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How tech giants have been getting away with Age Discrimination

Corporate diversity initiatives have focused primarily on skin color, ethnicity, and gender thus far, but age should also be imperative.  Aside from it being an overlooked and unmonitored protected category, workforce demographics project a talent shortage for all diversity groups under 40.

In the coming months, IBM could face hundreds of lawsuits (and/or a class action suit) over age discrimination. The EEOC has concluded (and made “final”) that the company took steps to significantly reduce people in its workforce over the age of 40.

With nearly 400,000 employees worldwide, the way the tech giant responds – as well as the way they behave going forward – could set the precedent for how other companies treat their aging workforces.

After all, we do all get old (if we’re lucky).

It wasn’t until 1967 that the Age Discrimination in Employment Act (ADEA) forbade discrimination against workers over the age of 40 (but not under). And that’s precisely the legislation that the American technology and consulting company International Business Machines Corporation (more commonly known as IBM) is accused of violating.

IBM has been in the news for years over accusations of age discrimination, and they’ve also been accused of using threats over severance pay to discourage employees from filing lawsuits against them. Instead, IBM employees agree to go to arbitration over such claims when they sign their employment paperwork.

Age discrimination can be hard to prove, but the coming months will show us just how rampant the problem really is in the technology sector, where at least one study has suggested that workers begin to be pushed out and overlooked for promotions starting at age 29.

Ageism – the most accepted “ism”

Corporate diversity initiatives have focused primarily on skin color, ethnicity, and gender thus far. But the IBM case may prove to be an example of just how insidious age discrimination is as well (especially as it intersects with other protected statuses).

Forbes contributor Sheila Callaham called ageism “the most accepted -ism,” pointing out that it also may come back to bite companies in the near future:

There are two reasons why talent management strategy needs to make age an imperative – aside from it being an overlooked and unmonitored protected category. Age is a factor for all diversity categories, and workforce demographics project a talent shortage in the under 40 category.

The Bureau of Labor Statistics has estimated that workers aged 65 to 74 as well as 75+ are expected to increase faster than any other age group through 2024. The entire 65+ group is projected to grow by 75% by 2050. However, the group of workers aged 25 to 54 is only expected to grow a mere 2% over the same time period. Nevertheless, a 2018 EEOC report found that 60% of people over 50 have seen or experienced age discrimination in the workplace – and yet only 3% have formally reported it.

In other words, the talent pool is shifting and companies that discriminate based on age are at a disadvantage when it comes to getting ahead. And they may be about to get a big surprise if the IBM case encourages more people to make formal reports.

The EEOC statement

On September 2, 2020, the New York District Office of the Equal Employment Opportunity Commission (EEOC) concluded an investigation in which they uncovered evidence of “an aggressive approach to significantly reduce the headcount of older workers to make room for Early Professional Hires” at IBM between 2013 and 2018. (That doesn’t mean discrimination ended in 2018, only the cases that they were asked to investigate.)

Their letter to employees who have filed complaints against the company goes on to state that IBM engaged in “top-down” messaging that had adverse impacts on employees over 40.

Furthermore:

Analysis shows it was primarily older workers (85.85%) in the total potential pool of those considered for layoff. Evidence uncovered older employees who were laid off and told that their skills were out of date, only to be brought back as contract workers, at a lower rate of pay with fewer benefits.

The EEOC also revealed that dozens of IBM employees from across the country had corroborated evidence that age discrimination was sanctioned by the company.

However, the organization did not find enough evidence to substantiate other accusations of violations – of Title VII of the Civil Rights Act of 1964 or Title I of the Americans with Disabilities Act of 1990 – including discrimination based on national origin, sex, race, and disability, or retaliation against those who attempted to fight back or blow the whistle.

But because the company has been found to have violated the ADEA, they will be required to “eliminate the alleged unlawful employment practices by informal methods of conference, conciliation, and persuasion” and join the EEOC in helping to resolve the matter and prevent future infractions.

While that may sound like getting off lightly, the EEOC’s findings now open up IBM to a slew of lawsuits from those they’ve allegedly discriminated against in the past. This could cost the company many millions of dollars and pave the way for a federal lawsuit.

In January 2020, Arvind Krishna was announced as IBM’s new CEO. Despite accusations of discrimination within his company, he sent a letter to Congress in early June outlining the company’s policy proposals to advance racial equality. And while racism needs to be tackled in every field, he still has at least one other big “ism” to worry about.

Krishna announced that at least one senior executive who was involved in the company’s old employment practices would be departing, but the company still faces great scrutiny when it comes to ageism.

