By Melinda Koster, Samone Ijoma and Sean Kolkey
This article first appeared in Law360 on March 14, 2023.
Melinda Koster
Samone Ijoma
Sean Kolkey
In recent months, mass layoffs have shaken the tech industry, among other sectors, and had a devastating toll on tens of thousands of employees.[1]
Amid a possible looming recession, many employers have cited financial woes and cost-cutting imperatives as grounds for implementing mass layoffs. But workers — and the public at large — should not accept these seemingly neutral explanations at face value.
Closer scrutiny of the recent wave of layoffs exposes disturbing trends that have the potential to change the landscape of corporate America.
As detailed below, a number of companies have terminated workers who were on parental leave; disproportionately subjected employees of color to terminations; and decimated diversity, equity and inclusion departments, all under the guise of cost-cutting.
While a reduction in force can present hurdles for employees to vindicate their rights, it does not insulate employers from liability for discrimination retaliation and other employment law violations.
In fact, courts, along with the U.S. Equal Employment Opportunity Commission,[2] have recognized that reductions in force can be discriminatory. Despite their appearance of objectivity, they are frequently used as a cover to mask intentional discrimination, thus giving rise to disparate treatment claims.
Moreover, even reductions in force that are executed for neutral reasons can disproportionately affect certain groups, thus paving the way for disparate impact claims.
In this article, we provide an overview regarding discriminatory reductions in force, discuss the core employee groups that have borne the brunt of these layoffs and explore potential recourses for employees in these affected groups. Finally, we provide concrete tips for how to spot discriminatory reductions in force and hold companies accountable for their wrongdoing.
Terminating Employees on Parental Leave
Many of the same tech companies that rolled out ostensibly generous parental leave policies and touted their support for caregivers are now terminating employees in the middle of their leave, citing mass layoffs as a seemingly objective rationale for their actions.
Recent reports have shared stories of workers who have been terminated under these circumstances, such as:
- An engineering leadership recruiter who was terminated just one month before the end of her maternity leave;[3]
- A data scientist who was lured to a software company by its paternity leave policy, yet was subject to a layoff in the middle of his leave;[4] and
- A couple with a 4-month-old baby that was hit with dual layoffs while one was already on leave and the other was poised to resume leave soon after [5]
While challenging an individual termination during a mass layoff can seem insurmountable, employees on parental leave have various legal protections that they may be able to deploy under these circumstances.
Family and Medical Leave Act Leave
Employees who take leave under the Family and Medical Leave Act to recover from childbirth or bond with their child are entitled to up to 12 weeks of job-protected leave.
Among the FMLA’s most powerful protections is that it guarantees workers a “right to reinstatement,” i.e., a right to be restored to the same or an equivalent position upon returning from leave.
This right comes with certain limitations, as the FMLA does not endow employees with a “greater right to reinstatement or to other benefits and conditions of employment than if the employee[s] had been continuously employed during the FMLA leave period.”[6]
Even so, this right to reinstatement equips workers with a powerful tool to challenge their terminations, as it places the burden of proof on the employer to disprove illegal conduct, rather than the other way around.
Specifically, under the FMLA, employers must demonstrate that they would have eliminated the employee’s position regardless of whether the employee took leave.[7] And workers on FMLA leave retain a presumption that they should have been restored to their original position at the expiration of their leave.
By placing the burden of proof on employers, the FMLA flips the script on traditional employment law frameworks, which put the onus on workers to prove their case.
Additional Protections
Beyond the FMLA, employees on parental leave may have recourse to challenge their terminations under other laws.
For example, mothers who recently gave birth can invoke Title VII’s protections against pregnancy discrimination and cite the close temporal proximity between their pregnancy and/or childbirth and their termination as indicative of pregnancy discrimination.
Moreover, parents terminated on leave may be able to assert claims for caregiver discrimination.
While there is no federal law that explicitly deems caregiver status to be a protected characteristic, recent EEOC guidance[8] and a myriad of court decisions recognize that employees can bring claims for caregiver discrimination where such discrimination is rooted in unlawful gender-based stereotyping — as is typically the case — or targets employees based on their race, ethnicity, religion or other protected characteristics.
In addition, certain states and cities expressly prohibit caregiver discrimination. Alaska, Delaware, Minnesota and New York, for example, all have state laws that provide some level of explicit protection against caregiver discrimination.[9]
Racial Discrimination in Mass Layoffs
Layoffs decimating the tech workforce are expected to hit underrepresented groups the hardest.
