In case you haven’t heard, once again AT&T is being sued for discriminating against its very own retirees … read about it HERE. 
Yes, I know. The blog used to post crazy stories about my childhood. Now all you get are stories about Starbucks and AT&T.
All I can say is, “Watch out now, you may learn something.” See, one of the nice things about being an MBA candidate is that I get to play armchair judge. What follows is my ruling in the case based upon the mock trial we conducted.
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Though outwardly and at first blush the case possesses the hallmarks of a disparate impact or age-based discrimination lawsuit, upon investigation of the facts the court believes neither to be accurate. Instead, the court believes the Plaintiff’s charges of disparate impact and/or age-based discrimination are defeated by the Defendant’s claim of business necessity.
The very same negative economic situation affecting the Plaintiff(s) seeking reemployment is affecting AT&T. As such, it is patently unfair to force AT&T to incur a greater economic burden by, in essence, expecting AT&T to serve retirees as a place of hop-on/hop-off employment. Additionally, it is unrealistic and shortsighted to believe that the burden of rehiring 400 people would not have tremendous operational impacts upon AT&T. It is also shortsighted to believe, especially during the current and future similar economic downturns, that droves of retirees would not use this incident as a precedent to file comparable litigation.
AT&T has demonstrated a willingness to temporarily employ its retirees to meet business demands (Slackman, 2008). It has also demonstrated a willingness to employ American citizen when the opportunity to do so is in its best fiscal interest. Case in point, AT&T has sought to return 4000 jobs previously performed offshore to the US (Karpinkski, 2009). To answer Ms. White’s charges that “it is ironic that within the time frame between the 2006 early retirement of the plaintiffs and 2008, AT&T issued a statement that they were having difficulty finding qualified workers in the US;” the investigation indicates a divorce between perception and reality. Citing a near 50% high school dropout rate in portions of the United States, AT&T’s CEO went on to explain that
The “American public isn’t educated enough to handle customer service jobs at AT&T and probably thousands and thousands of others with all different kinds of employers, these companies will have little choice but to continue shipping jobs overseas” (Cafferty, 2008).
Additionally, the skill set AT&T is seeking and the skill set the Plaintiff(s) offer may not have been equitable, and geography may have played an important role. As such, the irony is not the CEO’s comment but the Plaintiff’s use of this counterproductive quote.
What these employment-related examples illustrate is a company that forecasts, budgets, and manages itself to be successful for its shareholders, while also being conscientious of public opinion and the law. Though not relevant in my ruling, AT&T has been cited numerous times for social awareness and inclusivity. These accolades speak to its character as an organization. Conversely, and also absent from weight in my decision, are AT&T past legal indiscretions. The company has, as many pointed out, been successfully sued for similar –but not identical– situations. These are NOT indicators of character, as they are situational and not applicable in this Judge’s ruling.
In cases of disparate impact, which is what the Plaintiff asserts this case to be, the burden of proof lay with the Plaintiff. Defendants can counter disparate impact by claiming business necessity, which is what AT&T has done. To that end, the court agrees with Mr. Hansberger’s assertion that “’employers enjoy fairly wide discretion to adopt hiring practices that they deem valuable to their organization’ resulting in laws that are ‘more proscriptive than prescriptive’ (Azera) . The laws are written this way in order to allow employers the latitude required to run a successful business. If the laws were written or interpreted in a highly restrictive manner, it would become impossible for employers to efficiently allocate their human resources” (Hansberger).
There is a fundamental difference between what Ms. White deems the Plaintiff’s “right to pursue gainful employment after retirement” and one’s right to be hired. AT&T’s refusal to rehire retirees does not preclude the Plaintiff’s right to pursue such employment; the two are mutually exclusive. As Ms. White stated, the members of American society have aged and the demographic has shifted. The reality is that this change does not favor the Plaintiff, as the change sees so-called 83 million baby boomers retiring at a hire rate than any other segment of American society (L’Allier and Kolosh, 2005).
As Ms. White asserted, “Workforce planning strategies are used to reshape a workforce in response to skill set requirement changes in response to functions of organizations changing. Resource managers do not offer an early retirement to a seasoned worker who has the skill set needed. This does not make fiscal sense” (Ryan). Furthermore, Ms. Ryan goes on to claim that the “VRIP and ERP programs are used to reduce, reshape or restruct
ure the workforce of an organization. These retirement incentive programs are costly in the short term however, cost savings are realized over the long term in savings of salary and benefits. In addition, a restructure of the workforce may mean that the function requires a different skill than what the retired employee has” (Ryan).
To expect that the former employers of these retirees should be obligated to rehire them at the whim of the retiree holds potentially catastrophic economic results. The Nation is entering an era wherein population growth is dipping below levels in the 1950’s; conversely, the work force population has held steady for two decades and is forecasted to remain steady out until 2050 (L’Allier & Kolosh, 2005). As such, the burden of rehiring retirees while the workforce population provides suitable alternatives is a case of business necessity and common sense.
