IBM Hit with Another Age Discrimination Suit: What it Means for Red Hat

The pink slip came without real warning, the lawsuit alleges.

Former IBMer Brad Calderon claims he “diligently” performed during his 18-year career at Armonk, New York-based IBM. And he worked in Big Blue’s sweet spot – cloud computing, the subject of its recently-closed mega-buy of Red Hat.

But, according to a new lawsuit he filed in a federal court in New York Monday, Calderon’s sales title at Big Blue’s IBM Cloud business did not shield him from a layoff. He was handed his notice in August of 2016 and told it was part of a “resource action.”

That’s as the suit alleges that “the actual reason for Mr. Calderon’s termination was his age.”

The dust barely settled on IBM’s $34 billion buy of culture-proud Red Hat, and its legal team is busily working to squash this – and cases like it – in federal court.

The suit is one of multiple complaints lobbed at Big Blue in recent years, accusing the computer services giant (which has, in addition to Red Hat, a large campus at Research Triangle Park) of age discrimination – axing older workers while hiring younger talent.

“Had Mr. Calderon been younger, and especially if he had been a Millennial, Defendant would not have terminated his employment,” the eight-page suit filed Monday reads.

IBM denied the claim in an emailed statement: “We make our decisions based on skills, not age,” a spokesman writes. “This former employee’s claims are false and inaccurate, and we will defend ourselves in court.”

But it’s a case that should worry Red Hatters, says Josh Van Kampen, an employment attorney with Van Kampen Law in Charlotte.

While Van Kampen has no connection to this lawsuit, he is representing two former IBMers in separate age discrimination cases currently being investigated by the U.S. Equal Employment Opportunity Commission.

He says most of these cases come down to IBM’s resource action process – which he describes as a workaround to its longtime severance policy. Historically, employees have counted on IBM’s severance plan as an insurance policy, in a sense, Van Kampen says. It awards payouts based on years of service, and it’s one of the reasons people stayed at IBM instead of taking on lucrative positions elsewhere, he says. But the resource action process is “couched as more of a performance-related job separation.” And in the case of some, that means just a month of severance.

For its part, IBM executives have referred to recent reductions on earnings conference calls as “workforce rebalancing,” where it’s about the skills – not the employees. On a recent call, CFO Jim Kavanaugh said the company was divesting unprofitable business lines and investing in “remixing” its workforce to focus on high-growth sectors.

But continued age discrimination accusations keep coming – and the latest suit was filed at a bad time for Big Blue, which is trying to sell Red Hatters on the idea that there’s no clash between the companies – in terms of values or culture.

Retaining Red Hatters will be a big part of the deal’s success, analysts have said.

“One of the most critical risks to monitor will be the cultural fit between IBM and Red Hat after the close,” Credit Suisse analysts wrote in a note to investors earlier this year.

Van Kampen says this case – and others like it – could create the very culture clash analysts fear. “That’s not the culture that I think is present at Red Hat,” he says.

But Van Kampen, practicing employment law since 2004, admits age discrimination cases don’t necessarily translate to a reputational hit. “It’s not the kind of inflammatory discrimination that people start boycotting a brand for,” he says.

Joseph Torrillo, vice president at, says IBM has another advantage when it comes to surviving any controversy created – and that’s brand awareness.

“IBM has a really outstanding reputation over the course of a long long period of time,” Torrillo says, noting that earned goodwill is tough to shake.

Torrillo points to Walmart as a case study.

When it acquired independent brands Bonobos and Modcloth, some lashed out, vowing never to buy from the brands again. Walmart stayed on message and, within months, the controversy disappeared on its own. Torrillo says IBM needs to likewise stay on message and keep the lines of communication open with Red Hatters.

For its part, IBM has made moves to prioritize diversity among new hires – evidenced by a lawsuit it filed last year against its ex-chief diversity officer. In that suit, which ended in a settlement, it claimed it was trying to protect its “closely-guarded” diversity hiring initiatives.

At the time, Red Hat Chief People Officer DeLisa Alexander said the suit shows the premium top companies put on diversity, calling it a good trend.

“The fact that IBM really considers its diversity inclusion strategy to be a trade secret, that’s amazing,” she said at the time, months before IBM announced its Red Hat buy.

By Lauren Ohnesorge – Senior Staff Writer, Triangle Business Journal