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Former Yahoo Employee Files Lawsuit Over Performance Ratings

February 1, 2016, 11:43 PM UTC
The Davos World Economic Forum 2014
Marissa Mayer, chief executive officer of Yahoo! Inc., pauses during a session on the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, Jan. 22, 2014. World leaders, influential executives, bankers and policy makers attend the 44th annual meeting of the World Economic Forum in Davos, the five day event runs from Jan. 22-25. Photographer: Chris Ratcliffe/Bloomberg via Getty Images
Photograph by Chris Ratcliffe — Bloomberg/Getty Images

As Yahoo CEO Marissa Mayer prepares to announce a streamlining plan for the company on Tuesday, a former employee has filed a lawsuit against the company alleging he was wrongly terminated.

Gregory Anderson, a former editor, filed a lawsuit on Monday in federal district court in San Jose, Calif. in which makes several allegations concerning the company’s performance rating system as well as his own firing in late 2014, according to the New York Times. Anderson oversaw Yahoo’s (YHOO) autos, homes, shopping, small business and travel sites, and took a leave that summer to participate in a fellowship program in Michigan.

At the crux of the lawsuit is an infamous rating system (internally known as Q.P.R.) that Mayer instituted which assigns employees a rating on a scale of 1 to 5. The system has allegedly been used to fire hundreds of employees since 2012. Moreover, according to the lawsuit, managers have routinely manipulated Q.P.R. scores in order to fire certain employees without just cause, but they were also forced to give low ratings to a certain percentage of employees regardless of performance.

In late 2014 and early 2015, Yahoo laid off 1,100 employees, but failed to provide appropriate notices, as per California and federal regulations, according to the Times. Failure to do so can lead to penalties of $500 per employee, plus back pay.

As for his own situation, Anderson claims he was given low ratings and ultimately fired for complaining about the Q.P.R system and for reporting that another employee had attempted to bribe him to change someone else’s rating. According to the lawsuit, his leave in the summer of 2014 to study at the University of Michigan on a Knight-Wallace Fellowship was originally approved by two high-ranking executives, but he was terminated in November for being in the lowest tier of performance. He also claims that the Yahoo’s media group systematically favored women when it came to hiring, promotions, and layoffs.

Amid financial decline and calls from investors for the company to spin off its core business, its stake in Chinese e-commerce company Alibaba, or both, Mayer has been under pressure to turn the company around.

Yahoo is scheduled to hold its quarterly earnings call on Tuesday, during which Mayer is expected to unveil her streamlining plan, which will reportedly include cutting 15% of the company’s workforce.

We’ve reached out to Yahoo for comment and will update if we hear more.