Report Alleges IBM Age Discrimination With Layoffs

Big Blue allegedly flouts rules against age bias, axing mostly older staff and moving jobs overseas

IBM is accused of allegedly flouting age discrimination laws in the United States by pushing out Big Blue staffers aged 40 and upwards, and replacing them with younger, and cheaper employees.

This is the claim in an in-depth report published by ProPublica and Mother Jones. It also alleges that Big Blue has been sending a lot of the American jobs overseas.

The report’s accusations come after a number of large scale job cuts in recent years at IBM, as it seeks to transform itself into a cloud computing and data analytics powerhouse.

Older workers

It should be noted that age discrimination is illegal in the United States thanks to the Employment Act, which became law in 1967.

But proving age discrimination can be difficult, and matters are not helped by it reportedly being a common practice in America, as it provides businesses with a smaller salary wage bill and lower benefits outlay.

In the report, IBM is alleged to have laid off around 20,000 US employees over 40 years of age over the past five years. However some IBM watchers believe this number is much higher.

The report says that IBM reacted to the changing technology landscape with a strategy that, in the words of one confidential planning document, would “correct seniority mix.”

“It slashed IBM’s US workforce by as much as three-quarters from its 1980s peak, replacing a substantial share with younger, less-experienced and lower-paid workers and sending many positions overseas,” said the report. “ProPublica estimates that in the past five years alone, IBM has eliminated more than 20,000 American employees ages 40 and over, about 60 percent of its estimated total US job cuts during those years.”

“In making these cuts, IBM has flouted or outflanked US laws and regulations intended to protect later-career workers from age discrimination, according to a ProPublica review of internal company documents, legal filings and public records, as well as information provided via interviews and questionnaires filled out by more than 1,000 former IBM employees,” the report claimed.

ProPublica levelled a number of specific accusations at IBM.

Firstly, it claims IBM denied older workers information the law says they need in order to decide whether they’ve been victims of age bias, and required them to sign away the right to go to court or join with others to seek redress.

Forced retirements

IBM also allegedly targeted people for layoffs and firings with techniques (halting working from home in favour of centralised offices for example) that hurt against older workers more (younger workers more likely to move home). IBM apparently did this practice, even though it rated these staffers as high performers. The report alleges that in some instances, the money saved from the departures went toward hiring young replacements.

Thirdly, IBM is also alleged to have converted job cuts into retirements and apparently took steps to boost resignations and firings. Big Blue allegedly did this because high numbers of layoffs can trigger public disclosure requirements.

The ‘Watching IBM’ website has some examples here.

IBM also stands accused of encouraging staffers targeted for layoffs to apply for other IBM positions, while quietly advising managers not to hire them and requiring many of the workers to train their replacements.

It also is said to have told some older employees being laid off that their skills were out of date, but then brought them back as contract workers, often for the same work at lower pay and fewer benefits.

IBM response

According to ProPublica, IBM declined requests for the numbers or age breakdown of its job cuts. Although it did issue the following statement.

“We are proud of our company and our employees’ ability to reinvent themselves era after era, while always complying with the law,” said IBM. “Our ability to do this is why we are the only tech company that has not only survived but thrived for more than 100 years.”

IBM still employees 400,000 people around the world, with tens of thousands still in the United States. However some 130,000 IBM staffers are now said to be based in India and Bangladesh.

IBM chairman, president and chief executive officer Ginni Rometty has previously acknowledged that the company is shrinking “by design”.

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