Boeing and its older workers: The brewing confrontation
When the union representing Boeing technical workers and engineers filed age discrimination charges against the aerospace giant in July, the company called the action “a baseless complaint.”
“Diversifying our engineering workforce reflects changes in our business and is not related to the age of our employees,” Boeing said in an emailed statement.
That’s not how workers see it. During the implementation of 2,500 layoffs in the past year, a handful of whistleblowing managers alerted the Society of Professional Engineering Employees in Aerospace (SPEEA) of possible bias, according to Roy Goforth, executive director of the union. In addition to those layoffs, the company announced in April that it will be laying off another 1,000 people in the Puget Sound area by the end of 2015 as part of a shift of some engineering work to Southern California.
Age discrimination cases can be notoriously difficult to prove, experts say, and the experiences of former Boeing employees elsewhere in the country bear that out. Now, however, it seems likely that the aerospace company and its Puget Sound workers are headed toward a long legal brawl of their own.
Managers have the difficult task of deciding whom to fire, so to make the process more objective, the company has developed various performance-ranking system to rate employees. Historically, these evaluation criteria insulated senior employees who had more skills and experience from layoffs. Goforth told Crosscut, however, that recent changes to Boeing’s ranking system have meant that “if you were in your 40s your chances of getting laid off were doubled” while employees in their 50s had triple the risk of getting fired, and those in their 60s had quadruple the risk.
Obama visited Boeing's Everett plant in 2012 to deliver a speech on boosting American manufacturing exports. Photo credit: White House.
To get a glimpse into the future of the union's charges, it helps to look to the south and east; not to South Carolina where Boeing recently announced plans to build the 787 Dreamliner, but to Kansas, where the company is already tangled in a protracted legal battle over alleged age discrimination.
Between 2003 and 2004, in an effort to make its aircraft assembly more competitive, Boeing started the process of selling its manufacturing divisions in Wichita, Kanas and two Oklahoman locations to the aerospace manufacturer Onex (which later became Spirit AeroSystems). After inking the deal, Boeing fired 10,671 workers, making them apply for employment with the new owner. Spirit only rehired 8,354 workers, taking into consideration recommendations from Boeing managers.
The pink slips indeed seemed to be tinted gray: A lower percentage of employees over the age of 40 were rehired — spurring 700 workers to file charges of age discrimination and retaliation against both companies in 2005.
But axing a greater number of older employees isn’t enough to prove bias under the Age Discrimination in Employment Act. To do that, the workers would have to demonstrate one or both types of bias: disparate impact or disparate treatment.
Disparate treatment is a Hollywood-ready type of prejudice: Imagine people gathered in a back room conspiring to fire all the old people. Disparate impact is much less blatant, if it's even intentional. It is what Bran Noonan, an employment attorney in New York who has written about age discrimination law, calls a type of “accidental discrimination,” or a seemingly neutral practice that winds up hitting minorities harder. For instance, a policy that police officers need to be able to carry a certain amount of weight may seem reasonable at first glance, but that weight requirement could inadvertently lead to fewer female officers.
However, Noonan explains that layoffs can “sometimes cross over into both types” of discrimination — intentional and unintentional. For instance, the evaluation criteria used to decide who to fire might give older engineers an unfair disadvantage. The questions then become: Was the criteria deliberately rigged? Is it merely a pretext to conceal a darker motive? Or were the criteria reasonable?
What’s more, even if there is no policy designed to weed out all the old-timers, an employee could argue that he or she was individually targeted because of age.
Both Noonan and another employment attorney interviewed by Crosscut suggested that the Puget Sound chapter of SPEEA will be primarily pursuing a disparate impact claim by targeting the rating system used in layoffs; however, the case leaves open the possibility for arguing at least some disparate treatment claims, especially as individual employees come forward to file their own suits.
David Neumark, an economist at University of California Irvine who specializes in age discrimination, speculated that “it wouldn’t be surprising in this case if it ends up going in the direction of the company arguing ‘It’s not because they’re older, it’s because their evaluations were worse.’ ” (An “it’s not me, it’s you” analysis as it were.) “Often what it boils down to in these cases is an examination of the performance evaluation system to determine whether it’s biased.”
Much like SPEEA’s allegations so far, the Kansas plaintiffs in Apsley v. Boeing Co. honed in on the evaluation system used by managers to select who to retain and who to fire. The Wichita division’s human resource department developed the criteria based on skills, productivity, attitude, safety, corrective actions and a trait known as “lean” — a commitment to efficiency. Managers were “specifically told not to consider age,” according to court documents.
But a pre-layoff study within the human resources department later revealed that the selection process was disproportionately affecting people of color, women and older workers. The staff shuffled some layoff recommendations to address the race and gender issues, but apparently made no adjustments according to age, the court records indicated.
A Boeing advertisement from 2006. Photo credit: Margraet Shear.
In a 2012 ruling, however, the 10th U.S. Circuit Court of Appeals declined to assess the layoff criteria, quoting two earlier cases finding that a court should not "act as a super personnel department that second guesses employers’ business judgments.”
