaintiff’s offer to work for less than what was paid to Winegard, that the employer’s motivation for firing him was not cost cutting but was rather discrimination against his age.
Bottomline: Employers need to tread carefully as they contemplate cost-cutting measures. Engaging a good employment lawyer who can guide the employer through the process is a good first step in avoiding unwanted litigation. However, employers also need to consider the long-term impact of losing the wealth of knowledge and experience that older, albeit more experienced workers bring to the table. While the economics of our times will likely drive many employers to take some drastic measures, they should remember that when things turn around, it may be difficult to find experienced workers as the demographics of our society play out. Employers will likely see more competition in the future in terms of filling their employee ranks when it comes to highly skilled workers. And, of course, benefits will play a big part in how employers fare in that competition.