A long time coming

Anyone paying attention was likely unsurprised by the EEOC statement.

There have been high-profile age discrimination lawsuits against IBM before. Most recently, Jonathan Langley took the company to court, accusing them of firing him after 25 years of service because of his age.

He and IBM settled before the case could go to trial, but not before the judge in the case voiced his frustration at the company.

The numerous public statements by IBM’s CEO that can easily be read to suggest that IBM needed to replace older workers with Millenials, combined with other public statements suggesting that in the past five years IBM has replaced half of its 350,000 person workforce with young employees, is more than enough to meet this burden,Andrew W. Austin, a federal magistrate judge in Austin, Texas.

But that’s not all.

Two years of investigative reporting from the website ProPublica and magazine Mother Jones have laid out evidence that IBM engaged in a company-wide campaign designed to replace older workers.

Specifically, ProPublica has published evidence that they say shows 

IBM has flouted or outflanked U.S. laws and regulations intended to protect later-career workers from age discrimination.

Documents and interviews showed that IBM denied older workers access to information necessary to decide whether or not they had been victims of age bias and required them to sign away their rights to sue. They also contain evidence that the company targeted older workers for layoffs and firings even when they were rated as high performers (and used that money to hire younger workers in their place), and that they converted some job cuts into retirements. By doing so, they reduced the number of employees counted as layoffs in order to avoid making public disclosure requirements.

ProPublica also published reports that said IBM encouraged employees targeted for layoffs to apply for other positions while advising managers not to hire them. Older workers also said they were often required to train their own replacements. This would be particularly humiliating since older employees being laid off were told their own skills were out of date.

In general, IBM salary and compensation packages are said to lag behind those of other tech companies, particularly their cloud competitors. Their software engineers, for example, tend to have lower salaries, bonuses, and stock payouts. Perhaps that’s par for the course when the majority of your workforce is under 40 and there’s very little movement into senior positions.

But these accusations – and the lawsuits to come – are bound to cost the company money, not just in settlements and legal fees, but because a company with a tarnished reputation can’t attract the best talent. And a lack of diversity in the workforce (whether it’s skin color, gender, age, etc.) puts companies at a competitive disadvantage.

Discrimination doesn’t pay

IBM, of course, denies all allegations, even in light of the EEOC’s announcement and the investigative reports.

The company’s vice president for external relations, Edward Barbini, issued a statement denying that the company had ever discriminated against older employees:

IBM makes decisions based on the needs of its business units, not age,” the statement said. “We will continue to defend this matter vigorously.”

But the EEOC was very clear about its decision, saying it was “final.”

Shannon Liss-Riordan, a partner at Lichten & Liss-Riordan, PC, in Boston, recently wrote an email to The Register laying out what’s to come:

We are currently representing about 150 IBM employees who are claiming they lost their jobs because of age discrimination… A number of them have opted into our federal lawsuit, and a number of them are pursuing their claims through individual arbitration.

In the end, lawyers for former IBM workers told ProPublica that the decision may apply to over 6,000 ex-employees.

The number of people EEOC cites in making its determination and the details it provides indicate the agency is taking this case very seriouslyJoseph Seiner, an employment law professor at the University of South Carolina and former appellate lawyer for the EEOC

It seems quite clear in this case that ageism doesn’t pay.

Neither does gender discrimination, another accusation leveled at the IBM-owned firm The Weather Company in the UK. In August, IBM was ordered to pay £22,000 and two years’ salary to a British employee who blew the whistle on sex discrimination within the company and faced retaliation from IBM managers. They were also ordered to reinstate her after setting her up for a negative performance review that led to her termination. The tribunal in the case issued a scathing response to IBM, stating:

We have been concerned during this hearing that a number of the individual respondents, all senior managers within the first respondent’s organization, did not have any proper understanding of how discrimination could arise outside the most obvious situations of direct discrimination.

In addition, IBM settled 281 UK employment tribunal cases brought over age discrimination and constructive dismissal (when employees are forced to leave due to a hostile work environment) late last year.

It’s also telling that a former IBM vice president in its Global Engagement Office, Catherine Rodgers, claimed in an affidavit she was fired after pointing out that IBM was breaking age discrimination laws by firing staff over 40 at alarmingly high rates and that her superiors told her to hide information about staff departures from the US Department of Labor.

On October 8th, 2020, the company announced that it plans to break off its managed infrastructure services unit as a separate $19 billion public company based on their legacy infrastructure. Their plan is for the new, leaner IBM to focus on being competitive in hybrid cloud applications and artificial intelligence. It’s a $1 trillion market opportunity – but can they take advantage of it without a diverse workforce?

