Employee Performance Rating Systems: Avoiding and Defending Against Discrimination Claims, WARN Act Violations

The Feb. 2016 lawsuit against Yahoo by a former male employee alleging Yahoo’s performance rating system has a disparate impact on male employees is a stern reminder to all employers to closely examine their performance rating systems to discern potential disparate impact in their design and implementation. Counsel to employers should examine and weigh in on how employee ratings factor into hiring, promotions, terminations or layoffs.

Because performance rating systems and employee reviews involve subjective factors, they can easily cross over from neutral to discriminatory when used to support decisions regarding hiring, promotions or termination. Objective processes, solid recordkeeping and clear communication protocols are key to minimizing the legal risks. When performance rating systems are used to displace workers as a part of a mass layoff, counsel to employers must ensure that systems align with the requirements of the WARN Act.

Employment counsel must provide employers with guidance in designing and implementing performance rating systems and using performance ratings in a manner that minimizes the employers’ exposure to disparate treatment, disparate impact or retaliation claims, or WARN Act violations.

Listen as our authoritative panel examines the legal risks surrounding employee performance rating systems and provides strategies for counsel to help minimize employers’ liability exposure and defend claims.