Friday, February 05, 2010

Fired or Laid Off?

 By Mike Dorf

During the last economic contraction--after the bursting of the dot-com bubble at the turn of the century--a number of prominent law firms appeared to be using the following stratagem: Instead of laying off associates, they were letting people go for ostensibly poor performance.  To the outside world this looked better than layoffs because it did not communicate that business had slowed down, but to the young lawyers who were let go, it was cruel.  On top of the loss of a job, they were saddled with the stigma of having been fired for performing badly, making it that much harder to get a new job.  Strictly speaking, the dismissed lawyers perhaps could have sued the firms for defamation if and when they told prospective employers that the former lawyers had performed badly, but suing a former employer is almost never in the interest of someone trying to find a new employer.  And so the young lawyers simply had to take the hit.

In the current economic downturn, most law firms had to let go of so many lawyers that they simply could not get away with the gambit just described.  If a 350-lawyer firm dismisses 15 lawyers in a year, it can plausibly claim to be cutting poor performers.  Not so if it sacks 50.

Nonetheless, I have what I regard as pretty strong anecdotal evidence (from outside Cornell) that the practice at issue has migrated to tenure decisions in university departments in the arts and sciences around the country.  Here's a typical example: A large history department that tenured 3 of 4 tenure-track internal candidates in 2005 tenured 1 of 4 such candidates in 2009.  Because the total number of people at issue in any given year is small, the department can plausibly claim that the class of 2009 simply happened to be weak, but I've seen or heard of this happening in enough places that it is very hard not to understand these decisions as being strongly influenced by resource constraints.

The impact on the people denied tenure closely parallels the impact on the dismissed lawyers.  Being denied tenure "on the merits" makes it especially difficult to find a tenured or tenure-track position at a remotely comparable institution.  Nor are dismissed academics very likely to sue for defamation, both because of the harmful reputational effects and because it's very difficult to prove that a tenure denial was illicit.

Does this mean that nothing can be done?  Perhaps not.  At the very least, institutions--whether law firms, universities, or other employers--that disguise layoffs as performance-based firings can and should be exposed, and thus shamed into taking the reputational hit themselves.  Some enterprising do-gooder could start a website--"" is an available domain name--dedicated to collecting stories.

Former workers of the world unite.  You have nothing to lose anymore anyway!


Derek said...

I like the plan!

Don't many cases strike a sort of middle position between non-performance based lay offs and performance based lay offs? I'm thinking of firms that are *motivated* to lay people off by the economy but select which individuals to fire based on performance (e.g. they lay off whoever worked the least hours or had the worst reviews, etc.).

Saying such lay offs are "performance based" is misleading to be sure, but I doubt there would be a cause of action for defamation.

I'm not sure if there is an analogue in the academic world.

Michael C. Dorf said...

Yes, Derek, that's absolutely right. So long as a firm isn't firing everybody--or a faculty isn't denying everyone tenure--there will be some element of performance. Still, it's highly misleading. We normally don't think that someone who is performing adequately, but not among the top 25%, as performing inadequately. Also, firings will often be distributed unevenly based on business. E.g., if M&E work is down much more than litigation, M&E associates who are actually doing a better job than litigation associates might be let go for "poor performance."

Sam Rickless said...

It would surprise me to learn that tenure candidates were turned down for resource-related reasons at the *departmental* level. Departments can see that it will be difficult to lift the hiring freeze, at least for the short term, and need faculty to teach courses and perform other important academic duties. At the departmental level, the incentives (generally) are to tenure candidates, not deny them tenure. The resource-related incentive at the *administrative* level may sometimes be to deny tenure. So it is important to ask whether, in the case of the history department you speak of, the three who didn't make the cut received negative recommendations from their departments (or positive recommendations from their departments and negative recommendations from high-level administrators).

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