Dive Brief:
- On top of the expected Yahoo announcement of major layoffs today (reported in the Wall Street Journal Monday), the tech giant also was hit Monday with a lawsuit challenging its employee "ranking" system, according to the New York Times.
- A controversial practice these days, the Yahoo ranking system has essentially been accused of enforcing illegal layoffs in California by an ex-employee, Gregory Anderson, who filed the lawsuit.
- The Times reports that Yahoo's ranking system features a quarterly performance review that ranks every employee on a scale of 1 to 5. Since Mayer took over the troubled tech giant in 2012, Yahoo's system has resulted in the firing of hundreds of employees, according to the Times.
Dive Insight:
The lawsuit said the cuts (which included the firing of about 600 other low-performing Yahoo employees when the plaintiff was let go) amounted to illegal mass layoffs.
In California, you can't legally lay off more than 50 workers within 30 days at a single location without 60 days advance notice. The lawsuit says Yahoo didn't offer notices, but it did chop 1,100 workers from its payroll over several of months, saying they performed poorly. Violations of either law can lead to penalties of $500 per employee plus back pay for each day of advance notice the company failed to provide.
Similar "ranking" systems were once widely used in American business, including at companies like General Electric, Cisco Systems, Google and Accenture, but it's since fallen out of favor.
