Employers laying off employees due to workforce reduction plans are not immune from discrimination claims. In Lytle v Malady, the Michigan Supreme Court ruled that a former employee may proceed with discrimination claims even though his employer argued that his termination was necessitated by a bona fide workforce reduction.
When an employer defends against discrimination claims on the grounds of workforce reduction, employees must prove that the reduction was not bona fide. In this context, "bona fide" means necessitated by business or economic conditions. However, even if employees fail to prove that the workforce reduction was not bona fide, they may proceed with discrimination claims if (1) it can be demonstrated that the workforce reduction was not the real reason for termination, and (2) there is sufficient evidence showing that age, sex or other protected class status was a determining factor in the discharge.
The court also held that when an employee handbook contains contradictory statements concerning whether "just cause" employment exists, employees may form a legitimate expectation that they may only be terminated for just cause. Even when employment is deemed to be governed by a just cause employment contract, however, the court ruled that a company's bona fide plan for downsizing constitutes just cause. The message again is that employers must take great care in drafting handbooks so as not to give employees mixed messages about whether or not they have just cause employment.