Legal ‘pit bull’ steps in as employees tackle IBM over age discrimination
Thousands of workers have been fired over the past decade to cut costs and retool workforces, write Gerrit De Vynck
Shannon Liss-Riordan has been compared to "a pit bull with a chihuahua in its mouth". In a career of almost 20 years the Boston-based lawyer has gone after companies that have either harmed consumers or their employees.
She has represented workers against Amazon, Uber and Google and has styled her firm as the champion for employees left behind by powerful technology companies. Now Liss-Riordan, 49, is gunning for IBM. Last week she filed a class-action lawsuit on behalf of three former IBM employees who say the tech giant discriminated against them based on their age when it fired them.
"Over the past several years, IBM has been systematically laying off older employees to build a younger workforce," the former employees say.
In the past decade, IBM has fired thousands of people in the US, Canada and other high-wage jurisdictions to cut costs and retool its workforce after coming late to the cloud computing and mobile tech revolutions. A newer crop of tech giants has outpaced it in size, revenue and prestige.
That is why we have been and will continue investing heavily in employee skills and retraining — to make all of us successful in this new era
The waves of firings spawned a legion of disaffected former employees who congregate online to air their grievances and swap stories. To them, the firings are a mockery of the values they signed up for when joining the company.
IBM argues that changes in its workforce are necessary to stay fresh and competitive. "Since 2010 there is no difference in the age of our US workforce, but the skills profile of our employees has changed dramatically," says IBM spokesperson Ed Barbini.
"That is why we have been and will continue investing heavily in employee skills and retraining — to make all of us successful in this new era."
But the company is under mounting pressure to change its behaviour. In March ProPublica published a damning report making the case that IBM systematically broke rules on age discrimination. The US Equal Employment Opportunity Commission has consolidated complaints against IBM into a single, targeted investigation.
Liss-Riordan, a partner at Lichten & Liss-Riordan in Boston, expects many former IBM employees to join her lawsuit.
"A lot is at stake for IBM — how they’re going about making these decisions for their workforce really needs to be addressed and reassessed," Liss-Riordan says. "It will be in the thousands of people who will be affected. We think IBM should pay these employees."
If she is successful, IBM may be on the hook for hundreds of millions of dollars in damages and may take a hit to its reputation as being among the world’s most benevolent employers.
IBM is hardly the only big company that fired people in an effort at reinvention. General Electric has cut thousands of workers and sold off entire business units. But IBM has stopped disclosing the number of people it has cut in the US or how many it employs.
In interviews, more than a dozen recently laid-off employees say near-constant, rolling firings have created an atmosphere of confusion and fear in many parts of the business, particularly for older employees who feel they are the most likely to be terminated.
Former managers say significant amounts of their time were spent figuring out who to let go next. Other workers talk of constantly reading the tea leaves, swapping gossip about what division could be hit next and trying to transfer to a more favoured group in time to avoid getting cut.
For most of the past two decades Belinda Kromer’s life revolved around her job at IBM. She crisscrossed the US southwest selling mainframe computer software, the data-crunching behemoths that have been crucial to IBM’s success for many decades.
For the single parent, spending half her time on the road was not easy, but the job paid well and helped put her son through college. Earning about $115,000 a year not including bonuses, Kromer planned to work right till she was 70.
In 2017 IBM fired her. Her father had died a week earlier. Kromer says she had just received a glowing review from her manager but was told her skills were no longer relevant. Now 65 and tethered to the small Texas town where she owns a home and still supports her son, she struggles with her new status.
"Getting up in the morning and not logging into your computer is a weird thing if you’ve done it for 17 years," she says.
She is having a hard time finding work. In August she applied for a retail job at her local home improvement store. "They told me I was overqualified."
Kromer will not be participating in the lawsuit. She is one of thousands of employees who signed away their right to sue; Kromer did it so she would get a pension for her final year of employment. Workers typically agree not to sue IBM over age discrimination, individually or in class-action lawsuits. It’s a policy common in corporate America and one that was recently affirmed in a May 2018 Supreme Court ruling.
But over time, IBM has decreased the amount of severance it offers to just a month in most cases, say former employees interviewed, who spoke on condition of anonymity for fear of repercussions.
For some the offer was so inconsequential they decided to leave the money on the table and retain their right to sue later. These are the people Liss-Riordan is counting on.
One of those people she is representing is Edvin Rusis, 59. He joined IBM in 2003 during the $2.1bn acquisition of Rational Software, where he was working at the time. The first firings came barely a year later, but he held on. The work his department was doing seemed to be in high demand. Still, in March 2018 the firing machine found Rusis. His managers refused to give him a reason besides vague mentions of his skills not being up to date, Rusis says.
Liss-Riordan is a formidable lawyer, but the case her firm is best known for has not been an unalloyed victory. A high-profile campaign to get Uber to recognise drivers as employees resulted in an initial $100m settlement but was subsequently blocked by a federal judge. She is still going after Uber, including filing a separate lawsuit against co-founders Travis Kalanick and Garrett Camp.
Age discrimination is a tough issue on which to hang a class action. For a court to allow Liss-Riordan to represent fired IBM employees as a class, she would need to show that age discrimination affected all the employees in the lawsuit, says Michael Willemin, an employment lawyer with Wigdor who is not involved in any IBM-related case.
Liss-Riordan believes the evidence is there. The ProPublica story cited internal IBM documents that, among other things, mentioned a strategy of "correcting the seniority mix". IBM also fired people for not having the necessary skills, but rehired them as contractors in similar positions, ProPublica reported.