This paper examines a downsizing scenario at a small microbrewery in which three of five employees must be terminated. Each employee's situation is evaluated individually against relevant federal employment law, including Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the National Labor Relations Act. The analysis weighs performance records, absenteeism, protected group status, and future role viability to determine which employees should be retained and which should be let go. The paper concludes with implementation guidance on severance, retraining assistance, and strategies for minimizing post-termination litigation risk.
This paper investigates a number of different scenarios involving five employees whose circumstances must be taken into account before decisions are made about their futures with the company. Each decision is supported by an analysis of the situation using the relevant legal framework. In general, companies are permitted to terminate employees when the termination is part of a downsizing, which is the case here. Naturally, the issue of severance must be considered for each employee in question. The paper discusses each individual employee and his or her situation separately, and then renders a final decision about who to terminate at the end of the report. The microbrewery is assumed to be a qualified company with at least 15 employees, as this threshold is necessary for several of the relevant federal statutes to apply.
Employee #1 is a member of a protected group. His performance has been above the median, giving him a favorable position relative to any underperforming employees. He has strong educational credentials and no track record of absenteeism. He has made a casual inquiry about labor organization, and his position is being made redundant. He also has some reported difficulty communicating with other employees.
He cannot be removed on the basis of his race under Title VII of the Civil Rights Act, nor can his above-median performance be used as grounds for dismissal. His communication issues are generally insufficient grounds for termination. First, citing communication as a reason for dismissal could raise the inference that the decision is race-based. Second, for a fluent English speaker, a minor communication deficiency is unlikely to hold up if the dismissal is challenged. However, companies are permitted to remove employees for whom there is no longer a position, and under such circumstances an employee can reasonably be downsized.
There is also the question of whether his inquiries about organizing create legal exposure for the company. The National Labor Relations Act forbids an employer from firing an employee "because you join or support a union, or because you engaged in concerted activity for mutual aid and protection" (Department of Labor, 2012). His activities could potentially be construed as such, though at this point they appear to be informal. It would be unwise to release him on the basis of such organizational activity.
Employee #2 is not a member of a protected group under federal law, though he may be under state law depending on the jurisdiction. His average performance does not distinguish him as exceptional or unexceptional within the company. His work was predominantly tied to the project that has since been discontinued. He has some practical experience but no formal education, and he has missed 17 days in the past two months.
His absenteeism problem is significant. No cause has been provided for the absences, and the company has not yet inquired. Nevertheless, 17 days missed out of fewer than 60 working days is clearly exceptional. An employee cannot reasonably expect that absences of this magnitude, left unaddressed with management, will not become a problem. The company has the right to discipline him, but before terminating on the basis of absenteeism, the cause must first be determined. If his absenteeism qualifies him for protection under the Family and Medical Leave Act (FMLA) or the Americans with Disabilities Act (ADA), he may be entitled to certain protections.
His performance and lack of a clear fit with the organization going forward make a strong case for dismissal. Employees whose roles have become redundant may be removed, particularly if they lack the skills or experience to fill other positions within the company.
While there is no age limit for protection under the Age Discrimination in Employment Act (ADEA), the removal of an older worker often carries the implication that age is a factor. Employee #3 cannot be dismissed on the grounds of her age. There are two additional considerations. First, she no longer has a meaningful role in the company, having been assigned to the failed marketing endeavor. Her performance during that endeavor was strong, however, and she bears no fault for its failure. It would therefore be difficult to remove her on the basis of job performance, especially given her long history of excellent work with the company.
She has also experienced significant absenteeism over the past two months. As a single mother, it is likely that there are extenuating circumstances, though the specific reason for the absences is not yet known. This should be investigated before any final decision is made, as she may be entitled to protections under the FMLA. Her personal financial circumstances are not relevant to the legal analysis.
Employee #4 is a member of a protected group and cannot be terminated on the basis of her race. She has developed a poor reputation among colleagues, which could factor into a performance evaluation — particularly given the small size of the company and the inherent need for team members to work closely together. Her primary role, however, is in sales. While most of the division's sales were generated by her, overall sales were sluggish, which was a major factor in the project's failure. Her performance cannot therefore be characterized as exemplary, despite her recognized talent.
She also has a significant absenteeism problem. The reason is not yet known and should be investigated, as she may be afforded protections under the ADA or FMLA. Her history of civil rights activism is a notable factor: if her on-the-job performance has been properly documented, she can be dismissed regardless of the potential for subsequent complaints, provided performance — not protected characteristics — is the documented basis for termination.
Employee #5 is a member of a protected group. She has an absenteeism problem, but it is related to her pregnancy — specifically, morning sickness. She is therefore likely to be afforded protections under the FMLA. The company is aware of the cause and should be in a position to make reasonable accommodations, whether through medical assistance or scheduling adjustments. Her personal financial circumstances are not relevant to the legal analysis.
Her performance is generally considered strong, and her skill set makes her an asset in other areas of the company. This makes removal difficult to justify, as there is no documented record of poor performance and limited grounds to claim redundancy.
In this scenario, three of the five employees are to be removed. From a legal standpoint, the most defensible approach is to frame the question as "who should we keep?" rather than "who should we let go?" There are two reasons for this. First, this framing prevents the company from making termination decisions on the basis of protected characteristics rather than performance. Performance must be the critical criterion determining each employee's future with the company. Second, strategically, the company needs to focus on moving forward — not on relitigating what went wrong in the past, but on identifying who can contribute in the future. Those without a clear future contribution are the most appropriate candidates for the layoff.
Of the five employees, the two most likely to make a meaningful contribution going forward are Employee #1 and Employee #5. Both have demonstrated competence in their fields, and neither displayed poor performance during the failed marketing project. Both possess skill sets that can be applied to the company's ongoing operations or future projects.
The three employees to be terminated are therefore Employee #2, Employee #3, and Employee #4. Employees #2 and #3 were brought in specifically for this project, and neither appears to have a role following its conclusion. Both are specialists whose skill sets do not easily adapt to other functions within the company. Employee #4 is a sales professional whose role is more adaptable in theory, but sluggish sales were a central reason for the project's failure. She did not succeed in her core function. Any employee can be terminated if their project was cancelled and their performance within that project fell below acceptable standards.
"Severance, retraining, and lawful termination approach"
"Likelihood and strength of wrongful termination claims"
Department of Labor. (2012). Employee rights under the National Labor Relations Act. US Department of Labor. Retrieved April 21, 2013, from http://www.dol.gov/olms/regs/compliance/EmployeeRightsPoster11x17Final.pdf
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