While research on the racial impact of recent tech layoffs is limited, one recent study from Revelio Labs found that tech layoffs have disproportionately affected Latino workers, who are already underrepresented in the tech industry.[10]
In addition, research on the racially disparate toll of past economic downturns strongly suggests that the recent wave of mass layoffs will hit Black employees especially hard,[11] threatening to exacerbate the already dismal representation of Black workers in tech.[12]
Recently terminated employees of color may have recourse under existing anti-discrimination laws if they can demonstrate that a reduction in force was implemented in a racially discriminatory manner.
Davis v. District of Columbia, decided by the U.S. Court of Appeals for the D.C. Circuit in 2019, is illustrative. There, Black Washington, D.C., government employees who lost their jobs as part of a reduction in force brought Title VII race discrimination claims against their employer.[13]
The plaintiffs pointed to statistical disparities in the termination rates of Black and non-Black employees and challenged their employer’s termination selection process, which entailed eliminating entire job categories in which Black employees were heavily concentrated and allowing managers to deploy subjective criteria to implement the remaining job cuts.
The D.C. Circuit allowed the plaintiffs’ disparate impact claims to proceed and, on remand, the district court concluded that the plaintiffs — who had demonstrated that Black workers were terminated at a rate of 15.5% — compared to 5.6% for non-Black employees — presented sufficient statistical evidence to make out a prima facie case of disparate impact discrimination.
One employment practice that is particularly rife for disparate impact claims is the “last hired, first fired” approach of terminating employees who have limited tenure at the company.
This seemingly objective approach to mass layoffs is problematic for employees of color, particularly for Black employees, who are already underrepresented in the tech sector and tend to have shorter tenures at tech companies relative to their white counterparts.[14]
Notably, in 2020, many tech companies engaged in more concerted efforts to increase the representation of employees of color, meaning that any last-in, first-out rubric used in recent layoffs is bound to disproportionately impact these same employees.
While employees of color terminated under these reduction-in-force procedures may face uphill battles in bringing claims for intentional discrimination — or disparate treatment discrimination — they will have ample grounds to challenge their company’s selection process through disparate impact claims.
Slashing DEI Roles
Over the last decade, and especially in the wake of what some have called the “racial reckoning” of 2020, companies have touted their commitment to diverse and inclusive workplaces, pledging financial and programmatic support to eradicate racial inequities.
As part of this professed commitment to confronting structural racism, Big Tech and other parts of corporate America increased demand for DEI roles by 55% amid racial justice protests; in some cases, these companies committed to filling those roles with candidates from underrepresented racial groups.[15]
These roles, however, have been among the first cut in the recent spate of layoffs.[16]
In a February study conducted by Revelio Labs, DEI roles “experienced a nearly 40 percent churn rate at companies engaged in layoffs, as compared to about 24 percent for non-DEI roles.”[17]
By cutting these jobs at such high rates, companies have made clear that DEI roles are disposable and that DEI efforts as a whole fall low on the list of corporate priorities.[18]
The decimation of DEI departments in recent months is poised to have a lasting impact on workplaces across the United States.
Mass layoffs targeting DEI talent, who are typically charged with increasing the representation of women and employees of color and promoting a corporate culture of inclusion, threaten to derail any progress companies have achieved.[19]
Research on the role of diverse workforces and DEI initiatives suggests that the gutting of DEI departments will stand to decrease the representation of Asian, Black and Latino employees,[20] leading to less racially diverse workforces, a decrease in employee morale[21] and produce toxic work environments conducive to higher rates of harassment.[22]
Disturbingly, Twitter, for example, not only slashed its DEI department down from 30 employees to just two, but it also disbanded its employee resource groups, or ERGs, altogether, including Twitter Women for female-identifying staff and Blackbirds for Black staff.[23]
These actions make it abundantly clear that the gutting of DEI departments is part and parcel of a pattern of devaluing DEI efforts.
One lawsuit, filed last year by a Black Google recruiter tasked with increasing diversity, highlights some of the broader resistance to DEI efforts that preceded the recent round of layoffs, including corporations’ hostility to DEI professionals who complain of systemic issues.
In that case, a former diversity recruiter succeeded in bringing more than 500 students from historically Black colleges and universities to the company. But, according to her complaint, when she pushed back on the institutional barriers faced by Black Google employees such as discriminatory pay practices, she was met with resistance and ultimately terminated in retaliation for calling out race discrimination.
DEI professionals targeted in these latest reductions in force may be able to follow in the footsteps of this Google plaintiff and bring similar retaliation claims if they can show that their firing was not a mere cost-cutting exercise but in retaliation for advocating for institutional reforms and raising concerns about discrimination.
