Older workers see little choice after layoff

Sunday, May 29, 2005
Times Business Writer brianl@htimes.com

Company waivers swap right to sue with cash payoff

As companies in Huntsville and across the country cut jobs, many older workers caught in the net think they were let go because of their age.

Age discrimination claims filed with the U.S. Equal Employment Opportunity Commission have risen steadily since 1999. Claims dropped slightly last year, but are still above mid-1990s levels.

The number of claims seems to mirror the slowing down of the U.S. economy and broader unemployment trends. Fortune magazine recently reported that the national trend is for older employees - ages 55 to 64 - to be cut first, a reversal from trends during the past 20 years, which saw layoffs first focused on the youngest workers, ages 20 to 24.

Intergraph Corp. and Sanmina-SCI Corp. have an-nounced restructuring plans in the past six months aimed at reducing costs. Intergraph says it will cut between 150-200 jobs over the next six quarters; those layoffs have already started.

Given both companies' long history in Huntsville, they have a high number of older workers. Federal law has consistently found that simply laying off older workers does not constitute bias, as long as other business factors, such as cost reduction or limited skills for new technology, are shown to be factors in the decision.

When is letting an older employee go age discrimination, and when is it simply a market reality?

The answer is elusive, complicated by the standard corporate practice of asking employees to waive any possible legal claims of age bias and related federal protections in exchange for an enhanced severance package.

Intergraph attorney David Lucas said the company takes its legal obligations seriously, is careful in its job cuts and does not discriminate. Lucas said the company's recent history includes thousands of layoffs as Intergraph exited the computer hardware business. Despite that heavy volume, he said, there hasn't been a "single substantial verdict against Intergraph in this area."

A longtime Sanmina-SCI employee estimated the company's December job cuts of around 80 employees focused largely on employees age 55 and up with years of experience. He said younger workers with less experience remained.

The former employee said the severance agreement asked employees to waive the right to claims under federal age discrimination laws and related protections in exchange for a lump cash payment. He said everyone he knows signed it, essentially exchanging a certainty of payment against the tremendous uncertainty of a drawn-out legal fight.

Sanmina-SCI has not returned calls seeking comment regarding the layoffs.

Edward Still, a Birmingham-based attorney who handles discrimination cases, said a company's decision to pay an enhanced settlement in exchange for a worker's right to sue makes good business sense.

"For a company to pay an extra few thousand bucks, that's good money for them," Still said. "They're knocking out the lawyers' fees."

The waiver departing Intergraph employees were asked to sign includes an agreement to waive the right to legal action against the company under a broad range of federal employment and discrimination standards, and an agreement not to "disparage, criticize or make derogatory remarks about Intergraph. ..."

A handful of former longtime Intergraph employees who spoke to The Times said they and several other employees who were recently let go feel their age was a decisive factor in being laid off; they requested anonymity for fear of being seen as violating the severance waiver terms.

Each of the former employees said younger, less experienced workers performing similar jobs were retained. Some of the employees said that, despite their belief they were treated unfairly, they signed the waivers because they need the additional weeks' salary, which was based on longevity, and continued health care benefits while they look for another job.

"If I didn't sign, my family wouldn't have insurance," one former Intergraph employee said.

Intergraph's Lucas said the waivers are a legal form of "belt and suspenders," designed to give employees additional benefits while protecting the company's interests.

Another former Intergraph employee considered filing an age discrimination claim, hoping to bring attention to the issue, but was advised by several people that, even if successful, the process would take years to resolve.

"I looked up cases online and they took four to five years to settle, even if the person won," the former employee said.

Attorney Still said age-bias claims tend to face difficulty from the start.

"You might not be able to find a lawyer to take your case," he said. "It becomes a matter of case selection, once you have experience with these cases. You'll see the facts and often have to tell them, 'In my experience, that's going to be very difficult to prove.' "

Still said age discrimination cases can take up to six months to get a required right-to-sue letter from the EEOC. Then the person has 90 days to file suit. In the Northern Alabama district, such cases take about a year to get to trial.

Most age cases, he said, are decided by a summary judgment before the trial, because age cases tend to pay significant attention to the company's right to "business reasons" for their termination decisions.

"It is the plaintiff's burden to show that the company did not have good reason to discharge you," Still said. "The burden always remains on the plaintiff. The burden on the defendant is to articulate a non-discriminatory reason for the dismissal. You've got to knock that down, show that is not the true reason.

"That usually requires direct proof, or something like examples of a sudden drop in performance evaluations, shortly before dismissal."

Dr. Jim Cashman, a management professor at the University of Alabama, said it's unwise to cut employees simply by age; the loss of competence and experience has a high, unseen cost.

"It really comes down to an availability of talent," Cashman said. "The harder it is to find, the more likely a company is to overlook the stereotypical markers you might apply."

Each of the Intergraph workers said they had consistently strong performance reviews; they were told they were being let go for "business reasons." The company has stated that it wants to raise its roughly 6 percent operating margins to the 8-12 percent range found in its industry peer group.

Cashman said strong performance evaluations weigh less heavily than the cost factors. "While a business can and usually does choose to influence your behavior by using at least annual performance reviews, those are often disregarded when these decisions are made," Cashman said.

The U.S. Supreme Court recently found for the first time that a neutral employer policy that results in "disparate impact" on older workers can now be used to bring an age bias claim. A policy's impact on a select group has long been used as a test in cases involving race or gender discrimination .

But the court also found that age may have relevance to an employee's ability to perform duties, and employers may consider it among other factors.

One former Intergraph employee said she hopes speaking up will bring additional attention to the plight of older workers. She believes she was treated unfairly, but doesn't see much recourse.

"I don't feel like I can take two years out of my life to sue these guys," she said. "They have lawyers, they know what they're doing."

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