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    Highlights for week ending September 27, 2003
  • Poughkeepsie Journal: Ex-IBMers hire lawyers for bias suit. Excerpt: A group of ex-IBMers who were laid off have retained a law firm to prepare a lawsuit against the company, alleging a pattern of age bias. "We made the decision last night," Antonio Rivera said Thursday. Rivera, of Poughquag, is one of the organizers. "We've got quite a few people lined up. We're hoping to get 50 right off the bat."
    • Alliance@IBM: IBM Age Discrimination Law Suit. How you can join! Excerpt: Immediate action is absolutely necessary! ... We need a minimum of 50 people to join the suit but we think many more will want to join. We need as many as possible. If we have more than 100 join our cost will go down. We are hoping that hundreds will join the suit. The two attorneys seem confident that they can beat the waiver. That will be the first item in the suit. There is a very strong sense of urgency to file the suit by October 1 since many of us received letters from the EEOC saying we have 90 (or 60) days to file a suit in federal court. That means that if we miss that deadline by even one day we lose all rights. Time is up for some on or shortly after October 1, and we all should file in one case that names each of us as a plaintiff. So time is of the essence. We worked very hard to find experienced attorneys during these past two months. It was difficult because we had all signed the waiver and most firms were unsure how to handle that problem. This firm has experience and knowledge with the law that protects older workers, and we feel that they can do an excellent job and that they can overcome the waiver.
    • Janet Krueger comments. Excerpt: It is important for people considering joining this suit to understand that this is not a class action suit in the same sense as Cooper v IBM -- people who do not explicitly join the suit will not be covered by it or benefit from it. Instead, it is a "mass" action, where the legal team is submitting almost identical individual suits on behalf of a large number of people. So if think you would be covered, but sit back and do nothing, you will get nothing. Of course nothing guarantees that the people who do join the suit will get more. Read more...

  • San Jose Mercury News: Review finds IBM tracked deaths. Excerpt: Attorneys in a major Silicon Valley cancer cluster lawsuit against IBM have uncovered a "corporate mortality file'' in which IBM tracked the deaths of more than 30,000 workers -- and the lawyers claim the company knew its electronics workers were dying of cancer more often than normal. ... The review -- which included employees at IBM facilities in New York and other locations -- also found that IBM was aware of the higher cancer rates decades ago. "By 1975, IBM must have known their manufacturing employees had significantly increased death rates due to cancer and must have known that through the next two decades,'' the review says. It was conducted by Richard Clapp, a Boston University epidemiologist who analyzed the corporate mortality file, a massive database held on seven computer disks. The mortality file was recently given to attorneys for the plaintiffs by mistake after IBM failed to mark it as confidential, plaintiffs' attorney Richard Alexander said.


  • Dow Jones News Service: IBM to Lay Off About 400 Workers in Software Unit. Excerpt: International Business Machines Corp. is laying off about 400 people in a cost-cutting move. ... The jobs eliminated include marketing and administrative functions at IBM's Tivoli software unit, based in Austin, Texas. Other software locations affected include Somers, N.Y., Cupertino, Calif., Boulder, Colo., and Raleigh, N.C.


  • MSNBC: Job satisfaction drops to new low. Excerpt: The research is consistent with other surveys and reports that have found declining worker loyalty and a surprisingly strong urge to seek new employment once the job market improves. While the economy has shown clear signs of improvement in recent months, the labor market has been stagnant or worse, no doubt leaving many workers stuck in dead-end jobs with few options.


