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Trap for the Unwary: Elimination of the Position as Opposed to Termination for Cause

Posted in Labor Law, Reductions in Force, Retaliation and Wrongful Termination

Employers sometimes see a position elimination or reduction in force as a way of terminating employees that is kinder and gentler than termination for cause.  Position eliminations and reductions in force allow an employer to say goodbye to an employee without having to lay out the reasons for the separation on the employee’s door step.  It is, after all, easier to say the “business won’t support your continued employment,” than it is to say, “we don’t like your work.” While some people may embrace confrontation, my experience has been that most employers don’t like to frankly tell their employees that their work performance is inadequate.  Employers or managers can feel nitpicky, impolite, and discourteous, when they document an employee’s performance deficiencies.

This discomfort can result in inflated job performance evaluations (giving, for example,  a marginal employee a satisfactory rating and a satisfactory employee a “walks on water” rating).  But real dangers can arise when employers try to avoid an honest communication with employees.  That is because employment cases are less about “what” an employer did.  It is lawful to fire an employee.  It is unlawful to fire an employee for unlawful reasons (such as the employee’s race or religion).  As a result, the question in most wrongful termination cases is: Did the employer have a legitimate lawful reason for the termination?   Courts can’t open up the employer’s head and find the reason, so courts look to surrounding facts and circumstances to determine the employer’s motives.

In order to prevail in a discrimination claim against a defendant, a plaintiff must establish, for example, that she was adequately performing her job, that she is a member of a protected class, that she suffered an adverse job action, and some additional fact or facts would suggest that the plaintiff’s protected class status was a factor in the employer’s adverse employment action.

The burden then shifts to the defendant to state a legitimate nondiscriminatory non-retaliatory reason for the adverse employment action.  (Something like, “his performance was inadequate,” or “he stole money from the cash drawer,” etc.)  The burden then shifts back to the plaintiff to present evidence that the stated legitimate reason for the termination or adverse employment action is a pretext for illegal discrimination.  Often plaintiffs can do this by pointing to the fact that similarly situated persons not in a protected class or who engaged in the same conduct were not fired or did not suffer the same adverse employment action as the plaintiff.

Another way for a plaintiff to meet the burden of establishing pretext is by showing that the stated reason is a false reason.  That is the hidden danger of claiming the need for a reduction in force or a business restructure in lieu of terminating an employee for cause.  Employers often think, mistakenly, that simply saying your position has been eliminated can avoid all the messiness and explanation required of a termination for cause.  This just isn’t true. Employers can still be challenged by an employee who claims that the reduction in force is merely a pretext for a discriminatory (and illegal) termination of employment.  Reductions in force can be complicated things.  After a company makes a decision to reduce the number of full-time positions, it will have to establish or demonstrate a legitimate business objective (to reduce costs, reduce or eliminate losses, etc.) and to demonstrate that its selection of the plaintiff for the position elimination was not itself discriminatory.  Many employers who rely on a position elimination don’t bother to do the ground work of establishing a neutral selection criteria that results in the selection of candidates for a reduction in force. Without that ground work being done, employers can end up with egg on their faces when a plaintiff says “okay, you had to eliminate a position, but why my position?”  Another danger is that employers will claim a reduction in force may re-fill the position that they told the plaintiff they were eliminating.  Such a fact, if proven, could easily support a claim that the employer’s stated reason for termination was a pretext for discriminatory intent.

Finally, you should recall that an employer who has to change reasons for an adverse employment action is already helping a plaintiff prove that the stated reason is a pretext for an illegal reason for termination.