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Recent Federal and State court cases involving reductions-in-force (RIF) clearly show that employers must be very careful in applying a performance appraisal system to a reduction in force situation. You can learn the following from these cases:

  1. When reviewing plans for a RIF, it is important that the Company track where work will be assigned and who will be assigned.
  2. Statistics regarding the RIF must be carefully analyzed.
  3. Performance appraisal systems which are already in place are more credible for RIFS.
  4. Forced ranking of employees established at the time of a RIF can be dangerous.
  5. The three rules of performance appraisals are “objectively,” “objectivity,” “objectivity.”

RIFS THAT WORK

This case involves the processing of a RIF. The judge affirmed a summary judgment decision which found that there were legitimate age neutral reasons for laying-off the fifty-three (53) year old employee.

The employee was transferred to another department after receiving notice of a lay-off. At that time, he was the highest paid employee in his group. In his mid-year performance review, he was rated as “needed improvement” in eleven out of twelve performance factors. The specific objective factors found him reading magazines on the job, sleeping at a meeting, leaving work early, and doing an absolute minimum of his job requirements.

It is important to note that the employee received the lowest rating out of (144) employees. The employee evaluation program involved technical issues, as to technical capability, skills applications, personal commitment, and team building.

During this RIF, the Company’s RIF guidelines included an employee’s most recent performance evaluation, five (5) year merit increase history, and a list of employees ranked according to their score. The employee discussed herein alleged that his prior performance appraisals were positive, and therefore, were motivated by age, bias animus.

COMMENTS

Interestingly, the court noted that in RIFs, even employees who perform capably are let go, and they even went against other court of appeals by stating that the manager’s concern was how his performance is related to his high salary, rather than his age. Generally, high salary is a dangerous criteria for RIFS. The court also noted that ten (10) employees who were under forty (40) years of age received low scores.

This case stands for the practical proposition that in RIFs, if an individual’s performance is merely inadequate, not completely unsatisfactory, they can be scheduled for a RIF. It is also important the more than one performance.

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