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Upside Magazine
Techies complain of age biases:
by Norm Alster
December 07, 1998



Feeling a little pooped this morning? Just don't have the same zip you had in your late 20s? Better not confide that to your supervisor. Judging by the hiring habits in Silicon Valley and other high-tech hot spots, age--and the wisdom that we hope comes with it--aren't highly valued attributes. In fact, the contrary is true, according to a growing chorus of not-yet-geriatric workers. These professionals say all the talk about "negative" unemployment in high tech is bunk. They say there is unemployment in the land of chips and bits--among aging technicians and engineers who are often discriminated against by those doing the hiring and those who are cutting back as a result of reorganization or downsizing.

What has brought these complaints, which have been around for years, to the fore? Tech companies' recent efforts to boost the number of foreign workers they import. To make their case, lobbyists tried to enlist public support to influence legislation on the issue. However, this sort of lobbying, though often persuasive, can backfire.


So it is with high-tech employers who've complained bitterly that they can't find enough skilled American programmers and engineers. These employers' arguments regarding the H-1B program, which allows companies to hire foreign workers in specialty occupations, prevailed in the nation's capital in 1998. After months of legislative wrangling, on Oct. 21, the president signed into law the Workforce Improvement and Protection Act, which, among other things, will increase the H-1B quota from 65,000 in 1998 to 115,000 in 1999. But this victory opens the door on a much wider war.


In its high-profile efforts to deepen the pool of foreign workers, high tech has inadvertently drawn attention to its employment practices. Many believe that these practices include age discrimination. As a result, the Workforce Improvement Act includes a provision requiring the Comptroller General of the United States to prepare a report on older workers in the IT field.


Once thought to threaten only the silver-haired crowd, age bias is increasingly a risk for professionals in their 30s. In some workplaces, anger and anxiety about age bias have begun to produce a receptive environment for union activists.

The U.S. Equal Employment Opportunity Commission (EEOC) reports that there were more than 5,200 age bias complaints brought against high-tech employers from 1993 through 1997. Digital Equipment Corp. (now owned by Compaq Computer Corp.), Intel Corp. and many others have quietly litigated age discrimination lawsuits in recent years. But with many baby boomers approaching 50, age discrimination appears to be an issue lacking only a spark to set off an explosion. That spark could be a broad industry downturn that generates new waves of layoffs.


Industry pleas for an expanded labor pool have already triggered anger. Many midcareer American engineers and programmers, downsized and unable to find full-time permanent work, are surprised to hear about skills shortages that require the massive import of lower-cost foreign engineers. "This is probably the one issue that's had an impact where people are just livid," says Paul Kostek, president-elect of the Institute of Electrical and Electronic Engineers USA (the career and public-policy arm of IEEE).


The normally noncombative IEEE immersed itself in the Washington legislative battle over H-1Bs. And Kostek expresses concern that in the midst of a prolonged economic boom, unemployment among its membership has been climbing: Just 0.4 percent earlier in 1998, by August it had climbed to 2.2 percent. The IEEE has also found that for every year of age, it takes an unemployed engineer an average of two weeks longer to find a job. In other words, a 45-year-old is likely to stay unemployed 40 weeks longer than a job seeker who's 25.


An analysis of data on computer science graduates and civil engineers suggests that programming isn't a long-term career option. Norman Matloff, a computer science professor at the University of California, Davis, found that six and a half years after earning their degrees, 57 percent of computer science graduates were still working as programmers. After 20 years, only 19 percent are still programming. By contrast, 52 percent of civil engineers are still working in their field after 20 years. Matloff acknowledges that many computer programmers may go into management or consulting, which are natural career paths. But such options also are available to civil engineers.


Many companies continue to report shortages of software engineers, particularly when it comes to C++ and Java. "We absolutely see where there's a shortage," says Rodney Reese, vice president of human resources operations at PeopleSoft Inc.


in Pleasanton, Calif. "And there's high competition for these


people." In some cases, PeopleSoft must bid for talent. "We're seeing more people come to us who have [received] multiple offers," Reese says. Still, PeopleSoft has been able to find personnel: Reese anticipates that the company's payroll, which stood at 2,500 employees at the end of 1996, will grow to more than 7,000 by the end of '98.


Though common, recruitment problems for growing companies aren't universal. "Finding qualified programmers has not been a problem at Yahoo [Inc.]," notes Nancy Larocca, staffing programs manager for the Santa Clara, Calif.­based Internet search and directory company. Larocca reports getting 50 résumés a day for engineering positions. Since the end of 1997, Yahoo has increased employment by more than 50 percent--up from 389 full-time employees to more than 670.


