How to Run a RIF Adverse Impact Analysis
A reduction in force analysis tests whether the people selected for termination were chosen on merit-related grounds, or whether the selection fell disproportionately on a protected group. It can be run before decisions are final, or afterwards to understand and defend the process that was used.
Running it beforehand is the version that can prevent unintended consequences. Running it afterwards is the version that explains them.
What Employers Need to Know
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Four statutes shape the analysis: the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Worker Adjustment and Retraining Notification Act, and Title VII of the Civil Rights Act.
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The work should be set up so that it is protected by attorney-client privilege, which means engaging counsel first and having the analysis run at their direction.
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Comparison groups decide the result. They should be formed from employees who reasonably should have been considered together for termination, such as a job family, function or department.
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Those decisional units are scrutinized both legally and analytically, so how they were drawn needs to be defensible on its own terms.
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The analysis looks at the entire decision-making process rather than only the final list, checking whether selections rest on merit-related variables such as seniority or performance.
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Age is the exposure most often underestimated in a RIF, which is why the ADEA and OWBPA sit at the top of the list rather than the bottom.
Frequently Asked Questions
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What is a RIF adverse impact analysis?
A statistical test of whether the employees selected for a reduction in force differ by protected group in a way the selection criteria do not explain. It compares selection rates across groups within each decisional unit and asks whether any difference is larger than chance would produce. The same adverse impact methods apply when the selection is driven by an algorithm.
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Should the analysis happen before or after the layoff?
Before, if the goal is to prevent unintended issues. An analysis run while decisions are still provisional lets an employer find and fix a problem. An analysis run afterwards can still be valuable for understanding and defending the process, but by then the decisions have been made.
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What is a decisional unit and why does it matter?
A decisional unit is the group of employees who were realistically considered together for selection, usually a job family, function or department. It matters because the same layoff can look clean or problematic depending on how the units are drawn, and both regulators and courts examine that choice.
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Which laws apply to a reduction in force?
The ADEA and the OWBPA govern age and the disclosures required with severance agreements. The WARN Act governs advance notice for larger reductions. Title VII covers race, sex, religion, color and national origin. State law frequently adds notice requirements of its own.
About the Infographic
DCI's guide on conducting an analysis on reductions in force, either before or after they happen, covers key considerations for employers including: why an analysis should be conducted, the relevant laws that should be considered, and the factors and variables that should be included in a RIF analysis.
Submit the form to download the guide.