HP Faces Age Claim over Demographics Discussions, RIFs

By Allen Smith, J.D. Sep 6, 2016
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Discussions about generational differences may be in vogue, but incorporating such talk into company documentation at HP Inc. and Hewlett Packard Enterprise Company (collectively referred to as HP) violated the Age Discrimination in Employment Act (ADEA), according to an Aug. 18 complaint. 

It's "shocking" if older workers were stereotyped as slow workers, Baby Boomers as "rule breakers" and Millennials as, by contrast, "highly desirable," Jim Hammerschmidt, an attorney with Paley Rothman in Bethesda, Md., told SHRM Online.  The thrust of the generalizations was that older workers weren't up to speed anymore, he said, noting that HP allegedly discriminated against older workers in its reductions in force (RIFs).

Discussion of demographic characteristics "is fairly common" among HR, said Clare Draper, an attorney with Alston & Bird in Atlanta. He noted that there often are discussions about generational differences at professional conferences, usually based on studies. But documenting these discussions back at companies invites allegations, he said.

"To the extent you look at demographics, it's best to record studies rather than company impressions," Draper said. "Realize that there is a risk factor in the discussion of those factors."

And, he recommended, use the demographics discussions in a positive way as a means to accommodate employees, rather than as a reason for excluding or, as was allegedly the case at HP, laying off workers. Also, document that the demographics studies are being used in a positive way, Draper said, such as by offering telecommuting to improve retention of a particular demographic group.

So, bottom line: Whether company discussions of demographics are age discrimination "depends on what they're used for," said Draper.

CEO's Comments

Hewlett-Packard Company split in November 2015 to become HP Inc. and Hewlett Packard Enterprise Company. Both are technology companies based in Palo Alto, Calif.

The complaint alleged that there has been much ageist talk at HP in recent years. Meg Whitman, the CEO of the former Hewlett-Packard Company, the current CEO of Hewlett Packard Enterprise Company and the current chair of HP Inc.'s board of directors, "has publicly made it abundantly clear that her overarching goal is for HP to get younger," the complaint stated.

During an October 2013 securities analyst meeting, Whitman allegedly said, "Our labor pyramid … has become not a triangle. It's become a bit more of a diamond. And we are working very hard to recalibrate and reshape our labor pyramid so that it looks like the more classical pyramid that you should have in any company and particularly in ES [enterprise services]. If you don't have a whole host of young people who are learning how to do delivery or learning how to do these kinds of things, you will be in [for] real challenges." 

'College, College, College'

Whitman also allegedly said, "Changing the shape of your labor pyramid takes a couple of years, but we are on it, and we're amping up our early-career hiring, our college hiring."

HP instituted RIFs that allegedly targeted workers who were age 40 and older. Rather than truly reducing the workforce, HP replaced laid-off employees with recent college graduates, the complaint alleged. It also maintained that ads for the available positions blatantly said the openings were for recent college graduates. 

HP also made "blanket, stereotypical statements about large groups of employees based entirely on their age," the complaint contended. "For example, in internal documentation, HP stated that anyone born between 1930 and 1946 could be considered a 'traditionalist' who moves 'slow and steady' and seeks 'part-time work.' As for 'Baby Boomers' (born between 1946 and 1964), HP considered them to be 'rule breakers,' implying that this was undesirable." Conversely, when it came to Millennials, HP clarified that hiring new employees from this generation was "highly desirable. Indeed, HP specifically adopted strategies for 'integrat[ing] Millennials into the workforce' and 'educat[ing] managers and others on Millennial characteristics.' "

The complaint said, "HP's decision to define and refer to entire segments of its employees as 'slow and steady' or 'rule breakers' based on the year in which those employees were born is not only callous, but is at the heart of the very type of discrimination that the ADEA and similar California laws were intended to prohibit. Furthermore, promoting such stereotypes only further exacerbates unjustified biases against large portions of HP's workforce based entirely on age."

One plaintiff claimed that his supervisor described a phone call he had with HP's HR team as follows: The theme on the call "was, you know, 'college, college, college.' Everything was about refreshing HP's golden workforce. That was kind of the theme. I think they woke up and said, 'Man, everybody running around this place is old.' "

Waivers

Hammerschmidt noted that the four named plaintiffs were seeking to bring a class action. Usually with RIFs, employees sign releases waiving their right to file a discrimination claim in exchange for severance pay, he said.

Here the plaintiffs are seeking to get around the waivers by alleging that the required listing of all employees who were let go within the same decisional unit as the laid-off employees—along with these employees' ages—was faulty. The decisional unit was defined too narrowly to make it look like there was no discrimination, Hammerschmidt said.

And yet, according to the complaint, even with the decisional units being narrowly defined, older employees were significantly more likely to be terminated than younger employees.

Employers need to carefully vet RIFs and carefully select decisional units, Hammerschmidt said. And CEOs need to "watch what they tell analysts on the street," he added.

HP declined to comment for this article.

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