Did the tech industry overplay its hand on the foreign worker issue? If so, much of the credibility problem can be traced to the Information Technology Association of America in Arlington, Va. In February, the ITAA said there were 346,000 vacancies in the United States for computer programmers, systems analysts and computer scientists. This number was quickly reported in an avalanche of "crisis" stories suggesting dire consequences for high-tech growth if the labor floodgates weren't opened.


Since then, industry players and critics have engaged in statistical cross fire. The General Accounting Office has criticized the methodology of the ITAA's studies, and others have poked holes in tech labor shortage claims. Matloff, for example, found in one of his studies that despite assertions that they desperately needed workers, virtually all companies were still hiring just 2 percent or less of programmer job applicants.


On the other hand, the industry has challenged one claim that 17 percent of programmers over age 50 are unemployed, though the IEEE's Kostek thinks it's a "pretty reasonable number."


Reconciling industry claims of labor shortages with contrary data requires evidence that older engineers, willing and able to be retrained in the most wanted skills, are being spurned. And for this there's plenty of anecdotal evidence:



At a job fair in suburban Boston, Robert Pettersen, who passed 50 some time ago, was patiently distributing his impressive résumé. He'd spent 18 years at Raytheon Co. of Lexington, Mass., before being "downsized" in 1996. It then took Pettersen 18 months to find a temporary contract job. Since that work ended six months ago, he's been able to get just one interview. "It's my impression [that tech companies] are going to replace highly paid, experienced professionals with people who have minimal experience," Pettersen says.


Gene Nelson, a 46-year-old with a doctorate in biophysics, is now forced to do telephone tech support in Texas. Nelson is convinced that because of his age and education, most employers consider him overqualified. "I've had to take my Ph.D. off my résumé to even get an interview at some companies," says Nelson, who doesn't believe there's a programmer shortage. "The shortage is of people who are fresh, inexpensive young blood."


Annette Kelaiditis, 44, holds a master's degree in computer science. She says she's been sending out résumés all year and has managed to get only one interview.


It took William Spence, a 48-year-old with a doctorate in physics, 19 months to find work after getting laid off from a Stanford University lab. "In programming, I found that age alone was a disqualifying factor," Spence says. Despite the fact that he has lowered his salary expectations and believes that he has "very transferable skills," several recruiters have told him directly, "An employer is not going to be interested in someone like you."

Says Nelson, "Age discrimination is so widespread that it's almost invisible." Or, as Mark Rudy, a San Francisco attorney at Rudy Exelrod Zieff & True LLP who has tried age discrimination cases, puts it: "It's rare that you see anyone over 40 being hired to do a job in the high-tech industries."


When asked whether he believes there's age discrimination in high-tech hiring, Robert Rivers, publisher of the monthly Engineering Manpower Newsletter, replies, "Absolutely, in caps."


The Age Discrimination in Employment Act of 1967 prohibits bias against workers age 40 and over in both hiring and firing. Although it's an issue in many industries, age bias looms larger in high tech. "I would say age bias is probably worse in high tech," notes Laurie McCann, a staff attorney with the Washington, D.C.­based American Association of Retired Persons Foundation Litigation. "There are stereotypes that older workers don't want to or can't learn new technologies."

"It's an issue in Silicon Valley more than anywhere else," claims Dru Anne Keegan, a plaintiffs' attorney in San Jose who is litigating an age discrimination case against Intel. "In Silicon Valley, unlike pockets of the industrial Midwest, there's no internal loyalty that goes both ways between employers and employees. It doesn't exist," she contends.


Intel is one company that has come under fire for its employment practices. Although the numbers are difficult to confirm, the company has been sued--according to some sources--more than a dozen times for age bias. Intel declined to say how many times it has been sued, but when it settles a case, it generally sees to it that court records are sealed--plaintiffs and their attorneys are muzzled.


A group that calls itself FACE Intel (Former and Current Employees of Intel) says that Intel has consistently weeded out older employees. Ken Hamidi, founder and spokesman for the group, was terminated in 1995 at the age of 47. He says that more than 400 terminated Intel employees have contacted FACE Intel in recent years. "We've seen that more than 90 percent of people who have been terminated by Intel are over 40," Hamidi charges. And that's a conservative estimate, he says. Intel has denied FACE Intel claims. Upside asked Intel to furnish data that would break out its hiring and terminations by age, but the company declined.


Other members of FACE Intel are also outspoken in their criticism of the chipmaker's employment practices. Cliff Thomure, a technician now on medical leave, says Intel uses loads of contract technicians. Some of them, Thomure says, will eventually be hired. "I've seen [Intel] hire a lot of younger technicians. I never saw them hire anyone over 40 as a technician," he says. "I believe they discriminate against older people."


