1. Encounters @ Southern Bank
Allegations of both adverse impact and adverse treatment in the involuntary layoffs of bank employees

2. Case Background Southern Bank >$300 billion in Total Assets
Rapid expansion through mergers and acquisitions
Merged/acquired 12 institutions in Florida from 91-94
In 2014, total assets ~ $1.5 trillion and world’s largest bank according to market capitalization (~250 billion)
Over 3000 affected by involuntary layoff
Defendant in age discrimination case
ADEA protects workers of 40 years of age and older
Approximately 350 plaintiffs filed suit
Focus was on entire system for which we had data
Discovery was problematic
College recruitment, compensation, promotion, layoffs

3. Southern Bank 25,721 employees in dataset PM System
data file spanning
PM System
1-5 point graphic rating scale
Annual, top-down, single-source system
Many missing appraisal observations
Depositions of HRM staff asserted that PM ratings and length of service were the only criteria for reduction in force decisions
Naturally we focused on the tenability of this assertion
We began with establishing prima facie evidence

4. Prima Facie Evidence of Disparate Impact (Exhibit 1)
Table 4. Employment Status by Employee Age Group
Employment Status
Total
Retained
Involuntary Layoff
Voluntary Termination and Other
Terminated - Reason unknown
Age Group
Under 40 years of age
Count
1553
951
1676
836
5016
31.0%
19.0%
33.4%
16.7%
100.0%
40-49 years of age
779
547
511
298
2135
36.5%
25.6%
23.9%
14.0%
50-59 years of age
476
383
283
207
1349
35.3%
28.4%
21.0%
15.3%
60+ years of age
127
228
176
118
649
19.6%
35.1%
27.1%
18.2%
2935
2109
2646
1459
9149
32.1%
23.1%
28.9%
15.9%
Age of employees in 1994 was one month older than employees in 1991
It could not have been due to a higher voluntary termination rate among older employees because their rate of voluntary and other terminations was lower than that of employees in the youngest age group (23.9%, 21%, and 27.1% versus 33.4%).

5. Prima Facie Evidence of Disparate Impact (Exhibit 2)
Table 6. Proportional Involuntary Lay-off Rates of Each
Employee Age Group From
Age
Group
1991
Lay-off Ratio
1992
1993
1994
Under 40 years of age
Count
77/1630
710/2263
118/1671
46/1599
% Within Age Group
.047
.313
.070
.028
40-49
years of age
63/842
366/1145
82/861
36/815
.074*
.319
.095*
.044*
50-59
35/511
265/741
58/534
25/501
.068*
.357*
.108*
.049*
60+
17/144
176/303
23/150
12/139
.118*
.580*
.153*
.086*
Total
192/3127
1517/4452
281/3216
119/3054 %
.061
.340
.087
.038
11 of 12 differences in lay-off ratios are statistically significant
10 of 12 differences in lay-off ratios demonstrate adverse impact on ADEA employees
Aggressive lay-offs in 1992 produced a rate among 60+ employees that was almost twice that of those under 40 years of age

6. Do data conform to the deposition provided by HR staff executives?
Figure 17. Southern Bank Decision Model of Employment Termination
Years of Service
ADEA Status
Employment
Status
Job
Performance
Model 2 Coefficient is statistically significant.
Model 1 Coefficient was not statistically significant.

7. Do appraisal data relate to compensation?
Table 5. Correlations Between Age Group Variables and Percentage Change in
Hourly Compensation Among Management Employees of Acquired Institutions.
Percentage Change in Pay: Pre-Acquisition
Percentage Change in Pay:
Percentage Change in Pay:
ADEA Status at Acquisition
Correlation Coefficient
.118
-.101
-.232
Sig. (2-tailed)
.003
.026
.000 N
624
481
374
Age Group at Acquisition
.170
-.164
-.300
Note. 0=Non-ADEA 1=ADEA.
Trend reversal so that age becomes negatively related to performance ratings.

8. Conclusions
Among those for whom PM data were available, no rational logic could explain the pattern of empirical relations observed
Identifiable, legitimate factors could not explain ratings
Relations with employee LOS went from positive to negative from
Relations of pay and performance ratings went from positive to zero among ADEA employees but not among non-ADEA employees
44.8% of employees designated as PNE (position not evaluated) were subject to involuntary termination
r = -.75 between positions converted to PNE and presence of payroll record in 1994
Ongoing college recruitment programs hired several thousand new employees over the period while hundreds of laid-off employees had reapplied for their old positions and were denied employment
Both adverse impact and adverse treatment were viable allegations that could be substantiated by evidence

9. Final Report Conclusion
The series of analyses we reported in this document repeatedly support the allegation of age-related bias being manifest in a wide variety of employment decisions at XXXXXXX during the 2-year period immediately subsequent to the acquisition of large institutional competitors. The demonstration of age related bias was pervasive in most decisions involving employee retention including the designation of job as “position not evaluated” which was correlated with involuntary layoffs; the reversal in appraisal ratings relationship with age subsequent to acquisition; the higher promotion rate among employees younger than 40 years of age; the reversal in the relationship between age variables and percentage increase in hourly pay and the consistent demonstration of a negative age-pay raise relationship subsequent to acquisition; the fast-tracking of new management talent through the college recruitment program; and the often improbably high over-representation of older employees among those experiencing involuntary layoffs. This last effect was robust across most acquired institutions, job groupings, and years subsequent to acquisition.
Finally, these last series of tests conducted with the largest population of XXXXXXX employees available to us for analysis suggested a pattern of force reduction that systematically reduced the proportion of employees above the age of 40. Whereas younger employees tended to engage in higher rates of voluntary termination, older employees were designated at a disproportionate rate by XXXXXXX for involuntary termination through layoffs. A definitive test of two decision process models clearly indicated that the best explanation for employee status as a “layoff” versus “retention” was membership in the more senior age group (i.e., ADEA class membership) at the time of the decision.