Targeting older workers

[MBAustin]

Although I didn't w*rk at Big Blue, I was in management with two other megacorps that had similar (although less blatant) tactics as described in this article:

CUTTING ‘OLD HEADS’ AT IBM

I will say that in my experience, it was a combination of performance and pay rate that triggered a layoff notice - a highly paid person with a middle rating would be more at risk than a lower paid person with a lower rating, all else equal. But in general, higher paid is longer tenured, so it essentially was age-based.

It's a long article, so if you don't plan to read it all, scroll to the end for the punch line of why most of us are here on ER.org.

 

[Brat]

I did the first Age Discrimination in Employment Act investigation for USDOL based on compensation where all those terminated were highly paid older workers shortly after the sale of the business. The new manager explained to me that pay was a significant factor in determining who he would discharge. No employee was offered the chance to continue working at a lower pay rate. I interviewed the former owner about his compensation practices, he valued length of service. In as much as the fact that length of service and age are correlated and no terminated employee was offered employment at a lower rate.... bingo! Employer settled.

Subsequent cases that went to court ruled on both sides of that issue.

Later the DOL's Seattle office got bogged down in a ADEA investigation where the employer was alleged to have a policy that amounted to 'up or out' where compensation (as reflected by % in a pay range) would have been a key indicator. I think the employer exhausted the resources DOL had to investigate the issue. I remember seeing boxes of copies of personnel records they were trying to make sense of.

All of this happened before statistics software was available.

Were I to tackle the ilk of IBM or the above mentioned employer I would use the criteria claimed by the employer as well as age, % of range, length of service in a regression analysis and slice and dice until I found a statistically significant set of comparators. Before I would allow performance appraisals as a factor I would validate them as free from bias (in this area... I didn't fall off a turnip truck). I would also hire a Phd in Statistics who had used the Bayes' Rule successfully.

I have been long retired from this stuff but it still gets my neurons sparking.

Now this enforcement is in the hands of the EEOC. I am not sure that they are doing any class actions in this area.

 

[mystang52]

What a surprise, megacorp laying off higher paid older workers. Gotta confess, although I am 5 years happily ER'd (and I ER'd by choice from my last company), when I read articles like this I get upset and a tad bitter.

 

[CRLLS]

I worked at a Fortune 500 tech company when they announced that "We are actively working to reduce the average age of our workforce" or similar type wording. I always wondered how that would have played out in an age discrimination lawsuit.

 

[JoeWras]

I have many friends who have gone through this so called RA process. One was asked to co-locate to Bangalore. Seriously?

Sadly, the techniques and practices are being employed at many other Megacorps. It isn't pretty.

 

[Bamaman]

My Megacorp sent home the older, long term employees AND the college graduates hired the most recently. The older employees were 30 years and 55 years of older.

We had to sign a hold harmless agreement prior to receiving 5 weeks additional vacation, base salary for another year, state unemployment for 50 weeks and a pay supplement until age 62 and social security kicked in. My retiree HSA paid my healthcare premiums and my wife's Social Security supplement for 6 1/2 years.

Not a single person complained about those big company benefits. The funds received sure beat the money we would have drawn had we chosen to retire on our own.

 

[JoeWras]

My Megacorp sent home the older, long term employees AND the college graduates hired the most recently. The older employees were 30 years and 55 years of older.

We had to sign a hold harmless agreement prior to receiving 5 weeks additional vacation, base salary for another year, state unemployment for 50 weeks and a pay supplement until age 62 and social security kicked in. My retiree HSA paid my healthcare premiums and my wife's Social Security supplement for 6 1/2 years.

Not a single person complained about those big company benefits. The funds received sure beat the money we would have drawn had we chosen to retire on our own.

Problem is many Megacorps are providing waaaay less than this. That's extremely generous.

 

[Mdlerth]

There is a tide in the affairs of men which, taken at the flood...

My Megacorp sent home the older, long term employees AND the college graduates hired the most recently. The older employees were 30 years and 55 years of older.

We had to sign a hold harmless agreement prior to receiving 5 weeks additional vacation, base salary for another year, state unemployment for 50 weeks and a pay supplement until age 62 and social security kicked in. My retiree HSA paid my healthcare premiums and my wife's Social Security supplement for 6 1/2 years.

Not a single person complained about those big company benefits. The funds received sure beat the money we would have drawn had we chosen to retire on our own.

