When older employees are let go, discrimination may be at work, but it can be difficult to prove.

Ms. J, 60, was a nurse administrator at a large HMO clinic. Her duties were mostly recruiting, scheduling, and resolving staff problems. After she was dismissed and replaced by a younger (and lower-paid) woman, she sued for age discrimination. Her case carries lessons for any employee, including clinicians.

The clinic had been losing money for years. When a new business director was appointed, he immediately hired a consultant, who advised a “reduction in force” (RIF) program to reduce costs by cutting jobs. Ms. J’s position was one of those eliminated, although she was offered an assignment as a charge nurse in the clinic.

In breaking the news, the clinic’s general manager told her the change was not related to her performance, which was satisfactory. It was simply part of the RIF program, he explained.

But Ms. J had been a charge nurse early in her career, and she was not about to go back to a job she viewed as a demotion. Instead, she quit the clinic altogether. Later, she discovered that her administrative duties had been absorbed by the manager’s administrative assistant, who was much younger, less experienced, lower paid, and not even a nurse. At that point, Ms. J consulted a plaintiff’s lawyer who specialized in employment discrimination.

He reviewed the facts and told her he would take her case on a contingency basis. That meant that if the suit was successful, he would take a percentage of any settlement or award as his fee. If he lost the case, Ms. J would owe him nothing.

After the fee agreement was signed, the plaintiff’s lawyer called for Ms. J’s personnel records. He soon filed suit against the HMO for wrongful dismissal under the federal Age Discrimination in Employment Act (ADEA). Within hours of receiving the court papers, the HMO hired the city’s foremost law firm. At $500/hour, the firm was also the city’s most expensive.

The defense lawyers took about six months (at a rate of about $10,000 a month) to complete the discovery part of the litigation, during which both sides traded documents. Then it was time for the depositions. Ms. J went first, detailing her version of events.

She outlined her early career at an acute-care hospital, her rise through the ranks because of her hard work and dedication, and her eventual appointment as “nurse administrator” for the HMO clinic. She described how she had been called into the general manager’s office, summarily dismissed after many years of service, and replaced by the young administrative assistant.

During his cross-examination, the defense lawyer seemed so sympathetic, so eager to hear her side of the story, that Ms. J assumed that the HMO would make an offer to settle. Instead, two days after the deposition, she was served with a motion to dismiss for “failure to state a case.”

A hearing was held a month later. After listening to oral arguments and reading through the detailed legal briefs, the judge agreed with the HMO’s lawyers. She dismissed Ms. J’s lawsuit for “failure to establish a prima facie case.” Ms. J was surprised, but her lawyer confidently reassured her: “We’ll come back on appeal.” He was right. The appeals court ruled that Ms. J’s deposition raised enough questions of fact for the case to proceed to trial. But it never got that far. A week before a jury was to be sworn, the lawyers agreed to settle for $34,000.

Legal background

An employee’s first hurdle in an age-discrimination case is to establish a “prima facie case”—a set of facts that would suggest to a reasonable juror that discrimination probably took place. In response, the employer may offer an alternative, legitimate explanation for a layoff, such as an RIF program.

The employee must then produce evidence, such as internal memos or comments made by the employer, that indicate the purported reason for dismissal was just a pretext for discrimination. In this way, the burden of proof passes back and forth between the two sides.

Meanwhile, lawyers’ fees have increased considerably in the past 20 years. Leading attorneys from prestige firms recently announced breaking through the $1,000/hour barrier. Of course, under the contingency system, plaintiff’s lawyers work some cases for free, making up for those losses with astronomic settlements in other cases.

Fee inflation creates disparities in representation, and this can lead to disparities in results. In this case, Ms. J was represented on a contingency basis by a competent plaintiff’s lawyer, but the HMO was represented by a leading law firm with access to resources in terms of staff and billing time that an individual lawyer may not have. Although the settlement was probably fair, the playing field was not necessarily level.

Protecting yourself

Discrimination based upon age is a reality in the workplace, but it is often difficult to determine whether a particular dismissal was based upon age alone, an RIF program, or the employee’s lack of competence. A good risk-management program seeks to avoid these ambiguities by taking specific steps. First, adequate documentation is as important in employment situations as it is in clinical situations. Records should be complete enough to allow disciplinary actions to be reconstructed.

Regular work reviews can be helpful in assessing performance, providing evidence of improvement or deterioration. Although they tend to be subjective, they do provide a narrative of how an employee is doing over a period of time. For example, if an employee’s record shows a pattern of poor attendance and poor performance, then discipline or dismissal is more justifiable than if the employee has an excellent record marred by an isolated bad incident or review.

From an employee standpoint, age discrimination is always a possibility but difficult to prove. Typically, discrimination may be in operation when a better-qualified but older employee is passed up for promotion in favor of a younger, less experienced candidate. Similar considerations apply when the employees laid off in an RIF program are mainly those who are older and better-paid. In both these situations, offhand comments by managers indicate that discrimination is taking place.

Discrimination is rarely explicitly documented in an employee’s file, and the lack of documentation must be overcome for a successful lawsuit. Be sure to keep copies of all performance reviews and all correspondence, both complimentary and critical, from supervisors or human resources personnel in your own private file.