Could a merger lead to expensive discrimination claims?

On Behalf of | Nov 12, 2021 | Business Law |

When your company acquires or merges with another business, a lot of changes will occur. You may close one building and move everyone into a central location. You may adopt a new name or choose to use the established brand of one of the companies. 

You will likely also need to review where the two businesses have redundant staffing. Each company may have required its own IT team or human resources professional, but you probably don’t need two people filling the exact same position after your companies merge. 

Sometimes, those in redundant positions can transfer into similar positions that you need to fill. Other times, you may need to conduct layoffs or mass terminations following a merger to keep the business in the black. The wrong approach to this process could put your company in a vulnerable legal position.

Workers could allege discrimination in the termination or layoff process

Companies can technically let go of workers for almost any reason, especially when conducting a merger or layoffs. However, changing the employment status of many people at one time could lay bare certain patterns that your company or its workers might otherwise not notice. 

For example, if a certain group of employees has disproportionate representation in the pool of people getting let go, you may need to reevaluate some of your decisions. Letting go of multiple workers from the same sex, religion or racial group might eventually leave the claims of discrimination and a civil lawsuit. It’s crucial to businesses establish neutral standards for deciding who they keep and that they review decisions for any concerning trends before announcing them. 

Understanding the need to protect your company during major transactions like a merger can help you avoid mistakes that put your company in a financially or legally vulnerable position.