A group of former employees has filed a lawsuit against IBM that accuses the tech giant of failing to comply with a federal law that requires companies to disclose the ages of people they lay off who are 40 or older. The suit, filed in federal district court in New York City, also alleges that the company has improperly prevented workers from combining to challenge their ousters.
It is the second broad legal action against IBM since a 2018 ProPublica story that documented widespread age discrimination by the company in its global restructuring. The former employees are asking the court to invalidate a written agreement that IBM requires its employees to sign to receive severance pay. Under the document’s provisions, workers agree to give up any right to challenge their dismissal in court.
Until now, most age-related legal actions contesting an IBM layoff have been brought by the rare ex-worker who refused to sign the agreement and left without severance. If the district court were to agree that IBM’s separation agreement is invalid, it could open the company up to lawsuits by tens of thousands of older workers IBM has laid off in recent years.
Today’s lawsuit and the string of other cases filed in the wake of ProPublica’s story face steep odds as a result of decisions by the Supreme Court and federal appeals courts that curtailed workers’ ability to challenge employers’ staffing decisions. The rationale is to limit what federal judges view as cumbersome, costly cases that hamstring both employers and the courts.
“The Supreme Court is hostile to class action, to collective action and to employees,” said Cliff Palefsky, a prominent San Francisco attorney who frequently represents employees. “Congress needs to step in to preserve the integrity of its own civil right laws, not just involving age, but also race and gender. So far, it hasn’t.”
ProPublica reported in March 2018 that IBM, which had annual revenue of $79 billion last year, had ousted an estimated 20,000 U.S. workers ages 40 and over during the preceding five years. In some instances, it used money saved from the departures to hire young replacements to, in the words of one internal company document, “correct seniority mix.”
The new lawsuit follows legal action last fall by Boston class-action lawyer Shannon Liss-Riordan, who filed a class-action case on behalf of 60 ex-IBM employees who had not signed the severance agreement and argued they had been discriminated against because of their age. In tandem, Liss-Riordan filed scores of arbitration claims for ex-employees who had signed the document, which only permits workers to pursue age claims in individual arbitration hearings.
The New York lawsuit opens a new legal front, challenging the IBM agreement’s one-at-a-time restriction as a violation of workers’ rights under the federal Age Discrimination in Employment Act. The law allows laid-off workers to take legal action against their employers as a group, either in court or arbitration.
“IBM against one person is not a fair fight,” said David Webbert, an Augusta, Maine, lawyer who, together with his partner, Jeffrey Young, and a Washington-based law firm, filed the new case. “IBM against thousands of people who’ve been laid off because of their age, that’s a legitimate legal proceeding.
“IBM is afraid of a fair fight,” Webbert said.
A spokesman said the company had no comment on the latest lawsuit. In response to ProPublica’s initial findings in 2018, IBM said: “We are proud of our company and our employees’ ability to reinvent themselves era after era, while always complying with the law. Our ability to do this is why we are the only tech company that has not only survived but thrived for more than 100 years.”
The new suit is filed in the name of four ex-employees who were in their mid-50s when they were ousted by the company, including Cheryl Witmer of Firestone, Colorado.
Witmer said in an interview she began her career repairing IBM Selectric typewriters in 1984 and was a program manager in the company’s cloud division in 2016 when she unexpectedly received a bad job-performance rating and was told she was retiring.
“But I’m not retiring,” she said she told her manager.
“Yes, you are,” she quoted the manager as replying. ProPublica documented dozens of similar employee ousters that began as layoffs but were converted to retirements, a change that kept down IBM’s layoff counts, where high numbers can trigger public disclosure requirements.
Witmer said she felt she had little choice but to sign the company’s severance agreement because she needed the money while she looked for a new job. “I couldn’t afford not to” sign, she said.
The ADEA requires that workers over 40 who are being laid off be told the job positions and the ages of the position holders who are being laid off with them so they can decide whether to pursue an age-discrimination case or to waive the right to do so.
IBM stopped providing this information to employees in 2014 when it rewrote its severance agreement. Under the previous agreement, departing employees could not receive severance unless they agreed to waive their right to pursue legal action. The new agreement employees were required to sign to receive severance did allow them to file claims of discrimination, but only in individual hearings before an arbitrator.
IBM executives appear to have concluded that this change in the document permitted them to stop providing the ages of employees were being laid off. Legal experts say this made it much harder to find evidence of age discrimination, which requires establishing a pattern drawn from large numbers of layoffs.
Until the newly filed suit, IBM’s decision to stop disclosing age information has not faced legal challenge.
