Yahoo Ex-Employee Files Lawsuit

A former Yahoo Inc. employee filed a lawsuit Monday saying that the Internet company used performance reviews to terminate workers without proper warning.

In the complaint, filed with U.S. District Court in San Jose, Calif., Gregory Anderson, a onetime editorial director who worked on Yahoo auto and travel content, said the company's employee rating system—which he alleges required that a certain percentage of staff be designated as low performers—was swayed by political manipulations, prompted competition so fierce it sparked a bribery attempt and violated employment laws.

"The [quarterly performance reviews] process was opaque and the employees did not know who was making the final decisions, what numbers were being assigned by whom along the way, or why those numbers were being changed," the filing said.

News of the suit was reported earlier in the New York Times.

Yahoo said its review process is rooted in fairness. "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," said a company spokeswoman.

Mr. Anderson was terminated in November 2014 while on leave and attending a journalism fellowship at the University of Michigan. He said he had earned "a promotion, raise and compliments" at Yahoo but was told at the time of the firing that he ranked among the lowest 5% of employees and that his dismissal was a result of the quarterly review process, according to the lawsuit.

The performance management approach, introduced by Yahoo Chief Executive Officer Marissa Mayer in August 2012, was similar to the controversial "forced ranking" or "stack ranking" systems previously used by General Electric Co., according to the lawsuit.

Microsoft Corp. and other big companies have moved away from stack-ranking systems in recent years, favoring more frequent feedback that doesn't rate workers with a number.

Yahoo employees received ratings from 0 to 5, numbers that paired with buckets ranging from "greatly exceeds" to "misses" expectations, according to the lawsuit. Managers had to assign a certain percentage of workers to each bucket, Mr. Anderson alleged. In so-called calibration sessions, higher-level managers were able to adjust the ratings of employees they didn't personally know up or down, he added in the suit.

Mr. Anderson alleged that the process let in managers' "personal biases and stereotyping" and encouraged gender discrimination. He also said that the company didn't comply with state and federal rules that require companies to give advance notice before big layoffs.

He said he suffered from "severe emotional distress" after the firing and is entitled to lost wages, benefits, bonuses and stock rights.

Write to Rachel Feintzeig at [e-mail]

(END) Dow Jones Newswires

February 01, 2016 19:45 ET (00:45 GMT)

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