For me right now, that deal would be winning the lottery. But present it 10 years earlier, and it would have been a disaster.

 

[Brat]

The ADEA is/was an odd duck in that before an individual can sue they must file a complaint with the enforcing agency who then tries to mediate. Only after mediation fails can the complainant file suit. Many states have laws that are similar and are actually stronger from the complainant's point of view.

If I were a plaintiff's lawyer I would file in state court under state law whenever possible. The EEOC contracts with some states to enforce the Federal law. All of that happened after DOL lost enforcement authority so I don't know how that works from a practical standpoint.

 

[harley]

I have to admit my telecom Megacorp seems to have been pretty fair in it's force reductions. Most of the people I knew who got RIF'ed were lower performers, and when the company decided to get rid of it's older employees they did it with a fairly healthy retirement buy out. I actually had to cajole a RIF package out of them when I was ready to go.

I read most of the article (it was damn long!), and it sounds like IBM was way over the line of legal age discrimination. But I've almost never heard of anyone winning a suit against that. I think the law was passed in good faith, but with nothing behind it. It's too bad.

One person that might have a case is Andrew McCabe. They fired him 2 days before he was supposed to retire.

 

[USGrant1962]

One person that might have a case is Andrew McCabe. They fired him 2 days before he was supposed to retire.

Termination for cause and age discrimination are rarely the same thing.

 

[brett]

I worked in the industry from 1980 to 2010. Downsizing and outsourcing started at my employer in late 80's and continued until I left my management role. This article is really a mirror of what I saw in the industry as a whole.

It was much worse for US employees than it was for others employed in countries with significantly better employee protection. Not to mention much better termination packages that mirrored legal settlements. At the end, I saw termination benefits of 3 months for US employees while others with similar age and service would be getting a minimum of 15-18 months, including full benefits, in other country locations. Often more. I experienced, and had to manage through the last few years in this environment.

My understanding is that US organizations actually took bigger hits because they did not have the employee protection that most other western countries had. It was far less expensive, and took much less time to cut an employee in the US than it was to cut in other western countries. , etc. That is not to say that there were not cuts in these countries however US employees were recognized as 'easy marks' in the downsizing process. Hence the US generally took a higher rate of HR actions.

The big difference...employees woke up and realized that the true nature of their employer and began to act accordingly. I believe that this change ultimately had a negative effect on the P&L. Apart from constant downsizing and outsourcing I saw the wage overhead rate move from 1.51 down to 1.25. It was achieved by slashing benefits, cutting employee education, and of course by reducing pension entitlements.

 

[JoeWras]

This topic has me sad, angry and maybe even content in my decision.

It is time for me to get out.

30+ years ago I worked for IBM and it was a different place. It was part of American culture, part of the dream. I worked in an extremely diverse workplace with all genders, identifications, races, ages, etc. To me it was what America was striving for. But it was changing, and I got out in the early 90s, sensing an ugly shift.

Fast forward to today. Their systematic transfer of work to the cheapest corner of the world is ironically benefiting those of us who want to ER. Why? Profits. Is this good? Yes and no. I'm having a bit of heartburn about it with conflicting thoughts. I'm both sad and angry.

My Megacorp is doing similar. A decade ago, they offered voluntary packages. Today. No. Just a slow, systematic layoff method to "get younger." Yes, those words have been used openly.

Nobody retires. You can't find it anywhere on any website. People wait to be asked to leave, with the hope of getting 3 or maybe 6 months pay. That's sad.

And although I am admittedly jealous of some of the packages I see you all mention, and would love to get 6 months on the way out, I'm content in my decision to leave in May-June.

I think when I'm gone, I'm gone. I don't have any close friends there, and I really don't want to know what happens after I go. It is going to be time to make a clean break and look to the future. Worrying about what could have been if I waited for some package is ridiculous. I'm F.I.R.E. Looking ahead.

 

[mystang52]

..one more thing. This again shows that many people who want to w*rk to age 67, or 70, or whatever may not get that choice.

 

[Dtail]

Finally read the whole article....
That is why I took a package from MegaCorp, as I knew there was not 1 worker in my office who was over 60.

 

[marko]

..one more thing. This again shows that many people who want to w*rk to age 67, or 70, or whatever may not get that choice.

Despite a stellar resume and a 'name' in the industry, I was surprised by how difficult it was at age 53 to even get an interview after my company was acquired.

