Is Big Blue Hostile To Gray Hairs?Michele Galen
When Richard Rathemacher, a systems engineering manager, left IBM in August, 1987, he wasn't really fired, the company says. And the 30-year veteran agrees. Instead, he says IBM threatened him with an "unsatisfactory" job rating and then "suggested" he sign up for a 1986 early-retirement plan. He initially signed up under duress but then wavered. IBM, meantime, stripped him of his title and duties and reassigned him to an abandoned office, with no supplies, no switchboard, and no secretary. Weeks later, Rathemacher, then 55, arrived at work to find that his office had been cleared out the night before. "At that point I said, `Maybe I'd better take the retirement plan.' I had absolutely no choice," says Rathemacher.
Now, with the Oct. 7 opening of his age-discrimination suit, Rathemacher is forcing IBM to tell it to the jury. In a trial pending in U. S. District Court in Trenton, N. J., he accuses IBM of making work so intolerable that any reasonable person in his circumstances would resign. He seeks lost pay of about $75,000 a year, plus punitive and other damages.
At its core, the Rathemacher case raises this question: Does IBM discriminate on the basis of age? "This age-discrimination attitude goes all the way to the heart of the organization," Rathemacher's lawyer, Nancy Erika Smith, said in her opening argument. She cited an IBM policy forcing 100 key executives to vacate those jobs at age 60.
IBM denies it mistreated Rathemacher and counters that he left "voluntarily" with a "very generous severance and retirement package" after consulting legal counsel and his accountant. IBM lawyer Michael Furey calls the case "a tragedy, but not because of age discrimination. There were serious problems with Dick Rathemacher's performance."
STICKY QUESTION. Barring an out-of-court settlement, the trial promises more than just IBM Chairman John F. Akers as a witness. In an era of corporate downsizing, the case raises for all employers the sticky question of whether early-retirement plans mask age discrimination. "The programs and the manner in which they're applied could be more of a shove than a helpful offer," says Christopher Mackaronis, an age-discrimination lawyer.
For the past decade, companies have shrunk payrolls by offering early retirement incentives. The packages are legal as long as older workers leave voluntarily and the buyouts aren't part of a scheme to hire younger, cheaper labor. But the line between lawful incentives and coercion amounting to age discrimination "is still very murky," says Cathy Ventrell-Monsees, a lawyer for the American Association of Retired Persons.
Even if the plans fall squarely within the law, they raise other problems. Seniors object to any presumption that older workers aren't as capable as younger workers or are less willing to work. Moreover, the cost of retraining and recruiting could offset any savings from the job cuts, says Robert Tomasko, a downsizing consultant at Arthur D. Little Inc. "Companies focus on lowering head count instead of on what skills they need for the future," he says.
Rathemacher's case cuts to the heart of IBM's "full employment" policy, which originated with founder Thomas J. Watson Sr.'s vow not to lay off workers for economic reasons. Instead of layoffs, the slumping computer giant has offered six early-retirement and other incentive programs in five years (chart).
HOLLOW PROMISE. Now, Rathemacher intends to call Akers to the stand to show that for older workers, the no-layoff promise is a hollow one. Akers testified in a deposition that one reason the company offered the retirement plan was to eliminate older, more highly paid workers--evidence that U. S. District Judge Anne E. Thompson said suggests the plan "may have had impermissible goals." In the same pretrial ruling, she also said that Rathemacher's evidence of how IBM treated age-discrimination charges is "indirect proof of institutionalized age bias."
Another element of Rathemacher's case is his attempt to show that IBM used negative job appraisals as a way for managers to force seniors to accept early retirement, then turned a "blind eye" to their complaints of age discrimination. That charge calls into question IBM's long-standing "open door" policy, which encourages workers to take their gripes to top managers, even to Akers himself, with the assurance that they'll be investigated fairly.
Rathemacher excelled at IBM for most of his career, winning numerous sales and achievement awards. But in early 1985, his new manager, Charles Quinn, passed him over for a promotion, saying, according to Rathemacher, that he wanted "new young blood in that job." Quinn later raised questions about Rathemacher's work. In early 1986, court records say, Quinn reorganized the branch and put Rathemacher in charge of mainframe computers, even though all of his experience at IBM had been with small systems. Then, in a November, 1986, meeting, Quinn blasted Rathemacher's performance and ability to get along with colleagues. In the same meeting, he brought up early retirement.
Before and after he reluctantly signed on, Rathemacher says he protested to superiors that he was being mistreated on account of his age. In July, 1986, he complained informally to one of Akers' assistants. But after speaking to Quinn and others, Rathemacher says the assistant told him, "At your age, hang on to your job and keep out of people's way." In March, 1987, Rathemacher filed a formal open-door complaint with Akers' office, and in June, 1987, he sought a rehearing. Both times, he says, investigators interviewed Quinn and other managers but failed to explore fully his side of the case.
SECRET TAPES? IBM is fighting back hard. The company will call employees to testify that Rathemacher's performance began "a precipitous decline" in November, 1984. The particulars: "persistent negativism, insensitivity, rudeness, verbal abuse, and poor interpersonal relations with his co-workers." And, says IBM, Rathemacher secretly taped conversations with his managers and co-workers, "presumably in an effort to manufacture an age-discrimination lawsuit." IBM will also defend its famous open-door and no-layoff convwntions. "IBM has a very proud tradition of never having laid off a single individual to cut costs," Furey said in court.
Win or lose, IBM will pursue its previously announced plans to pare 17,000 more workers, largely through retirement incentives. Employees who accept them must waive their rights to sue the company. And in early October, IBM formalized plans to stiffen its performance standards to weed out weaker employees and reward stars. A spokesperson says IBM is seeking "to raise the bar on performance to meet international competition." Rathemacher doesn't buy that. And if he wins, IBM will be under extra pressure to make sure the bar is raised to the same height for everyone.
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