Yes, an employer is of course free to reduce force, and re-organize operations with new lines of reporting. It is not legal to prefer younger workers over older ones in deciding who to retain. Matthews v. Commonwealth Edison Co. (7th Cir. 1997). See also, e.g., Cronin v. Aetna Life Ins. Co. (2nd circ. 1995) 46 Fed.3d 1194, 1195 and Uffelman v. Lone Star Steel Co. (5th Cir. 1989) 863 Fed.2d 404, 407-408.
In this continuing nightware of lay-offs, some employers are using the lay-offs not just to save costs, but to replace older workers (who may be perceived as less energetic, less able to learn, or more likely to have medical disability and absences). These motives are illegal, and while the discovery and effort are greater to prove the lay-off was discriminatory, the case can be made. In part, that is because the proof does not have to be by an admission of bias, but can be based on circumstantial, indirect evidence that places the "official reason" in serious question, and permits a "reasonable inference" that bias was behind the selection. Reeves v. Sanderson Plumbing (2000) 120 S.Ct. 2097, 2106.