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IBM cannot ditch a former employee’s arbitration demand for age discrimination claims even though he missed the arbitration agreement’s stated deadline, the U.S. District Court for the District of Massachusetts ruled Sept. 30.
The plaintiff in Rumsey v. International Business Machines Corp. was 52 years old when he was terminated via a group layoff in March 2016. At the time, he was presented with, and signed, a separation agreement with an attachment that required him to waive all claims against the company, except for Age Discrimination in Employment Act claims, which were to be handled via arbitration. In exchange, he received a severance of one month’s salary and three months of continued health and life insurance benefits.
The arbitration agreement also required the employee to file his arbitration demand according to the same deadline such a claim would need to be brought before a government agency — 300 days from the incident, in this case.
The worker filed a U.S. Equal Employment Opportunity Commission charge of age bias 89 days after his termination. The agency — after four years spent considering his charge, along with 61 other age claims against IBM — determined IBM likely did engage in age discrimination and issued a notice of right to sue in August 2021 to workers unable to reach an agreement with IBM through EEOC’s conciliation process.
The worker filed an arbitration demand in November 2021, but IBM declared the demand untimely, arguing he should have filed 300 days after his termination.
No valid agreement
The court considered the validity of the timeliness provision, whether such a provision was “unconscionable,” and whether the agreement could be considered valid.
The ADEA’s statute of limitations and the arbitration agreement’s deadline were “clearly in direct conflict,” the court found, given the ADEA has two deadlines: 300 days to file a charge with EEOC and 90 days following EEOC’s notice of right to sue.
Further, the court found this statute of limitations is substantive — an integral part of the law — rather than procedural, making it impossible to waive. While it noted disagreement across the circuit courts on this issue, it pointed to precedent suggesting the 1st Circuit, where Massachusetts is located, has indicated it would consider the statute of limitations substantive.
While IBM argued these arguments fail because the plaintiff signed the arbitration agreement, the court found that the ADEA’s limitations provision does not only apply to civil actions in court.
“It appears from the changes to the ADEA’s statute of limitations, the ADEA’s amendments, and the vigorous legislative history, Congress … did not intend for the ADEA’s limitations to be waived by contract,” the court said.
A history of age claims
Former employees, agencies and reports have spotlighted IBM for alleged age discrimination for years, making this claim one among many.
In 2018, ProPublica and Mother Jones published an in-depth report highlighting an alleged pattern of cutting older employees and replacing them with younger, less expensive workers. The report identified the movement of age claims to arbitration as a strategy for avoiding ADEA requirements.
More recently, an age discrimination lawsuit against the company included incriminating emails in which an executive allegedly said he wanted to “accelerate change by inviting the ‘dinobabies’ (new species) to leave” and make them an “extinct species.” Another executive allegedly lamented the low number of millennials at the company and said IBM needed to “hire early professionals.”
IBM eventually settled that case, court documents show.
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