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Ex-IBM Employees Sue Company in Federal Age-Discrimination Lawsuit

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Four former IBM employees over age 55 sued the company Wednesday in what plaintiffs lawyers say is a potentially major age-discrimination lawsuit, alleging that top executives “took the calculated risk of openly breaking the law” to cover up massive, targeted layoffs of older workers.

The former workers, in a federal lawsuit focused on alleged company violations of the Older Workers Benefit Protection Act and the Age Discrimination in Employment Act, say they are just four of more than 20,000 IBM employees over age 40 who've been discharged during the past six years as the company secretly looked “to correct seniority mix” by replacing baby boomers with recent college graduates and other tech-savvy young workers.

The lawsuit centers many of its allegations on IBM’s alleged effort to conceal from older workers minimum information about the layoff demographics—information the plaintiffs say was required under the Older Workers Benefit Protection Act, or OWBPA—while asking the laid-off workers to release their federal right to bring age-discrimination claims collectively as a group.

Lawyers representing the plaintiffs at Cohen Milstein Sellers & Toll and Johnson Webbert & Young have also filed a separate-but-related arbitration action, they noted on Wednesday. In that action, their clients seek to have a notice issued to all older laid-off IBM employees who were allegedly also coerced into signing invalid releases. Moreover, the arbitration filing asks for certification of group collective claims under the Age Discrimination in Employment Act, as well as lost wages and injunctive relief, the lawyers say.

“IBM’s effort to discriminate was the culmination of its internal reviews that stereotyped older workers as rigid and unreceptive to technology, and branded millennial employees as innovative,” Cohen Milstein and Johnson Webbert said in a news release Wednesday that was issued shortly after their federal lawsuit was filed in court in White Plains.

“For example,” the lawyers said, “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.’”

IBM on Wednesday said in a statement that "the plaintiffs' legal theory will fail, as similar cases have, and we are confident IBM's agreements are valid and lawful."

Added company spokesman Ed Barbini, "IBM does not discriminate, and makes its employment decisions based on skills, not age."

The 19-page federal lawsuit launched by plaintiffs Steven Estle, Margaret Ahlders, Lance Salonia and Cheryl Witmer seeks declaratory and other relief, including voiding former employees’ waivers of their rights under theAge Discrimination in Employment Act, or ADEA.

The lawsuit itself, the plaintiffs lawyers noted in the news release, comes after the publication of a ProPublica story headlined “Cutting ‘Old Heads’ at IBM” that the lawyers say exposed the company's age-discrimination practices. Using footnotes in the complaint, the plaintiffs reference the article for certain allegations.

The former employees’ suit claims that in 2014, IBM ended its longtime practice of giving laid-off workers age-specific, demographic information about the layoff selections as required by the OWBPA.

According to the news release, “instead IBM began implementing a company-wide plan, hatched by top executives,” to hide evidence of “large-scale discriminatory layoffs—called ‘Resource Actions’—that eliminated older employees in favor of much younger ones.”

The four plaintiffs were terminated in resource actions in 2016, they claim. In the news release, their attorneys said past practice at IBM, dating back to 2001, was to give workers “comparator information” required by the OWBPA when the company sought rights-waivers as part of a group layoff.

“However, in 2014, IBM made an intentional decision to begin concealing this minimum information about the layoff demographics,” the news release said, adding that “IBM also coerced laid-off workers to sign arbitration agreements waiving their federally-protected rights to bring ADEA claims in court.”

Moreover, the suit alleges that IBM devised rules making older workers more likely to be selected for “resource actions,” including by exempting “early professional hires.” In addition, the company allegedly manipulated its performance review process by ordering the reduction of the annual performance ratings for older workers and by using a sham evaluation score for employees.

“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,” Jeffrey Neil Young, a partner at Johnson Webbert in Portland and Augusta, Maine, said in the news release.

In a phone interview, Joseph Sellers of Cohen Milstein Sellers & Toll said that he has "not seen before an effort like IBM’s to allegedly make an end-run around the OWBPA, and this lawsuit is challenging this unlawful tactic.”

He added that "IBM is relying on unlawful and unjustified stereotypes to remove older workers who have decades of tech experience, and this suit is also challenging that.”

The plaintiffs lawyers filed the separate-but-related arbitration claims because IBM’s severance agreement requires them to take their claims to arbitration, the lawyers said.