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Employer Law Report

Does the Use of Subjective Criteria in a RIF Show Discrimination? The Sixth Circuit Says Not Necessarily

Posted in Traps for the Unwary, Workforce Strategies

Charlotte Beck had been employed with Buckeye Pipeline Services Company ("Buckeye") for over 16 years as a 12-hour operator. In 2009, however, Buckeye underwent a company-wide reduction in force. Buckeye created a "design team" to reform the organizational structure of the Company and implement a team-based leadership model that would be used going forward. The design team created a new performance evaluation system, which required at least two people with first-hand knowledge of the employee to rate the employee and cite specific examples of behaviors that supported the grade. Any employee who did not receive a rating of 60 points or higher would be terminated. Three members of the design team evaluated Beck and she received an overall score of 35 points. Beck was terminated from Buckeye, along with 139 other employees. A younger, male employee with less experience replaced Beck as a 12-hour operator.

Claiming that the design team’s reliance on "subjective criteria" in selecting her for termination singled her out because of her age and gender in violation of Ohio law, Beck filed suit in Ohio federal district court. The district court granted Buckeye’s summary judgment motion on the ground that Beck could not show that the company’s decision to lay her off as part of a company-wide reduction in force was pretextual.

On appeal, the Sixth Circuit upheld the summary judgment decision. Noting that qualified individuals often lose their jobs as part of a legitimate reduction in force, the Sixth Circuit held "the use of subjective evaluation criteria does not by itself show discrimination, particularly in a reduction in force case." To establish that the employer’s reliance on the reduction in force was pretextual, Beck relied on a favorable opinion provided by her direct supervisor. The problem, however, was that the supervisor, undoubtedly reluctant to be the cause of anyone losing their jobs, stated all of his subordinates were good employees and placed the decision squarely back in the hands of the design committee. When Beck’s supervisor was deposed as part of the lawsuit, he stated that he disagreed with some of the design team’s conclusions about Beck, but acknowledged that he did not share his contrary thoughts with the team when it was making its decision. Significantly, because this is often an issue in reduction in force cases, the Sixth Circuit also noted that the supervisor’s "satisfaction with Beck’s work under the old system at any rate does not prove she would succeed under the new system."

Beck was unable to show, however, that the design team relied on criteria that was discriminatory or applied in a discriminatory manner. Instead, the Court held that in order to prove that the subjective criteria permitted Buckeye to discriminate against Beck, she needed to provide evidence to support any of the following criteria:

  • Buckeye terminated women or older workers at a disproportionately high rate during the reduction in force;
  • Buckeye deviated from its normal use of subjective evaluation procedures; or
  • Buckeye used evidence which was not truthful.
  • Having failed to provide any such evidence, the Sixth Circuit Court of Appeals affirmed the District Court’s ruling.

What employers should do:

  • Ensure that the subjective criteria being used to make an employment decision, such as in a reduction in force or promotion context, will be predictive of success in the new environment.
  • When using subjective criteria to make employment decisions attempt to break the criteria down as much as possible into objective components.
  • To the extent possible, document how the individual had demonstrated the subjective character trait that you are looking for by using specific examples. If there are interviews involved in the process, design questions (and identify in advance favorable answers) that will elicit answers that demonstrate the trait you are looking for.
  • Ensure that all decision-makers and influencers have documented how they have arrived at their subjective conclusions.
  • Ensure that the basis for deviating from any previously established evaluative criteria can be justified and documented. Ensure, to the extent possible, evaluators are consistent from year to year. If an employee who has always received high marks, suddenly receives uncharacteristically low ratings, this may raise red flags.
  • Before making decisions final, have your demographics before and after the RIF evaluated to ensure that protected classes are not disproportionately impacted.