Employers like IBM that conduct layoffs while integrating more artificial intelligence into operations face potential exposure to age bias lawsuits if older workers are among the first to get a pink slip.

Human resources departments increasingly have been adopting AI-powered tools to help streamline their business processes and efficiently complete tasks like drafting job descriptions and performance reviews or responding to employee inquiries.

As a result, there’s a growing discomfort at the prospect that jobs traditionally viewed as needing a human touch may now actually be on the chopping block.

“In the past, HR fields haven’t necessarily been a field where we think of automation or technology taking over in a meaningful way. It has been a people-related field and it’s been run by people,” said Michael Schulman, a partner at Morrison & Foerster LLP. “And we’re certainly seeing a shift in the recruiting space, in particular larger employers’ use of AI to review resumes, to cull out the right people, to decide who’s going to get interviews and who’s not.”

With more companies expecting to restructure and incorporate AI into their hiring and staffing efforts in the coming year, attorneys are urging employers considering layoffs as part of a restructuring effort to proceed with caution.

If an older worker can prove that AI and their age contributed to the adverse employment action, that could be fodder for a claim under the Age Discrimination in Employment Act, they said.

Case in point: a recent lawsuit accusing IBM of unlawfully cutting short the decades-long careers of two HR employees because they were 60 or older to make room for younger workers. IBM’s increased reliance on AI tools to “reduce the number of real humans handling human resource functions”—amid a series of layoffs—caused the termination earlier this year, the suit alleged.

IBM CEO Arvind Krishna earlier this year had announced plans to suspend or delay hiring for roughly 7,800 jobs that AI could replace, including back-office functions like HR.

“There’s an inherent assumption that older workers are going to be resistant to change, slower to take up and build on new technologies, and might not be beneficial to a company’s long term growth as younger workers,” said Matt Scherer, a senior policy counsel for workers’ rights and technology at the Center for Democracy & Technology.

“In that sense, I wouldn’t be surprised if the things described in the complaint are true and if those assumptions were somewhat underpinning some of these layoffs,” he said. But the lawsuit lacks any “smoking gun” to show that age was the predominant factor in the decision, Scherer said.

Role Lends Weight

The terminated IBM workers accused the company of using stereotypes to make employment decisions and presuming that younger workers could better adapt to new technology.

The plaintiffs’ supervisors and colleagues allegedly described older workers as having shorter “runways,” referring to the number of years before their retirement. And they regularly expressed the need for employees with “new skills” or “new energy,” the suit said.

Whether IBM can defeat the allegations depends on its evidence that the older workers were laid off for reasons unrelated to their age.

An IBM spokesperson had denied the allegations, saying in a statement to Bloomberg Law that age wasn’t a factor in its employment decision. The company “will vigorously defend itself against each of the allegations in this complaint,” the spokesperson said in a statement.

But the former IBM workers’ role in HR could give some weight to their case that other ADEA plaintiffs typically lack.

“They certainly have more access to information than a normal employee would about reductions in the workforce and how much runway someone has, which obviously is going to be another thing that correlates with age,” said Esther G. Lander, a partner at Akin Gump Strauss Hauer & Feld LLP.

“This is obviously only half of the story” until more information comes out, she said. “But they, being HR people, have more evidence than most,” Lander said.

Federal case law on the criteria for establishing an age bias claim remains murky, Scherer said. The lack of a consistent standard creates an uphill battle for older workers to prove they experienced discrimination because of their age, he said.

Plaintiffs bringing age discrimination claims can sue under two theories: disparate treatment and disparate impact.

In this case, the IBM workers are alleging intentional, or disparate treatment, age bias claims. Those require direct or circumstantial evidence to prove that they would not have been laid off but for their age. That’s a heavy burden because many workers would lack such evidence, attorneys said.

Under the disparate impact theory, an employee would show that a facially neutral company policy or practice has a disproportionate impact on employees aged 40 or older.

One of Several Suits

The latest case joins a string of age bias complaints against IBM by former employees over the past several years, some of which have settled or been dismissed.

Last year, discovery in one lawsuit revealed emails between senior IBM executives that discussed how to force out older workers, referring to them as “Dinobabies” who should be made an “Extinct species.”

The lawsuits underscore the need for employers planning a workforce reduction, especially when it comes to the adopting new technology, to work with legal counsel to ensure that workers with protected characteristics aren’t disproportionately impacted, attorneys said.

“When we counsel on reductions in force, we look to see what the high-risk terminations are,” Lander said.

We examine “not only if there’s a disparate impact based on age or any other protected characteristics, but also when individuals are over 50. Then we will press the managers to explain the legitimate reasons for those decisions and see if they hold.”

These reasons must be business or performance related, said David T. Harmon, co-chair of Norris McLaughlin P.A.’s executive compensation and employee benefits practice group.

Before companies conduct layoffs linked to higher AI use, they could also offer training to workers to make their jobs more efficient, he said. “There may be a middle ground approach.”

—with assistance from Riddhi Setty