Does this court finding spell doom for Everett-based engineers and technical workers who are hinging their charges on employment decisions? Maybe not. Despite the 10th Circuit Court’s reticence to rule on “business judgments,” courts routinely do just that when those practices appear to discriminate.
For instance in the landmark 1971 case of Griggs v. Duke Power Co., which established the precedent of disparate impact, the U.S. Supreme Court ruled that Duke Power effectively excluded black applicants from the hiring process because it required a high school diploma and I.Q. test scores in an era when African Americans had significantly lower high school graduation rates. This approach of assessing whether business policies were inadvertently biased eventually expanded into age discrimination cases, notably in a 2005 case involving police pay raises in Jackson, Miss., and a 2007 case involving layoffs.
In the 2007 case, brought by workers laid off by New York-based Knolls Atomic Power Lab, the U.S. Supreme Court ruled that in disparate impact cases involving age, once the business practice has been shown to have discriminatory effect, the burden of proof rests on the employers, not the employees, to show that there was a legitimate, unbiased reason behind its actions. That burden-shifting analysis could potentially favor SPEEA — if the union is able to definitively demonstrate discriminatory impacts and if they ever do make it to court.
Still, Donna Ballman, an employment attorney from Florida and author of the book Stand Up for Yourself without Getting Fired, said, “Disparate impact cases can be tough. It’s expert versus expert, you’re looking at statistics in the claim they brought.”
Court documents show Boeing employees in Kansas painted telling pictures of age bias: A manager asked everyone over the age of 55 when they wanted to retire; a managing director wrote an email that “we are moving from a demographically expensive population towards [sic] one that should be cheaper"; an employee alleged that a supervisor sought to terminate “the old fuckers.” In spite of all this, the court found these instances too idiosyncratic and sporadic to qualify as broad discrimination.
In 2012, the 10th Circuit Court of Appeals acknowledged some discrimination had occurred but said the employees had failed to establish "a pattern or practice of age discrimination.” That was primarily because of weak statistical evidence.
The judge decided that the statistical model used by the plaintiffs rendered age differences in the hiring process statistically insignificant. Before Boeing shed the division, 87.4 percent of the workforce was over the age of 40. That percentage dropped by only a tiny margin to 86.6 percent after the big sale. The Wichita plaintiffs have appealed the ruling, and even after 11 years, are still in the midst of motions and countermotions.
Below: Construction of a Boeing 787 airplane in Everett. Photo credit: Jetstar Airways.
If another legal battle sprouts in the Puget Sound, the Kansas case won’t be the only experience Boeing executives can draw from. The CEO of Boeing, James McNerney, has a history with age discrimination lawsuits. McNerney headed 3M, the corporation that makes Scotch tape and Post-it notes, when it initiated a series of national layoffs starting in 2003. (McNerney left the post in 2005 but the layoffs were carried out through 2006.)
The federal Equal Employment Opportunity Commission later found that the layoffs targeted employees over the age of 45, presumably as a way to shrink the number of salaried positions and pension costs. The agency’s investigation uncovered employee emails outlining McNerney’s “vision for leadership development” at 3M that “we should be developing 30 year olds with General Manager potential." Another email said, “He wants us to tap into the youth as participants in the leadership development.”
While maintaining its innoncence, 3M ultimately agreed to settle with the EEOC for $3 million in 2011. That same year, it settled two related cases, one in Minnesota involving 7,000 employees for $12 million, and another in San Jose for an undisclosed amount, according to the Minneapolis Star Tribune.
Boeing seems to be thriving under McNerney's leadership lately. Coincidentally on the same day SPEEA filed charges with the EEOC, McNerney was in a conference call with investors announcing that Boeing’s earning per a share jumped to $2.42 in the second of quarter of 2014, surpassing expectations of $1.98 per share.
“Our priorities remain clear,” said McNerney’s as he concluded the call, citing production increases in the commercial airplane programs, a stronger defense business, especially internationally, and “driving productivity and affordability throughout the enterprise.”
Part of that affordability, of course, is keeping labor costs in check.
Layoffs are often a pivotal moment in any company, weighted with potential for discimination. “It’s not hard for employees to get an inkling that a large-scale layoff is [having a greater impact on] a concentrated group,” said UC Irvine economist David Neumark.
For older engineers in Everett, however, the challenge would be to prove their side of the story through clear statistics, expert analysis and witness accounts. And as shown in the Wichita case, that task is anything but brief and easy.
The state Human Rights Commission could take two to six weeks to respond to the SPEEA’s charges, and the EEOC has up to six months to reply. According to lawyer Donna Ballman, the chance that the EEOC will open a federal investigation of its own into the matter is “about as likely as getting struck by lightning twice.” So SPEEA will probably be handed a right-to-sue letter instead, granting it permission to sue in federal court but leaving the workers on their own to prove whatever allegations they might pursue. The letters are required in most discrimination cases. The state could also give the union the green light for filing charges in state court.
Any potential lawsuits could take years to play out. In the novel of ongoing strife between SPEEA and Boeing, this could be the start of a very long chapter.