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IBM Attempts to Side-Step Age Discrimination Law Using Arbitration

Friday, May, 16, 2014


IBM recently changed the way it handles terminated employees and age-discrimination law.  Legally, when an employee is fired they have the right to sue based on suspected age-discrimination.  Companies can ask employees to sign waivers of these rights as part of their severance agreement, but must legally provide detailed information regarding the age and job titles of all workers being let go as part of an organized “downsizing” theoretically concerned only with headcount and budget issues.


IBM recently changed the way they handle downsizing by offering employees arbitration instead as part of their severance, and using the change in language to justify not supplying the title and age information.  Technically, since the employees retain the right to pursue age discrimination cases, only through arbitration instead of the court system, IBM is not required to offer the employee information.


IBM claims the change is due to privacy concerns on the part of retained employees.  However, this claim has been rejected by most legal experts who see it as a move to make it less desirable for older employees who suspect age discrimination to take steps, as binding arbitration offers fewer options than lawsuits, which can be pursued alongside other negotiations or appealed if they end in failure.  The shift is also seen as part of a general movement by corporations to shift all liability claims to binding arbitration as opposed to litigation.  Whether State or Federal laws will be amended to require the disclosures in arbitration agreements as well remains to be seen.