Byron Carlson Petri & Kalb, LLC | attorneys at law

A merger or acquisition can lead to employee claims later

On Behalf of | Aug 31, 2022 | Business & Commercial Law

Mergers can be a fast and effective way for your company to expand its talent base and facilities. Acquisitions can also increase what resources your company can make use of for daily operations.

The process of negotiating a merger or acquisition often seems like the most intensive stuff for those in management or an executive role at one of the companies involved. However, mergers and acquisitions often require extensive reshuffling of the business’s resources, possibly leading to layoffs as you remove redundant team members and try to streamline operations.

A diversity audit before announcing any major decisions is key to avoiding lawsuits and expensive claims by the workers let go after a merger or business acquisition.

People don’t always recognize their own bias

You may trust that your management team knows better than to target a group with protected characteristics when planning the layoffs for your company. While it is likely true that no one at your company would intentionally fire multiple people from the same background, that is often what happens anyway.

If those workers realize that there is a disproportionate representation of staff members over the age of 40, belonging to a certain sex or from a certain racial group among those let go, those workers may try to fight back. They could potentially try to take your business to court by claiming that you discriminated based on certain protected characteristics when making those employment decisions and therefore violated their rights.

How a diversity audit helps

Once you have a short list of everyone that you intend to fire, demote or promote, you are then in a position to explore whether one group of workers has disproportionate representation in any of those categories. For example, if individual team leaders suggest the workers to lay off during the transition, you may not realize at first that it is largely older workers or workers from a certain minority religion selected for layoffs.

A thorough review looking at everyone affected by these employment decisions could help you identify choices that might put your company at risk. Employing a measured and careful approach to acquisitions and mergers can help you avoid or more effectively resolve potentially expensive employment law claims.