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Why mergers and acquisitions can lead to discrimination claims

On Behalf of | Mar 21, 2024 | Employment Law

Businesses often grow rapidly when they enter into transactions involving other companies. Mergers where two companies combine into one organization and acquisitions where one business purchases another company can lead to significant returns on investments for those helping run organizations and can change what a company is capable of achieving.

Unfortunately, mergers and acquisitions are often difficult to complete in part because they are subject to regulatory scrutiny. Federal and state agencies sometimes intervene to prevent mergers or acquisitions because they might violate federal antitrust laws. Other times, the companies complete the transaction only to face legal issues after the fact.

Sometimes, large business transactions lead to claims of discrimination against certain employees. Why do successful mergers and acquisitions sometimes lead to employee lawsuits?

Employees may question company staffing decisions

Workers generally do not react favorably to notice that they have lost their jobs. Even when there is a single employee facing termination due to documented performance issues, they may still resent that decision.

When a worker loses their job as part of a mass termination following a merger or acquisition, they may try to claim that the company violated their rights by eliminating their position. Sometimes, workers may allege that their personal inclusion in the roster of terminated employees was retaliatory. They may point to their involvement in protected workplace activities previously as a sign that the company violated their rights. For example, if a worker previously tried to unionize their coworkers or reported harassment in the workplace, a termination that occurs after they spoke up might seem suspect.

Other times, workers believe that the company unfairly targeted one group of workers for inclusion in layoffs. If almost every employee from one race or all of the workers over the age of 40 are let go at one time, it might be reasonable for the affected employees to allege that the company violated their rights by factoring and protected characteristics when making decisions about who keeps their job and who the company terminates.

Businesses that document disciplinary issues carefully and retain clear records of what factored into terminations following mergers and acquisitions may be less likely to face allegations of discrimination or retaliation from employees. Understanding what triggers many employment lawsuits may help companies limit risk when preparing for major transactions.