Avoid discrimination claims with pre-layoff audits | AccountingWEB

Avoid discrimination claims with pre-layoff audits

Employers contemplating reductions in force (RIFs) can avoid or minimize exposure to discrimination claims through relatively quick and inexpensive pre-RIF statistical audits. A comprehensive audit identifies potential vulnerability prior to a suit being filed and will help ensure that data and documentation exist, showing that any disparities are the result of nondiscriminatory factors.

Audits begin with the same type of statistical review plaintiffs would perform in seeking to make out a prima facie case of discrimination. Using files commonly kept by employers, the RIF plan is tested for possible disparate impact on protected classes.

If the tests show that disparities might occur, analysts then conduct the same type of tests performed by defendants seeking to determine if disparities can be explained by valid, nondiscriminatory factors.

To the extent that disparities cannot be ascribed to nondiscriminatory factors, a problem area has been identified that must be addressed by management before the RIF is carried out.

Audit Process

Economists at the Center for Forensic Economic Studies have developed a series of easily administered pre-RIF Chi-square and T tests. These tests, analyzing data typically kept by employers and not requiring extensive data gathering, can quickly reveal any statistically significant disparities.

If such disparities exist, regression analyses can be conducted to identify mitigating variables explaining the disparity. If the tests are performed under the direction of outside counsel, they should be privileged under attorney-client and attorney work-product protections.

Contact the Center for Forensic Economic Studies for more information about pre-RIF planning.

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