RALEIGH – “Last in, first out” may have been standard operating procedure at most companies in days past when executives made decisions about which workers would be laid off. But a recent round of layoffs at tech firm Twilio is creating a lot of reaction since the CEO says cuts “were carried out through an Anti-Racist/Anti-Oppression lens.”
Many companies are aggressively pursuing “diversity, equity and inclusion,” or DEI, policies in attempts to reshape their workforces, yet the Twilio actions raised numerous questions about whether the layoff action was legal.
Todd Olson, CEO at Raleigh-based software firm Pendo, recently cut less than 5% of that company’s workforce including some positions based in the company’s Raleigh headquarters location, explained the process by which the Pendo layoffs were made:
“Many factors went into these decisions. But, as with everything we do at Pendo, we also considered the impact through a lens of diversity, equity and inclusion.”
Attorneys say that companies are walking a fine line in making layoffs just as in hiring. Title VII of the federal Civil Rights Act which “prohibits employment discrimination based on race, color, religion, sex and national origin.” So whether Twilio’s actions are legal is a matter of debate.
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Depends on actions taken
Asked about the “Anti-Racist/Anti-Oppression” lens as cited by Twilio is legal, Jerry Sayre, partner at Fox Rothschild LLP in Raleigh, told WRAL TechWire:
“This depends on what they mean when they say they carried out the layoffs through an Anti-Racist lens. Title VII does not permit reverse racism; however, there is no reason to think that is what occurred here.
“On its website, Twilio defines ‘antiracism’ as ‘the practice of actively opposing racism and promoting racial equity.’ Certainly, this is legal and, in fact, required for employers in the United States.
“As you all know, we are committed to becoming an Anti-Racist/Anti-Oppression company. Layoffs like this can have a more pronounced impact on marginalized communities, so we were particularly focused on ensuring our layoffs – while a business necessity today – were carried out through an Anti-Racist/Anti-Oppression lens.” – Twilio CEO Jeff Lawson in letter to employees
“Title VII of the Civil Rights Act of 1964 prohibits employers with at least 15 employees from discriminating in employment based on race, color, religion, sex, and national origin. In this regard, I expect Twilio would say it was acting in accordance with the requirements of Title VII when it identified those positions affected by the layoff through an Anti-Racist Lens.”
Yet another attorney who has been actively involved in age discrimination lawsuits against IBM questioned the layoff method’s legality.
“If the company is making layoff decisions based on race – or any other protected characteristic – that’s not legal in the U.S.,” said Shannon Liss-Riordan, an attorney at Lichten & Liss-Riordan, P.C. She did note that it is not exactly clear what Lawson meant in the statement regarding the company using an anti-racist lens.
“It’s admirable that the company is giving notice and additional severance beyond what is required by law,” she added.
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A ‘higher standard’
What’s Twilio’s action mean in the future?
“I expect the real distinction in this case, if anything, is simply the fact that Twilio is being more intentional about its selection process in an effort to ensure its decisions are not affected by unconscious or implicit racial bias,” Sayre explains.
“In some cases, facially neutral selection processes may have an unintended effect on certain categories of employees (e.g., minorities, females, older employees, etc.). Among other things, applying an Anti-Racist Lens may contemplate reviewing the proposed layoff selections to verify that minority communities are not overly impacted. To be fair, well-advised employers have already been doing this; however, I expect Twilio is attempting to hold itself to a higher standard.”
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Layoffs may impact efforts to boost racial diversity in tech sector
Dr. Sarah Kaplan, a distinguished professor and the director of the Institute for Gender and the Economy at The University of Toronto, points out that the “tech industry has been under a lot of pressure for the last five years, if not longer, to increase diversity, and many have responded. The risk is that they are going to undo all of the work that they’ve done over the last five years, and that’s why they need to pay attention to the impact of who they’re going to lay off.”
Kaplan also says that systemic biases are still present in the economy and in how labor markets are structured.
Take one possible criteria for layoffs, Kaplan explains: eliminating the positions of those who were most recently hired.
That is not explicitly targeted at members of a protected class, she says, but the impact of implementing such a decision may in fact have an outsized impact.
“It’s not that gender and race are not being considered, it’s that this supposedly gender-neutral policy is in fact gendered,” Kaplan notes. “In theory, what they [Twilio, or any other company using an anti-racist lens in policy decisions] are going to do is examine their decisions to make sure they’re not unintentionally creating racialized outcome, creating discriminatory outcomes.”
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Defending DEI efforts
Asked if the Twilio action will become a new trend, Sayre says that Title VII will be a governing factor.
“As [I] noted earlier, Title VII has always required this to some extent, and employers already should have been doing their due diligence in making sure that their selection decisions are race-neutral, at a minimum. Perhaps the trend here is that anti-racist employers will push beyond simply being race-neutral and take steps towards combatting what they believe may be unconscious or implicit racism within their organization,” he says.
“Many organizations are fully embracing the benefits of Diversity, Equity & Inclusion, so it is reasonable to expect that these organizations will work similar strategies into their termination selection procedures in order to promote their overall DE&I efforts. So long as they operate within the restrictions set by Title VII, such efforts should be legally permissible.”
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The Twilio story
Just before Twilio announced last week that it planned to lay off some 11% of its global workforce, CEO Jeff Lawson wrote to employees to explain the company’s rationale and how the company decided who would be impacted, saying layoffs “were carried out through an Anti-Racist/Anti-Oppression lens.”
The company declined to comment further on what that process was, as a spokesperson communicated to WRAL TechWire only that the blog post on the company’s website that contained the contents of Lawson’s email “has all the information we’re sharing about the announcement at this time.”
But a filing made by the company with the U.S. Securities and Exchange Commission provides some further details to how the decision was made.
According to the filing, the compensation and talent management committee of the company’s board of directors approved a restructuring plan “designed to reduce operating costs, improve operating margins, and shift the Company’s selling capacity to accelerate software sales.”
That plan will cost the company an estimated $70-90 million, according to the filing, and the process of laying off the “approximately 11% of the Company’s workforce” may take until the end of the year.
The filing notes that employees were notified of this plan by email on September 14, including the email sent to employees by Lawson.
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What employees were told
While Lawson wrote in his email that the company would “restructure” and said that laying off its workers was “wise and necessary,” he also took “responsibility for those decisions” that led to the layoffs.
Further, Lawson’s email, which would then be published by the company in a blog post, outlined that affected workers may not hear directly from their managers but would hear within two hours from a company representative.
Lawson outlined how the company determined it would lay off workers, writing “applied a rigorous selection process to examine which roles were most tightly aligned to our four priorities,” and went on to outline that investments in specific areas would be curtailed.
“As you all know, we are committed to becoming an Anti-Racist/Anti-Oppression company,” Lawson’s letter reads. “Layoffs like this can have a more pronounced impact on marginalized communities, so we were particularly focused on ensuring our layoffs – while a business necessity today – were carried out through an Anti-Racist/Anti-Oppression lens.”