The polite, unspoken response was that I was just some rich guy who only wanted to play golf with clients for the next 10 years; which wasn't true, but...

Never got an offer, never got back into the saddle. Fortunately, I was FI many years before that. Best thing that happened to me, but without that FI, I'd have been in trouble.

Don't count on working till you're 70!

 

[cooch96]

Despite a stellar resume and a 'name' in the industry, I was surprised by how difficult it was at age 53 to even get an interview after my company was acquired.

The polite, unspoken response was that I was just some rich guy who only wanted to play golf with clients for the next 10 years; which wasn't true, but...

Never got an offer, never got back into the saddle. Fortunately, I was FI many years before that. Best thing that happened to me, but without that FI, I'd have been in trouble.

Don't count on working till you're 70!

Sounds like my former boss had a similar problem after he got bought out. Rumor was his only option was to buy his own company to run. Which I believe suited him just fine, but that does exclude the successful, non-management types.

Could you have gotten gigs as an independent consultant?

 

[marko]

Sounds like my former boss had a similar problem after he got bought out. Rumor was his only option was to buy his own company to run. Which I believe suited him just fine, but that does exclude the successful, non-management types.

Could you have gotten gigs as an independent consultant?

Maybe. At that point I wasn't very motivated.

My (highly compensated) contract prevented me from working in the industry for 2 years and by then, I had moved on from the working world. I had just found a better way of life by then.

I could've worked outside the industry in the meantime but every dollar I earned took a dollar away from the payout.

 

[RunningBum]

Back when I was working, we hired a guy who reluctantly took early retirement from IBM, because he's lose retirement benefits if he stayed on. He had an excellent rep in the industry. I had actually heard of him when I was in college, because my roommate was in the industry and was excited for me when I was hired out of college and would work at the same site as him. Anyway, we hired the guy, and that gave us a huge boost in credibility for our product line. Plus he was adaptable to our environment and new technology. Maybe overall IBM got what they wanted by giving a hard nudge out the door to older workers, but this one was a big loss to a competitor of theirs. I think he stayed on about 5-6 years before he left on his own terms.

 

[MRG]

Don't count on working till you're 70!

+1

Sadly I know some who are. One guy retired from IBM twice and is still working 60+ hours a week at Megacorp, he's pushing 80!

 

[USGrant1962]

That was a good, long article. They make a convincing case of systemic age discrimination at IBM.

Though they went a little overboard in suggesting that some of the unfortunate business practices are specifically targeted at older workers. DF worked for I've Been Moved and we moved 3 times. And outsourcing to India is epidemic in the tech world regardless of workforce demographics. Bringing in these examples dilutes their strong examples of involuntary retirement, internal age-biased presentations, etc. Things like involuntary retirement may also be gaming unemployment compensation law, which the article did not discuss.

DF took ER from IBM in 1990 with a very good package - a year's salary, retiree medical, full pension. Even then they let people know that it would be the last RIF package with full retiree medical. Sounds like he got out at the right time.

 

[Pilot2013]

DW works for an Engineering Construction company. They recently bought another EC company (although it is seeming more and more like it was the other way around), and the new Regional VP from the "other" company that took over at her office is systematically cleaning house of a significant number of the original company's "legacy" employees. As an 18 year, over 50 employee, she is on that list and her boss has mentioned on several occasions that he has been asked questions about her and one of her co-workers.

I have told her that if/when the day comes that they call her in, get information on the severance and agree to sign nothing and tell them she will get back with them after she has time to reflect (and check with our attorney, although I told her specifically NOT to mention an attorney). They may be slowing down as she works in the legal department and has seen a few EEOC claims come through from the recent terminations.

Should be interesting.

 

[brett]

A year or so I read an entry in an IBM former employees blog.

The entry claimed that IBM made their employee DC contributions on Dec. 31.

The rub? If you were not an employee on Dec. 31 you got nothing. That meant that any employee who resigned or was terminated did not get one dime in matching DC funds. If this is true, one has to question why you would work for an employer like this.

 

[neihn]

If this is true, one has to question why you would work for an employer like this.

It is true.

 

[Brat]

A severance package with a waiver of the right to sue should include a clause that the employee has the right to consult an attorney of their choosing and many include money for that purpose.

FYI, for you x-IBM employees who left about 25 years ago their EEO Manager and I were acquaintances. I had taken early retirement from DOL and was overseeing a local high-profile corporation's AA programs.