Is there enough fear and resentment among employees at places like Intel to fuel a unionization effort? Probably not, at this point. But FACE Intel, which has received some support from the Communications Workers of America, is beginning to take steps that look like organizing.


The CWA will help FACE Intel print and mail a monthly newsletter to the homes of Intel employees in Chandler, Ariz. Hamidi is also planning newsletters for Intel workers in Portland, Ore., and Albuquerque, N.M. But he isn't so bold as to talk of unionizing Intel. After all, efforts to unionize well-paid professionals haven't generally fared well. Hamidi talks of organizing more along the lines of an "association" or "guild."


On the legal front, Abel J. Lebreton, 62, has taken Intel to court for, among other charges, "harassment and discrimination based on age." In his formal complaint, Lebreton charges an Intel manager with telling him that he was too old to remain at Intel, that he should retire and informing him that his job was for younger people. The case is in discovery in Santa Clara County Superior Court.


Lebreton's complaint also alleges that "Intel engages in a discriminatory pattern of practice against its employees over age 40, including [the] plaintiff, who have attained a higher level of pay, compensation and classification." Intel, in its reply, denies "each and every allegation."


All these claims beg a single question: If age bias is illegal, how could it be so common?


The answer begins with the fact that companies, no matter what they say, have economic motivation to discriminate. And they've become good at covering their tracks--legally. They've learned how to build cases against laid-off older workers, making age bias cases difficult to prove.


Let's begin with the obvious economic incentive. Younger programmers and engineers, along with foreign workers, earn less. In the high-tech industry, professionals with 20 years' experience earned 59 percent more than new hires in 1995, according to one study by University of California, Berkeley, economists. "H-1B [workers'] salaries are 10 percent to 15 percent lower" than those paid to comparable American employees, says the IEEE's Kostek. And because H-1B workers can stay in the United States only as long as their employers need them, they're less likely to demand lavish raises. "They're kind of indentured to the employer that brings them over," Kostek says.


Matloff, who testified before the U.S. House Judiciary Committee regarding the H-1B program, believes the salary disparity is even higher. He told the committee that based on his estimates and several studies, foreign engineers and programmers earn 15 percent to 30 percent less than comparable American tech professionals.


Younger workers, in addition to their lower salaries, bring another financial benefit. In many cases, they lower corporate health insurance premiums. The difference can be substantial, according to Manny Chrobak, assistant vice president of underwriting at Tufts Health Plan, a Waltham, Mass., health maintenance organization with 1 million members. Young workforces that carry low "risk factors" can cost up to 30 percent less than the average corporate insurance rate. But workforces with high risk factors can cost 1.5 times the average rate. Hence, in the most extreme cases, high-risk workforces laden with older workers can cost twice as much to insure. Workers over 50 are in higher risk categories. Women in the childbearing ages of 30-39 also elevate premiums, Chrobak notes. Twenty-somethings of either gender are the most cost-effective.


Overall, Chrobak says, high-tech companies carry a lower risk rating than most other types of companies. "They hire more younger people just out of college," he observes. Of course, there are other reasons to hire the young: their freedom and willingness to work long hours, as well as the greater probability that they've already had training in the newest skills. And don't underestimate the affinity factor: In companies started and staffed by workers under 30, graybeards don't seem a natural fit.

Though age bias is a crime with regard to both hiring and firing, employers have an easier time getting away with discriminatory hiring than firing. Few spurned job seekers will take on the burden of filing a suit just because their résumés were ignored or because they were never called back after an interview. But the engineer laid off from a job held for 10 or 20 years has an emotional as well as financial motive and is far more likely to sue.


Nevertheless, most older workers who lose their jobs in what they think are discriminatory layoffs never file suit. That's because many employers offer severance packages that require the recipient to sign away his or her right to sue. Such was the case with Leroy Guatney, who believes "it was age discrimination" when he was laid off after 22 years at Englewood, Colo.-based US West Communications Group. But Guatney had been offered a considerable benefits package. "I didn't want my benefits held up. I had to sign away the right to file suit."


By contrast, Bob St. Germaine resisted signing a no-sue waiver after he was cut loose by Maynard,Mass.-based Digital Equipment Corp. St. Germaine took Digital to court. Though he says he's been offered a substantial sum to drop his case, St. Germaine is pursuing the suit and is holding out for what he wants most. "I'm looking for reinstatement," he says. In the meantime, he has started his own business installing lawn sprinklers.