Additionally, the case possesses elements of a legally-binding business contracts. As Ms. Tinsley argued, AT&T’s Voluntary Retirement Incentive Plan/Early Retirement Plan (VRIP/ERP) package is both voluntary and contains consideration. ‘The consideration is something of value to which a person is not already entitled that is given in exchange of an agreement to do, or refrain from doing, something’ We believe that the consideration was accepted by Yates and many others in exchange for him resigning from his job not to return” (Tinsley).
The court agrees that, from a contractual perspective, the scenario meets all of the requirements to being a legally binding contract. Upon acceptance of the VRIP/ERP, the retirees received consideration. As such, the contract, whether implied or explicit, is legally binding. In absence of available information on this case, the court assumes that AT&T did consult with its legal and human resources departments to apply lessons learned and require that acceptance of the VRIP/ERP be a legally-binding contract that forbade rehire. The VRIP, by nature, has an Incentive that is mutually beneficial; the employee retires early with his/her benefits and pension, and the company is able to manage its workforce, personnel budget, and forecast manpower availability in relation to needs, which includes business skill sets.
Notwithstanding contractual recourse, the court agrees with Mr. Mazzocchi’s assertions the Plaintiff fails to meet the criteria established in precedent cases. Specifically, four criteria must be met:
[…] that the [Plaintiff] is a member of a protected class, that [the Plaintiff’s] job performance was satisfactory, that [the Plaintiff] suffered a negative employment action, and that another individual who is not a member of the same protected class was treated favorably in the same situation as [the Plaintiff]. If the plaintiff can prove these four things, they would have established prima facie evidence of discrimination under the ADEA. If not, summary judgement [sic] for the defendant should be granted.
Mazzochi correctly argues that the Plaintiff does not meet the established criteria:
Firstly, [the Plaintiff] has not suffered a negative employment action. Use of the various retirement programs such as VRIP and ERP would be entirely voluntary, and would bestow a benefit (early retirement) on [the Plaintiff]. Failure to be rehired does not necessarily constitute a negative job action, as the plaintiff was at one time an employee and left voluntarily while obtaining a benefit. Since [the Plaintiffs] who accepted the retirement plans obtained a benefit, there is no disparate impact to the policies described. (Mazzocchi)
The crux of the business necessity defense is that the employees seeking rehire did not possess the skills necessary to make them valuable to AT&T. They were not unfairly subjected to a test that precluded them from reemployment inexorably linked to their age, but rather to their lack of business skills. Had the retirees possessed such skills [that is, prior to retirement], AT&T would have conceivably offered a counterincentive in order to effectively dissuading them from retiring. The court believes that it is coincidental–but unrelated to being denied reemployment– that the retirees are of a protected class.
Judgment in favor of the Defendant. Case dismissed.
Please send hate mail to: The Honorable Corey King
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References
Bagley, C.E. & Savage, D.W. (2006). Managers and the legal environment: Strategies for the 21st century (5th ed.). Mason, OH: Southwestern-Cengage Learning
Dessler, G. (2009). A Framework for Human Resource Management, 5th Edition. Pearson Prentice Hall. Upper Saddle River, New Jersey.
Brown and Keeley. (2007). Asking the right questions: a guide to critical thinking. 8th Edition. Pearson Prentice Hall. Upper Saddle River, New Jersey.
Cafferty, J. (2008, March 3). What does it mean if AT&T is having trouble finding skilled U.S. Workers? Cafferty File. Retrieved October 26, 2009, from http://caffertyfile.blogs.cnn.com/ 2008/03/27/what-does-it-mean-if-att-is-having-trouble-finding-skilled-us-workers/.
Disparate impact. (2009). Retrieved October 29, 2009, from http://law.jrank.org/pages/6188/Disparate-Impact.html
EEOC. (July 2009). Understanding Waivers of Discrimination Claims in Employee Severance Agreements. U.S. Equal Employment Opportunity Commission. Retrieved October 28, 2009 from http://www.eeoc.gov/policy/docs/qanda
Karpinski, R. (January 2009). In tough economy, AT&T brings off-shore jobs back home. Retrieved Oct 31, 2009 from http://telephonyonline.com/residential_services/news/att-brings-jobs-back-0130/
L’Allier and Kolosh. (June 2005). Preparing for baby boomer retirement. Retrieved Oct 31, 2009 from http://www.groco.com/readingroom/babyboomer_retirement.aspx
Salckman, D. (July 2008). AT&T seeks assistance from retirees during possible work stoppage. Retrieved Oct 31, 2009 from http://retireearly.ning.com/group/attemployeesformeremployees/forum/topics/830039:Topic:2861
Sauls, J.G. (April, 1995). Proving business necessity: the disparate impact challenge. Retrieved Oct 31, 2009 from http://findarticles.com/p/articles/mi_m2194/is_n4_v64/ai_16921449/
Smith, E., (2009). EEOC goes after AT&T on class action age discrimination case. Employee Rights Post. Retrieved October 31, 2009 from http://www.employeerightspost.com/tags/equal-employment-opportunity-c-1/
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