Yahoo Accused of Bias in Use of Rating System

One of Marissa Mayer's signature policies as chief executive of Yahoo has been the quarterly performance review, in which every employee at the company is ranked on a scale of 1 to 5. The ratings have been used to fire hundreds of employees since Mayer joined the company in mid-2012.

Now, as Mayer prepares to announce a streamlining plan Tuesday that is likely to involve even more job cuts, one former manager who lost his job is challenging the entire system as discriminatory and a violation of federal and California laws governing mass layoffs.

In a lawsuit filed in US District Court in San Jose, California, on Monday, Gregory Anderson, an editor who oversaw Yahoo's autos, homes, shopping, small business and travel sites in Sunnyvale, California, until he was fired in November 2014, alleges that the company's senior managers routinely manipulated the rating system to fire hundreds of people without just cause to achieve the company's financial goals.

Anderson said the cuts, including what his boss said was the firing of about 600 other low-performing Yahoo employees at the time of his termination, amounted to illegal mass layoffs.

Under California law, the layoff of more than 50 employees within 30 days at a single location like Yahoo's Sunnyvale headquarters requires an employer to give workers 60 days of advance notice. A similar federal law, known as the Worker Adjustment and Retraining Notification Act, requires advance notice for a layoff of 500 or more employees.

Yahoo has never provided such notices. But it did cut 1,100 employees over a period of months in late 2014 and early 2015, ostensibly for performance reasons.

If the court finds that Yahoo violated either law, it could be forced to pay each affected employee $500 a day plus back pay and benefits for each day of advance notice it failed to provide.

The lawsuit comes as Yahoo morale hits new lows. More than one-third of the company's workforce has left voluntarily or involuntarily over the past year.

Mayer, who has presided over a continued decline in Yahoo's financial performance, faces pressure from activist investors to sell the company's Internet businesses or otherwise radically restructure the business. She has promised to unveil a new strategy on Tuesday, when Yahoo reports its financial results for the fourth quarter of 2015.

© 2016 New York Times News Service