Reduction in Force (RIF) Litigation Planning

Reductions in Force (RIF) have become a necessary and difficult part of corporate life. Often, the circumstances surrounding these RIFs lead to employment litigation by individual employees or classes of employees who believe they were discriminated against.

For many companies the RIF process is complex. The multiple layer decision process involving termination, severance, reassignment, or relocation for large numbers of employees requires careful, ongoing analysis and monitoring. Although most RIF programs do not wish to discriminate, the complexity of the process sometimes leads to involuntary and inadvertent actions that could provide a basis for discharged employees to seek redress in the courts. Even if such discrimination allegations are without merit the economic, financial and human costs of these actions can be great.

In many cases the courts have admitted expert testimony based on multivariate regression techniques, such as logit and probit analysis, to establish or refute class discrimination claims. Preparing these analysis before the implementation of a RIF plan can have benefits. These techniques have made the analysis of complex RIF plans both practical and cost effective. The assessment consists of a preemptive analysis of the statistical models used in the courts to determine the presence of employment class discrimination.

A preemptive analysis of planned reductions in force can assist companies and their counsel in:

1- assessing the potential for litigation arising from the RIF and the vulnerability to the plaintiff’s expert’s use of this technique,

2- identifying possible sub-groups, within the protected group, who may have a basis for a class discrimination action,

3- providing statistical evidence normally used in litigation to test for the presence of discriminatory policies and procedures,

4- developing statistical models, using logit/probit techniques, that can be used to evaluate the litigation potential from alternative RIF plans, and

5- identifying individual case remedies to inadvertent discriminatory actions.