What is Recessionary Discrimination?

During a recession, employers are often faced with the difficult reality of having to reduce costs by implementing a mass layoff often called a reduction-in-force (“RIF”).  For many employees terminated in a RIF, loss of employment can be devastating financially and emotionally.

Unfortunately, employers sometimes use a RIF as an opportunity to terminate an employee for an unlawful reason.  For example, instead of relying on an employee’s demonstrated skill, performance, or qualification to determine if the employee should be terminated in a RIF, an employer or supervisor may decide to terminate the employee based on his or her gender, race, color, religion, disability or other category protected under the employment laws.

Wigdor LLP pioneered the term “recessionary discrimination,” to describe situations where an employer attempts to use the financial circumstances of a recession as a pretextual reason for terminating an employee for an unlawful reason.

Wigdor LLP has extensive experience handling cases involving recessionary discrimination.  In the aftermath of the 2008 financial crisis, the Firm successfully litigated on behalf of women, people of color, members of the LGBTQ+ community and other members of protected groups who were terminated in RIFs for unlawful reasons.

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Recessionary Discrimination in the Media

On October 13, 2010, Wigdor LLP filed a class action lawsuit on behalf of six former female employees at Citigroup and other similarly situated employees.  In the wake of the Great Recession, Citigroup terminated thousands of women while retaining less qualified male employees, according to the Complaint.  As alleged, nearly half of all senior employees who Citigroup selected for termination were women.

While on its face this appeared to be an egalitarian administrative decision, the discriminatory intent behind Citigroup’s layoffs was evident from, inter alia, the fact that 90% of the most senior positions at Citigroup after the layoff were men, as alleged in the Complaint.  This clearly disproportionate termination decision created a barrier to equal opportunity for highly qualified women at the company, creating a “glass ceiling” effect, the lawsuit alleged.

As set forth in the Complaint, Citigroup’s administrative decisions regarding employment exemplified the pattern and practice of discriminating based on illegitimate considerations, in this case, employees’ gender.  As alleged, the imbalance between the termination of men and women was statistically unlikely to have occurred by chance, therefore the company-wide layoffs were the result of recessionary discrimination.

This lawsuit was not an isolated incident but rather, part of a larger phenomenon felt by women in the financial services and insurance industries amid the recession following the financial crisis of 2008.

COVID-19 and the Threat of Recessionary Discrimination

With a recession looming in the wake of the novel coronavirus pandemic, recessionary discrimination will likely resurge.  If the past is any indicator, employers will attempt to use this economic downturn as an opportunity to use RIFs to discriminate against employees in violation of federal, state and local anti-discrimination laws.

In response to a lawsuit where employees claim that a RIF was used to engage recessionary discrimination, employers may attempt to use the financial circumstances of a recession as a legitimate, non-discriminatory reason for the termination.  Examples of proffered non-discriminatory reasons for terminating an employee include referencing other employees who were laid off, emphasizing the economic necessity of cutting costs, or other business-related reasons.

As the U.S. faces a new age of economic uncertainty following the coronavirus pandemic, it is more important than ever to protect those most vulnerable to a violation of their employment rights.  Wigdor LLP seeks to provide a beacon of hope for employees during this difficult historical moment and prides itself in being at the forefront of this issue.  Our attorneys are closely familiar with the signs of recessionary discrimination, having represented victims in numerous high-profile individual and class action cases.

If you think you have been a victim of recessionary discrimination, you should speak to an attorney who can assess the facts of your case and provide guidance.  To get in touch with an attorney at Wigdor LLP, call (212) 257-6800 or use the contact form on this page.

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