Best Buy Co. has settled a class action age discrimination lawsuit brought by 44 former IT employees in 2004. The
settlement was approved in early June in the U.S. District Court in Minnesota.
As baby boomers edge toward retirement and companies look to outsource IT functions to save money or fill a skills gap, the industry may well see more such suits, says one expert.
Stephen J. Snyder, the attorney who represented the former IT employees, declined to comment on the details of the settlement, or the case. "This is a matter that has been resolved on a confidential basis," said Snyder, who specializes in employment litigation, intellectual property and business litigation at the Minneapolis firm Gray Plant Mooty.
Best Buy spokeswoman Susan Busch said, "The case has been settled to the mutual satisfaction of the parties."
The suit alleged that Best Buy unlawfully terminated the employment of the 44 plaintiffs and other IT workers in 2003 and 2004 based on their ages, according to published reports at the time of the filing. The plaintiffs ranged in age from 40 to 71, with an average age of 51 when they were terminated, a press release from Gray Plant Mooty stated. About 68% of the laid-off workers were age 40 or older. Their terminations were part of Best Buy's decision to outsource most of its IT work to Accenture Ltd., the suit alleged.
Best Buy said the claim had no merit and vowed to vigorously defend the action.
Have your cake and eat it, too?
Age discrimination, or at least aging, is a hot topic in IT circles. As the pioneers of IT retire, industry experts are sounding the alarm bell on a looming shortage of so-called legacy skills. The study of aging IT workers has become something of a cottage industry. How to deal with potential culture wars between seasoned IT workers and a generation raised on the Web is now standard fare at IT conferences.
Should companies expect more age discrimination suits as baby boomers grow older?
Bruce Barnes, president of Bold Vision LLC, a Dublin, Ohio-based peer-to-peer counseling firm for CIOs, said age discrimination suits are not new in IT. "They've been happening, or at least attempted, for several years. When a big company like Best Buy settles, it brings the topic to the fore, " Barnes said. "Now, do I think it opens the door for more of it? Yes it does."
The decision to outsource is not easy, he said, and has been plagued by "shortsightedness forever."
"What suits like this point out to me is that if you are thinking of repopulating or reskilling or outsourcing your workforce, there are many dimensions that need to be discussed. If you don't, if you make a snap decision in a complex situation and get slapped with a lawsuit, frankly, you deserve it. Maybe if Best Buy had thought a little more carefully, they could have avoided this," he said.
Phil Murphy, a principal analyst at Forrester Research Inc. in Cambridge, Mass., said age discrimination suits may have other consequences. "I think we'll see an increase in these suits and, oddly enough, an increase in demand for older workers."
Murphy, who writes about IT roles and skills, said he believes the baby-boomer retirement will drive a legacy skill shortage. But the big loss will not be technical skills, which can be taught, he said, but knowledge of how business is done.
The knee-jerk approach to filling the IT skills deficit will be to hand over the IT functions and a portion of the in-house staff to an outsourcing firm, Murphy said, as Best Buy did to Accenture.
Under that scenario, older workers almost certainly will be passed over in favor of cheaper, more malleable younger employees. "So in that case, I can see an increase in lawsuits," he said.
Some businesses will decide to ship work offshore, to "make it someone else's problem," Murphy said. But offshore providers are already struggling to pay more highly skilled workers, creating demand for those very same baby boomers.
"It's not out of the realm of possibility that you could be suing your employers for firing you and walking into a better situation with a raise," Murphy said.
In any case, the debate over this shift in demographics -- confined to the "Chicken Littles" as recently as 2004, when Best Buy was sued -- now covers issues that go well beyond legacy skills, Murphy said.
"I think we have come to the point where the retirement of the baby boomers ceases to be a Chicken Little topic and becomes a significant business problem, which also happens to affect IT."