The elimination of DEI departments has widespread ramifications that will likely spur additional discrimination lawsuits because, in the absence of trained DEI professionals to spot and redress systemic issues at the outset, discrimination is likely to run rampant.
Tips for Challenging Discriminatory Reductions in Force
There are a number of avenues for attacking suspect reductions in force:
Statistical Evidence
Statistical information can be a powerful tool in exposing reductions in force as discriminatory.
For example, in the wake of Twitter’s mass layoff cutting roughly half of its workforce in November, two plaintiffs filed a gender discrimination class action against Twitter and pointed out that 57% of Twitter’s female employees were laid off in early November — as compared to 47% of male employees — including 63% of its female employees in engineering-related roles, as compared to 48% of male employees in engineering-related positions.
Comparator Data
Employees who have been terminated as part of a reduction in force should examine what percentage of their team or department was laid off, who in their department has been retained, and the cited reasons for their and other employees’ terminations.
If, for example, a company terminated two female employees with unblemished records as a purported cost-cutting measure, yet spared all underperforming male employees in the same department, this would serve as compelling evidence of differential treatment.
Even wholesale cuts of entire departments can be grounds for discrimination claims, depending on the demographics of the department.
For example, as in Davis v. District of Columbia, Black employees would have recourse to bring suit when a company cuts a department or job category that consists predominantly of Black employees, yet retains a department that comprises mostly white employees.
Evidence of Prior Discriminatory Treatment
Reductions in force do not exist in a vacuum, and an employer’s prior course of discriminatory conduct is extremely relevant in challenging mass layoffs as discriminatory.
For instance, if an employee terminated while on parental leave previously endured hostile comments about her pregnancy and impending motherhood, such treatment underscores that her employer may very well have intentionally selected her for termination amidst its mass layoff.
Evidence of Protected Activity
Evidence that an employee engaged in protected activity preceding the reduction in force, such as by speaking up about institutional discrimination, can provide grounds for attacking it as retaliatory.
For example, a former employee who complained about a lack of diversity in hiring or challenged the company’s practice of paying women less than men may be able to show that their firing was merely disguised as a neutral business decision and in fact amounted to retaliation for raising concerns about discrimination.
Conclusion
Now more than ever, it is important that employees understand that reductions in force do not provide companies carte blanche to discriminate.
While employers may exploit mass layoffs as a tactic to disguise their wrongdoing, workers have a range of legal protections that they can leverage against companies engaged in discrimination.
Melinda Koster is a partner and a Co-Chair of the Discrimination and Harassment Practice Group at Sanford Heisler Sharp LLP.
Samone Ijoma is an Associate at the firm.
Sean Kolkey is a former Deborah Rhode Civil Rights Fellow at the firm.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] See, g., https://www.latimes.com/opinion/story/2023-01-17/tech-layoffs-stress-economy; https://www.forbes.com/sites/jackkelly/2023/02/07/layoffs-are-harming-the-mental-health-of-workers-making-them-feel-vulnerable-and-disposable/?sh=96b7eb6667e1.
[3] https://www.nytimes.com/2023/02/09/business/layoffs-parental-leave.html.
[4] Id.
[5] https://www.businessinsider.com/google-laid-off-mother-on-parental-leave-baby-father-too-2023-1.
[6] 29 CFR § 825.216(a)
[7] Id.
[9] Alaska Ann. §18.80.220; 19 Del. Code §711(K); Minn. Stat. §363A.08; N.Y. Exec. Law § 296.
[10] https://www.fastcompany.com/90837794/recent-tech-layoffs-affect-women-poc.
[11] See, e.g., https://www.rand.org/blog/2020/09/laid-off-more-hired-less-black-workers-in-the-covid.html.
[12] See, e.g., https://www.mckinsey.com/bem/our-insights/how-to-close-the-black-tech-talent-gap.
[13] Davis District of Columbia, 925 F.3d 1240 (D.C. Cir. 2019).
[16] https://www.washingtonpost.com/business/2020/07/15/diversity-jobs-coronavirus-george-floyd-protests/.
[17] https://www.reveliolabs.com/news/social/cutting-costs-at-the-expense-of-diversity/.
[18] According to a Monster.com report from January 2023, “11 percent of companies said [DEI] programs were ‘among the first to go’ when it came time to tighten the belt, falling right behind events and bonuses.” https://www.law360.com/employment-authority/discrimination/articles/1575946/4-employer-tips-for-de-i-on-a-budget.
[19] https://www.reveliolabs.com/news/social/cutting-costs-at-the-expense-of-diversity/.
[20] Id.
[21] Id.
[22] https://www.eeoc.gov/select-task-force-study-harassment-workplace.