Tech has long had an age problem

Ageism is hard to detect, but it’s clear that people will be on the lookout for it from now on, especially as workers stay employed longer.

IBM isn’t alone in facing accusations of age discrimination in tech. For example, in 2019, Google settled an age discrimination suit for $11 million. That was after 227 people accused the company of systematically discriminating against job applicants over the age of 40.

Tech has long been a young field as it concentrates on flexibility, fresh ideas, and visions of the future. It’s ironic, then, that so many tech pros feel like they’re better at their jobs now than they were years ago and yet they’re at a competitive disadvantage for new opportunities. A Dice survey of 4000 tech workers found that roughly 68% of baby boomers don’t even apply for tech jobs because they assume they’re “too old.”

That meshes with other findings, such as a 2018 Stack Overflow developer survey that found that three-quarters of professional developers are younger than 35 and in 2018, less than 7% of professional developers were 45 or over. Worldwide, the average age of developers ranges between 22 and 29!

But age (or, in this case, youth) is one privilege no one can hold onto for long. Not to mention the idea that younger workers are more apt learners and have “fresher” ideas is simply a stereotype. Lumping all workers over 40 into a group of “aged” workers who command higher salaries while being less productive and reluctant to learn isn’t going to help a company’s bottom line.

The consequences of age discrimination are similar to discriminating against any other group – capable workers lose out on opportunities while a company’s bottom line suffers due to a lack of diverse viewpoints and true innovation.

Attention to ageism benefits us all

Not only do we all get older and potentially become the targets of age discrimination over the course of our careers, but we risk compounding other inequalities when we don’t address the problem.

The intersection of age with skin color, gender, and LGBTQ+ and disability status make discrimination even more common for workers.

As we address inequality in the workplace, it makes sense to keep an eye out for age discrimination and ways to apply engagement tactics and anti-discrimination policies to older workers.

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Visit our workplace diversity hub for further reading relating to current challenges faced by women and people of color, wage gaps, successful inclusion strategies, diversity in corporate and government leadership, effective talent acquisition and diversity programs, and how artificial intelligence affects diversity outcomes.

Sources

Cutting “Old Heads” at IBM (ProPublica, 2018)
https://features.propublica.org/ibm/ibm-age-discrimination-american-workers/

The U.S. Equal Employment Opportunity Commission Confirms a Pattern of Age Discrimination at IBM (ProPublica, 2020)
https://www.propublica.org/article/the-u-s-equal-employment-opportunity-commission-confirms-a-pattern-of-age-discrimination-at-ibm

Why The Most Accepted ‘Ism’ Will Become HR’s New Strategic Imperative (Forbes, 2020)
https://www.forbes.com/sites/sheilacallaham/2020/08/30/why-the-most-accepted-ism-will-become-hrs-new-strategic-imperative/

EEOC Finding Of Age Discrimination Against IBM Signals New Requisite For Diversity, Equity And Inclusion (Forbes, 2020)
https://www.forbes.com/sites/sheilacallaham/2020/09/20/eeoc-finding-of-age-discrimination-against-ibm-signals-new-requisite-for-diversity-equity-and-inclusion/?sh=184bee643793

Ageism Is Thriving, So What Are Companies Doing About It? (Fast Company, 2019)
https://www.fastcompany.com/90325055/ageism-is-thriving-so-what-are-companies-doing-about-it

EEOC Unearths Years of Intentional Age Discrimination within IBM
https://www.diversityinc.com/ibm-eeoc-unearths-years-of-intentional-age-discrimination/

Ageism In Tech: The Not-So-Invisible Age Limit Developers Face (TechTalks, 2019)
https://bdtechtalks.com/2019/03/29/ageism-in-tech-age-limit-software-developers-face/

Age Discrimination Common in Workplace (AARP, 2018)
https://www.aarp.org/work/working-at-50-plus/info-2018/age-discrimination-common-at-work.html

Age Discrimination Now Begins For Tech Workers at 29 (Workplace Insight, 2019)
https://workplaceinsight.net/age-discrimination-now-begins-for-tech-workers-at-29/

IBM Lags Google, Amazon, Microsoft in Engineer Compensation (Dice, 2020)
https://insights.dice.com/2020/10/19/ibm-lags-google-amazon-microsoft-in-engineer-compensation/

Jessica Baron, PhD

Jessica has a Ph.D. in History and Philosophy of Science. She works as a writer for DiversityJobs.com and is a consultant on a wide range of topics, including the ethics of science, technology, and medicine; science and pseudoscience in the wellness industry; national security; and diversity in the workplace.

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