By Joy P. Waltemath, J.D.
The editorial director of Yahoo's Autos, Homes, Shopping, Small Business, and Travel verticals has sued the media giant alleging that its performance review process was “stack ranking” that the company used as a means to terminate large numbers of employees without complying with California's Worker Adjustment and Retraining Notification Act and the federal WARN Act. His lawsuit, filed February 1 in the U.S. District Court for the Northern District of California, also alleges intentional gender discrimination under Title VII and state law based on claims that Yahoo intentionally hired and promoted women because of their gender, while terminating, demoting or laying off male employees because of their gender, an approach that he alleges resulted in top managers in Yahoo’s Media Org increasing from 20 percent to 80 percent female within a three-year period.
The thrust of the complaint
targets the way Yahoo allegedly administered its Quarterly Performance Review (QPR) process under CEO Marissa Meyer in order to reduce its workforce. The QPR process, first put into use in August 2012, was similar to forced distribution, forced ranking, or “stack ranking,” according to the plaintiff. Each quarter, a specified percentage of each department's employee population would be assigned a 1 to 5 ranking. Managers were required to rank their employees so that a sufficient percentage of employees were assigned to each rank, “even if all the employees were performing well or at the same level. Managers were each given a targeted mean Employee Score for all of their reports,” the complaint alleges.
Managers’ scoring was also subject to “calibration” meetings where employee scores were modified by higher-level management. QPR process rules allegedly were vaguely drawn and communicated on a need-to-know basis; for example, percentages assigned to each of the five rankings might change from quarter to quarter companywide, and different departments (or "orgs") would be assigned different percentages, which the plaintiff claimed made the system ripe for decisions to be made on the basis of personal bias or stereotyping.
Fired while on leave.
According to the complaint, the plaintiff was fired (while attending an approved Knight-Wallace Journalism Fellowship at the University of Michigan as a representative of Yahoo) under the new, ad hoc "cumulative" QPR process, although he had received four consecutive quarters of "Achieves" ratings. He alleged he was fired by the VP-News, without the knowledge or involvement of his direct manager, because he was told he was among the lowest 5 percent of Yahoo employees, approximately 600 of whom were terminated at substantially the same time as he was.
WARN Act claims.
Between January 2012 and July 2015, the complaint alleges, Yahoo reduced its workforce by 31 percent, to less than 11,000 employees, without declaring a reduction in force under the California or federal WARN Acts. Specifically, since August 2012, the QPR process reportedly was used on several occasions to result in Yahoo terminating more than 50 employees within a 30-day period. He claims Yahoo should have notified employees of their rights under the California and federal WARN Acts prior to their termination, and Yahoo should have compensated those employees for a period of up to 60 days with wages and benefits.
Gender bias claims.
In essence, the plaintiff further claims that Yahoo was intentionally and deliberately looking for women to hire and promote over more qualified males. He claims the company used the QPR process to manipulate the gender composition of his organization, the “Media Org.” Specifically, within three years, the top managers reporting to the chief marketing officer in the Media Org, including the chief editors of the 12 magazines (many of which were formerly called "verticals"), purportedly went from less than 20 percent female to more than 80 percent female. The complaint also alleges that of the approximately 16 senior-level editorial employees hired or promoted by the chief marketing officer in the Media Org in approximately an 18-month period, 14 of them, or 87 percent, were female. Female employees in management were allowed to leave voluntarily rather than being fired, the plaintiff asserts, but male employees were more often fired without an opportunity to resign.
The complaint also alleges wrongful termination in violation of public policy, violation of California’s Unfair Competition Law, and seeks other declaratory relief.