Yahoo Suit Highlights Performance Review Pitfalls
By Genevieve Douglas
A recent lawsuit by a Yahoo! Inc.
employee claiming the company
manipulated performance evaluations to justify mass layoffs highlights how performance reviews
and rankings can expose a business
to legal risk, attorneys say.
“Performance issues are always
really hard issues for employers to
deal with,” Tamara Devitt, a partner
in the Orange County, Calif., office
of Haynes and Boone LLP, told
On the one hand, Devitt said,
they’re necessary because they provide a good way to give employees
feedback. The pitfalls, however, are
multiple, she said. Employers run a
big risk if they don’t have any sort
of performance review process, but
they also have to ensure that the
reviews are appropriate, objective,
and balanced, Devitt said.
The lawsuit against Yahoo was
filed by Gregory Anderson, an
editor for some of the company’s
online news content, who alleges
— among other things — that he
and about 600 others at Yahoo were
unfairly fired in 2014 after managers
retooled a numerical ranking system
(Anderson v. Yahoo Inc., N.D. Cal.,
No. 5:16-cv-00527, complaint filed
2/1/16; 34 HRR 122, 2/8/16).
The complaint alleges that
employees “were never told their
actual metric numeric ranking
or how it had been determined.”
The quarterly performance rating
process “therefore permitted and
encouraged discrimination based
on gender and any other personal
bias held by management,” accord-
ing to the complaint.
Objective criteria ideal
This scenario revolves around a ranking process in which managers were
forced to pick the best and the worst
employees, said Devitt, who isn’t involved in the Yahoo suit. While such
ranking systems aren’t “inherently
unlawful,” they’ve been considered
controversial, especially when it
comes to employee morale, she said.
Employers should establish
objective criteria for performance
review programs, although it may
“be easier said than done,” said
David Baffa, chair of Seyfarth
Shaw LLP’s workplace compliance
solutions group in Chicago. The
ideal program would have objective
measures or criteria against which a
manager rates employees.
Devitt recommended that HR
manage and monitor performance
programs to make sure they’re effective, consistent, nondiscriminatory, and non-retaliatory.
She added that systems should
also reflect the unique makeup of
a company to be most fair to the
employees. There also needs to be
training, communication, and oversight, she said. “It’s a lot of work,”
Baffa commented that there
are ways for employers to build
in safety measures. Performance
ratings can be used in workforce reductions, he said, but legal counsel
should have input to make sure that
there aren’t any disproportionate
layoffs of protected groups.
systems should also
reflect the unique makeup
of a company to be most
fair to the employees.