Succession Planning Does Not Justify Age Discrimination, 6th Circuit Rules

Author: Marta Moakley, XpertHR Legal Editor

August 21, 2013

The 6th Circuit Court of Appeals has ruled that an employee can proceed to trial on his age discrimination claims in a case involving an employer's informal succession plan. Sharp v. Aker Plant Servs. Group, 2013 FED App. 0216P (6th Cir. August 9, 2013). Employers should keep in mind that recruitment, retention, training and development costs are a consideration for employees who are members of all generations, and should emphasize generational diversity within the workplace. In order to minimize potential liability with respect to workplace discrimination claims, employers should invest in supervisor training regarding effective employee communications, while paying special attention to communicating performance appraisals.

In Sharp, a 52-year-old employee was chosen for layoff over a 44-year-old co-worker. The employer contended that the layoff decisions were based on performance, not age. The employer cited several performance evaluations, using a rating scale, in which the employee's scores were relatively low.

Faced with a business downturn in 2008, the employer instituted a forced ranking system in place of the rating scale. Forced ranking or stacked ranking requires supervisors to rate a certain percentage of employees as top, average or poor performers. Often, the poor performers may be terminated (hence the system's original nickname "rank and yank"). In Sharp, the employee's supervisor ranked the employee as a poor performer and recommended that he be let go "if [the employer is] forced to reduce headcount." Management relied on the supervisor's recommendations in making the termination decisions.

However, when informing the employee of the layoff, the employee's supervisor never mentioned poor performance as the underlying reason. During a meeting, the employee asked why the younger employee with less tenure at the organization was being retained. The supervisor explained that "Well, we want someone younger . . . Aker had a succession plan where you bring in younger people, train them, so when the older people leave, that you'll have younger people." 2013 FED App. 0216P, **6. During this conversation, the supervisor never mentioned that the employee's performance had been rated as poor. In fact, the supervisor reassured the employee in subsequent conversations that "it's not that your abilities all of a sudden ceased to exist, or got worse, or anything like that." 2013 FED App. 0216P, **7. The supervisor later provided the employee with a glowing letter of recommendation.

The court ruled that the supervisor's remarks amounted to direct proof of age discrimination. In addition, the court found that the supervisor's decision to lay off the employee could be attributed to the employer.

The supervisor maintained that he had mentioned a succession plan, instead of poor performance, to spare the employee's feelings. Instead, the supervisor provided the court with an inconsistent performance management record and controversial quotes (replete with elements of bias) that aided the employee in his lawsuit under the Kentucky Civil Rights Act.