Orlando partner Kevin Shaughnessy was quoted in a February 12, 2009, Workforce Management article, "Mass Staff Cuts Don’t Slam the Brakes on New Hires."
According to the article, companies hiring new employees in the middle of a mass layoff reflects a broader trend under way. Nearly two-thirds of employers plan to lay off workers in 2009, but many will not freeze hiring. Instead, companies will continue to hire new employees for their still profitable units, upgrade their talent and replace higher-cost employees with lower-cost new hires. Hiring during layoffs, however, increases the likelihood of a discrimination lawsuit.
A sharp increase in discrimination lawsuits triggered by recent layoffs is already apparent, according Shaughnessy. "We've seen an extreme rise in claims nationwide, and not just age claims, but race and gender discrimination claims as well. Employer concerns about laying off older employees are well founded, but these actions can be managed. If money is the only issue and you can hire cheaper, you have to justify the disparate impact on older workers. The company can still be profitable, but it becomes more difficult to justify the layoff if there are no pressing economic factors," Shaughnessy said.
Exposure to a lawsuit can be reduced if the employer considers the laid-off employees for the open positions and those positions can be distinguished from the jobs included in the layoff, according to the article. "If the job title is similar, employers must carefully evaluate the job description for the open position," Shaughnessy said. Shaughnessy advises employers to keep careful records on the business reasons for the layoff, the selection process used and the difference between the jobs that were eliminated and the jobs where hiring is taking place.
"In a large layoff of thousands of employees, there is some safety in the numbers, and it is less likely that the company would have engaged in discriminatory actions," Shaughnessy said. "Financial considerations are paramount." Shaughnessy noted, however, that laying off senior people and hiring new employees at lower salaries can undermine trust in the company. The remaining employees may wonder at what age they will be terminated. "There is a tremendous morale upheaval during a layoff and this is exacerbated by bring in new employees," he said. Shaughnessy said that there should be an explanation for the layoffs and the new hiring that is taking place. "For example, explain that one product line is not profitable and layoffs are needed, but another product line is profitable and requires a slightly different skill set from the first. This doesn't end the angst, but it can go a long way to ensuring less upheaval."