When companies terminate groups of employees and ask them to sign no-sue waivers, they must comply with specific federal legal requirements. The Older Workers Benefit Protection Act of 1990 requires employers asking for no-sue waivers to meet certain conditions, including consideration over and above the standard termination benefits. Catherine Ziehl, an assistant attorney general at the Massachusetts Office of the Attorney General, argues that this includes more than the company's normal severance package, a position with which the EEOC agrees. It must also supply layoff targets, along with the ages of all terminated employees. Thus, terminated employees can see whether there are grounds for a class-action suit before signing away their rights.


But some companies haven't complied with the little-known enhanced-severance-package requirement. The state of Massachusetts and the EEOC have filed suit against Bull HN Information Systems Inc., a unit of Paris-based Bull Worldwide Information Systems (which has its North American headquarters in Billerica, Mass.), alleging that the company hadn't properly enhanced its severance program before requiring no-sue waivers from employees who were being laid off. This case is pending. Some observers believe other companies have secured no-sue waivers without meeting all the legal requirements and are therefore vulnerable to class-action suits.


Winning an age bias suit is no slam dunk. Before layoffs are announced, companies try to document the rationale for their decisions, notes Boston attorney Robert R. Berluti of Berluti & McLaughlin LLC. "Engineering-oriented firms try to give [layoffs] a mathematical methodology, which they think will become a prophylactic against lawsuits," he says. For example, companies sometimes create grids listing their skills needs and then rank their employees in those skills. Such charts carry impressively ponderous names such as "skills mix analyses" and "stack ranking charts." The research behind these charts, however, is often shoddy, Berluti says. He tried one case in which a computer services company contended that his client, the plaintiff, only had experience working on mainframes, not PCs. Berluti was able to disprove that.


Companies with enormous legal resources can make it difficult on the plaintiffs and their attorneys, who often work on a contingency basis. Because they aren't billing by the hour, plaintiffs' attorneys have an incentive to keep their hours to a minimum. Corporate attorneys, however, by filing motion upon motion, are able to prevent them from doing so. They can also drag their feet in providing documentation during the discovery process. Such has been the case with Intel, according to attorney Keegan. She says Intel's tactics have required her to keep filing motions in response to the company's motions. "It's a lot of work," Keegan says. "Sometimes they wear the plaintiff down."

One question often at the heart of age bias cases is whether a company has the right to terminate workers because of their high salaries. Older workers typically earn more, of course. In Keegan's view, "The salary issue is merely a pretext for age discrimination."


However, a controversial 1997 California court decision will make it easier for employers to cite salary as cause for dismissing older workers in that state. In Marks v. Loral, the 4th District Court of Appeals in Santa Ana, Calif., ruled that employers can replace higher-salaried employees with lower-salaried workers, even if the displaced workers are over 40 and presumably protected by federal law. Plaintiffs' attorneys say this ruling will make it more difficult to prove age bias in California.


Three bills have been introduced into the California Legislature in an effort to undo some of the impact of the Marks v. Loral ruling. One bill passed easily, but Republican Gov. Pete Wilson vetoed it. "The business lobby has lined up against all these bills, calling them job killers," says Nathan Paxton, formerly a legislative aide to California state Sen. Quentin Kopp (I-San Francisco), who sponsored one of the bills.


In the wake of the ruling, the Los Angeles Times ran a critical op-ed piece by Fernando Torres-Gil, director of the UCLA Center for Policy Research on Aging. "Welcome to California, first in age discrimination," the headline said.


It's worth noting that the Marks decision is an interpretation of California law. Victims of age bias in California--as elsewhere--can still bring suit under federal law, says Susan Oxford, an attorney adviser to the EEOC's general counsel. "Generally, the EEOC does not agree that employers can defend a layoff that has a disproportionate effect on older workers on the basis that they're just trying to cut salary costs," she says.


Ironically, the protection of workers age 40 and over (however imperfect) may have created a new class of age bias victims: those just under 40. They are not protected by law, and some labor experts see them paying the price.


"We're seeing a lowering of the age at which people are being targeted [for termination]," says attorney Rudy. "In some areas, it's occurring in the mid-30s," adds newsletter publisher Rivers.


Former US West employee Guatney, for instance, says he was laid off just before reaching his 40th birthday. Such layoffs are a new twist on an old theme--layoffs that precede eligibility for wider benefits. Lebreton, for example, says he was demoted and harassed at Intel just as he was nearing the 15 years of seniority required to qualify for full retirement benefits.


Of course, the ultimate irony is this: High-tech companies may actually be encouraging future labor shortages. Though they've long deplored the inadequate enrollment of Americans in computer science and other engineering fields, their current employment practices could make things worse. Until now, says UC Davis' Matloff, most computer science majors were unaware of the realities of a labor market that doesn't encourage long careers.


"Once word gets around," Matloff predicts, "[it will] deter students from majoring in computer science."



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