IBM Sued for Massive Scheme to Cover Up Discriminatory Layoff of Over 20,000 Older Workers In Knowing Violation of Disclosure Requirements
First-ever lawsuit against IBM for its official policy of flouting the Older Workers Benefit Protection Act by concealing evidence of age discrimination
NEW YORK – This morning, former employees of IBM Corporation (NYSE: IBM) sued the tech giant in federal court in White Plains, New York for violating federal laws prohibiting age discrimination in the workplace: the Older Workers Benefit Protection Act (OWBPA) and the Age Discrimination in Employment Act (ADEA).
The suit alleges that in 2014 IBM ended its over ten-year practice of providing laid-off workers with age-specific, demographic information about the layoff selections, as required by the OWBPA. Instead, it began implementing a company-wide plan, hatched by top executives, to violate the OWBPA by concealing evidence of its large-scale discriminatory layoffs—called “Resource Actions”—that eliminated older employees in favor of much younger ones.
The workers bringing the lawsuit are all over age 55 and were terminated in Resource Actions at IBM in 2016. They are just four of over 20,000 IBM employees over the age of 40 who have been discharged by IBM during the past six years.
The OWBPA protects older workers from unfair coercion and manipulation when they are laid off and offered severance packages in return for the release of their rights to bring age discrimination claims under the ADEA. One key protection is that the employer cannot obtain a valid release from a group of laid-off workers of their rights under the ADEA without first providing them with age-specific, demographic information about possible age discrimination in the layoff selections.
The OWBPA strictly mandates, without exception, disclosures including “any eligibility factors” for the layoff, as well as the ages and job titles of everyone in their unit who lost their job and everyone in their unit who was spared. Congress determined this “minimum” comparator information was essential for employees to knowingly evaluate whether the layoff “may be designed to remove older workers from the labor force.”
Dating back to 2001, when seeking waivers as part of a group layoff, IBM provided the workers with the comparator information required by the OWBPA. However, in 2014, IBM made an intentional decision to begin concealing this minimum information about the layoff demographics. Contrary to its past practices, IBM began asking laid-off workers to release their right under the ADEA to bring age discrimination claims collectively as a group without providing any of the “minimum” evidence explicitly required by the OWBPA. IBM also coerced laid-off workers to sign arbitration agreements waiving their federally-protected rights to bring ADEA claims in court.
“IBM’s strategy--flouting the OWBPA’s mandated disclosures of key evidence of possible age discrimination--is a brazen attempt to cover up its flagrant and widespread discrimination against older workers,” said Jeffrey Neil Young, co-counsel for Plaintiffs and Partner at Johnson, Webbert & Young, LLP in Portland and Augusta, Maine.
“By filing this lawsuit, we are sending IBM the message that its openly lawless and deceptive behavior must stop now,” said David G. Webbert, co-counsel and Partner at JWY.
IBM took the calculated risk of openly breaking the law to cover up its massive layoffs of older workers, which were designed “to correct seniority mix” by replacing baby boomers in order to “shift headcount toward a greater % of Early Professional hires,” a term IBM uses for recent college graduates and other younger workers. This effort was the culmination of its internal reviews that stereotyped older workers as rigid and unreceptive to technology, and branded millennial employees as innovative. For example, an internal report of IBM described older employees as “gray hairs” and “old heads” and concluded that younger workers “are generally much more innovative and receptive to technology than baby boomers so changing the organizational technology and the processes it supports can be a wise move.”
“For years, IBM has systematically removed older employees from its workforce and concealed from them the information with which they could detect the discriminatory nature of these actions,” said Joseph M. Sellers, co-counsel for Plaintiffs and Partner at the national law firm Cohen Milstein Sellers & Toll PLLC. “IBM—and the technology industry more broadly—cannot push ‘baby boomer’ employees out the door based on unlawful stereotypes.”
As part of its corporate plan to remove older employees to make way for millennials, IBM’s HR Dep’t devised rules making older workers more likely to be selected for Resource Actions, including completely exempting “Early Professional hires.”
IBM also manipulated the performance review process by directing the reduction of the annual performance ratings for older workers. And it then used that sham evaluation score as a key factor to justify picking older workers to be discharged through the Resource Actions. All the plaintiffs in the suit received favorable satisfactory annual performance evaluations for many years but were let go based on recently downgraded scores.
At the same time, IBM made no secret that it was shifting its resources and focus to targeting a much younger demographic. For example, the company launched a blog, “The Millennial Experience,” and a social media campaign led by the hashtag #IBMillennial.”
“I did my job very well and received glowing remarks on my annual evaluations for 33 years,” said Cheryl Witmer, a plaintiff in the complaint who was terminated as part of a Resource Action in May 2016 at age 57. “Suddenly in my 34th year, I was unfairly downgraded in my annual evaluation. Nothing about my work changed; what changed is that IBM decided to replace me with a much younger worker.”
While filing their complaint in the U.S. District Court for the Southern District of New York asking the court to invalidate their release of their ADEA rights, the workers are also filing age discrimination claims in arbitration because IBM’s Severance Agreement requires them to take all their claims to arbitration.
The complaint comes after a bombshell story last summer by ProPublica, “Cutting ‘Old Heads’ at IBM,” which exposed a company-wide pattern of age discrimination practices spanning many units and geographical locations.
In addition to seeking to invalidate the illegal waiver of their rights under the ADEA, Plaintiffs will seek the issuance of notice to all other similarly situated laid off older employees who were coerced into signing the invalid releases and the certification of their collective claims under the ADEA, as well as declaratory, equitable, and monetary relief. Copies of the lawsuit and arbitration complaints are available through these links.
About Cohen Milstein
Cohen Milstein Sellers & Toll PLLC is recognized as one of the premier law firms in the country handling major, complex plaintiff-side litigation. With more than 90 attorneys, Cohen Milstein has offices in Washington, D.C., Chicago, Ill., New York, N.Y., Palm Beach Gardens, Fla., Philadelphia, Pa. and Raleigh, N.C. For additional information, visit www.cohenmilstein.com or call 202.408.4600.
About Johnson, Webbert & Young
Johnson, Webbert & Young, LLP, is the leading workers’ and civil rights firm in Northern New England. Partner Jeffrey Neil Young is an elected member of the Executive Board of the Nat’l Employment Lawyers Ass’n, and partner David Webbert is on the Super Lawyers List of the Top 100 Lawyers in New England. JWY has offices in Portland and Augusta, Maine. For additional information, visit www.johnsonwebbert.com or call 207.623.5110.