Yahoo Hit with Suit Over Mass Firings, Performance Review Metrics

By | February 2, 2016

Yahoo! Inc. was accused in a lawsuit of manipulating employee performance evaluations to justify firing hundreds of workers in order to meet its financial targets.

Gregory Anderson, who was an editor for some of Yahoo’s online news content, claims he and about 600 others at the company were unfairly fired in 2014 after managers retooled a numerical ranking system to downgrade their performance.

The mass terminations occurred without appropriate notice in violation of state and federal laws, according to the complaint filed Monday in federal court in San Jose, California. Anderson also accused the company of gender discrimination under the U.S. Civil Rights Act of 1964, citing internal promotions he said were limited to female candidates.

“The employees were never told their actual metric numeric ranking or how it had been determined,” according to the complaint. The quarterly performance rating process “therefore permitted and encouraged discrimination based on gender and any other personal bias held by management.”

California law requires that the termination of 50 or more employees within a month occur with a 60-day notice period. Anderson was told by Yahoo that he was fired while attending a journalism fellowship at the University of Michigan granted with the support of the company, according to the complaint. He said he was informed the decision was effective immediately.

Suzanne Philion, a spokeswoman for Sunnyvale, California- based Yahoo, defended the company’s performance review process, saying “fairness is a guiding principle.”

“We believe this process allows our team to develop and do their best work,” Philion said in a statement. “Our performance review process also allows for high performers to engage in increasingly larger opportunities at our company, as well as for low performers to be transitioned out.”

Philion also said Anderson sent a letter Jan. 21 demanding that the company pay him $5 million.

“Yes, we itemized the damages at $5 million,” Jon Parsons, Anderson’s lawyer, said in a phone interview while referring to the nine-page letter he sent Yahoo. “They are posturing. When you don’t have anything substantive to say about the facts, you try to discredit the plaintiff.”

More firings are expected at Yahoo as part of Chief Executive Officer Marissa Mayer’s effort to cut costs and revive growth at the struggling web portal. Now more than three years into her turnaround campaign, Mayer is looking for new ways to bolster growth and beat back competition from rivals, while enduring investor scrutiny including the handling of stake in Alibaba Group Holding Ltd.

Details on Mayer’s plans are set to be unveiled Tuesday along with Yahoo’s quarterly earnings.

The lawsuit was reported earlier by the New York Times.

The case is Anderson v. Yahoo Inc., 5:16-cv-00527, U.S. District Court, Northern District of California (San Jose).

–With assistance from Brian Womack.

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