How fear of age discrimination caused a lawsuit

by on December 15, 2008 · 0 Comment POSTED IN: HR Info Center

Demoted worker felt humiliated. He sued for age discrimination. He won.

What should you do when slumping sales or a troubled economy force you to consider cutting a highly-paid older employee whose best years may be behind him? And how do you let such a person go without getting sued for age discrimination? Not the way this company did it.

Facts of the case

Project manager John Abuan was quite a catch for telecommunications start-up Level 3 Communications, Inc. Abuan arrived at the fledgling firm with more than two decades of industry experience.

But he didn’t come cheap: At an annual salary of $100,000, a potential bonus of $25,000 and a boatload of stock options, Abuan was a well-compensated professional.

By all accounts Abuan was a star performer. As one of the firm’s first employees he led key projects that helped get Level 3 off the ground, provided substantial direction to less-experienced individuals, and drew the admiration of the company’s leaders, his own employees and his peers.

That was all well and good until a dip in the economy – which coincided with the completion of Abuan’s major projects – caused senior management to reconsider Abuan’s future with the firm.

Subsequently, Abuan, who may not have been as valuable once his key projects had been completed, was demoted to a position with fewer responsibilities. He kept his salary, but his stock options and his bonus were reduced. No one took over his former position. Instead, the duties were divided up among three individuals.

Why wasn’t Abuan laid off instead? Courtroom testimony suggests that management feared it might look like age bias. After all, Level 3 was a “young company” and Abuan was among its oldest employees. They were afraid of a lawsuit. So instead of firing Abuan they demoted him and made sure not to replace him with a younger person.

HR dropped the ball

Abuan’s boss told him the demotion had nothing to do with his performance. So Abuan wrote to HR, asking for an explanation and suggesting it had to do with age discrimination. Unfortunately, HR dropped the ball: Instead of launching a discreet inquiry, HR allowed the news of his age discrimination complaint to become known throughout the company. People who’d been supportive of Abuan began to treat him as though he were a pariah. And, in fact, his complaint was never investigated.

Abuan the star quickly became Abuan the troublemaker. He’d helped to build the company, but instead of being rewarded he was being discarded.

Soon Abuan received his first negative performance review. Ultimately, he was dismissed from Level 3 – allegedly for poor performance.

He filed an Age Discrimination Employment Act lawsuit against the company claiming age discrimination and retaliation for his complaint.

Denied promotions too

In court, Level 3 claimed that Abuan’s age-bias complaint was without merit because his job had been eliminated and he wasn’t replaced by a younger person. But Abuan argued persuasively that no one person in the company was even qualified to take over for him.

Further, he showed it was likely that he’d been denied promotions at the youth-oriented company because he was seen as too old to join “the kids” – as they often referred to themselves – at the senior-management level.

Abuan won his case and was awarded more than $600,000.

What might “the kids” have done differently? HR21 spoke with one executive whose company has a written layoff policy designed precisely for this sort of situation.

It offers employees a choice between a new job at no less than 85% of their salary or a separation package that includes severance pay, counseling and outplacement services – in exchange for a signed waiver and release that says the employee won’t file a lawsuit.

But won’t demotions demoralize people? Sometimes yes, but the bottom line is that employees with a choice are less likely to feel embittered and file an age discrimination lawsuit.

Cite: Abuan v. Level 3 Communications, U.S. Court of Appeals, 10th Circuit, Nos. 01-1471, 02-1015, 02-1029, 12/30/03

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