  • New York Times: Changes Discussed in Accounting for Pension Fund Obligations. Excerpt: The board that writes accounting rules for American business discussed changes yesterday that could wipe out much of the financial incentive for companies to convert to cash-balance pension plans. The Financial Accounting Standards Board said it was beginning a study of the way many companies with cash-balance pensions measure the benefits they will eventually have to pay their employees. Actuaries said the board's approach could ultimately force these companies to report a much larger obligation than they now do. In the past, companies that converted to the plans were able to reduce their reported pension obligations and cut costs. ... The hybrid plans became extremely controversial in 1999, after I.B.M. switched to a cash-balance plan and older workers discovered that the changes were stripping them of tens of thousands of dollars in anticipated benefits. Their outcry led to lawsuits against cash-balance plans at I.B.M. and other companies, as well as attempts by Congress and regulators to control the spread of the plans. Two federal courts recently ruled against the cash-balance plans of I.B.M. and Xerox, making this an especially delicate time for the accounting board to consider whether companies are handling the plans the right way.


  • From the IBM Employee Issues Yahoo! Group: The weekly "Work and Family" Wall Street Journal columnist would like to interview workers who have experienced a measurable speedup on the job during the past two or three years. Specifically, she would like to talk to people who have been asked to turn out a higher quantity of work for the same pay, in the same length of work time. No company names will be used, and I will withhold your name if you wish. Interviews must be completed by Tuesday, September 30th. Phone: 503-636-6851.


  • Janet Krueger comments: Isn't it interesting, now that all the corporate cash balance plan defenders are running around like Chicken Little because of what FASB might do with the pension accounting rules, that they seem to be admitting to the real rationale behind these conversions??? Below are two more panic articles relative to the FASB agenda...
    • CFO.com: FASB: Time to Define Cash-Balance Plans. Excerpt: The Financial Accounting Standards Board is considering new rules that could wipe out the appeal of cash balance pension plans, according to published reports.
    • Washington Post: Accounting Regulator to Begin Review of Cash-Balance Pensions. Excerpt: The body that sets the nation's accounting rules will start a review of rules governing the way companies measure benefit obligations in controversial retirement plans known as cash-balance pensions. The Financial Accounting Standards Board Wednesday voted to add the cash-balance project to its formal agenda."

  • National Retiree Legislative Network (NRLN) Web site is worth bookmarking. Particularly interesting is the NRLN "Position on Issues and Legislation Affecting Retirees" page. Excerpt: The fundamental mission of the NRLN is to promote and support retiree-friendly legislation, vigorously fight retiree-hostile legislation and to create new legislation when a need is identified. We, currently, list the following legislation and issues, along with a brief explanation of that issue or bill and our present position - for or against...

Letter to Editor: IBM must abandon discriminatory pension plan.
By James Marc Leas. Published in Burlington (Vermont) Free Press, Wednesday, September 24, 2003.

On July 31, a federal district court in Illinois decided that the cash balance pension plan IBM adopted in 1999 violated federal retirement law because it discriminated on the basis of age. The court also declared that pension changes IBM installed in 1995 violated that same age discrimination statute.

The Wall Street Journal reported on Aug. 1 that "potentially, IBM could have to recalculate benefits for 130,000 employees and retirees, paying most of them more."

The changes IBM implemented in 1999 created an unprecedented groundswell of dissent and organizing among IBM employees, including a congressional town meeting hosted by U.S. Rep. Bernie Sanders that was attended by more than 700 IBMers. Covered by national media, this town meeting led to a Senate hearing chaired by Sen. James Jeffords, stockholder resolutions, and the class action lawsuit. Employees expressed outrage that IBM broke its promise that retirement pay and retirement medical insurance were a secure part of earned compensation. The protest campaign was so massive that IBM partially backed down, allowing about 35,000 additional employees to choose between the pension plans.

The court confirmed employee calculations and reports in The Wall Street Journal, saying that the cash balance plan would "cause reductions in retirement pay of up to 47 percent for older workers."

Now, we have a federal district court of the United States of America that has carefully considered the fully developed arguments on both sides. In its written decision the court declared that IBM's "1999 cash balance formula violates the literal terms of the Employee Retirement Income Security Act. IBM's own age discrimination analysis illustrates the problem."

From IBM's own documents the court also concluded that "IBM proceeded with the cash balance plan with open eyes and was fully informed of the consequences of the litigation that was sure to come." Thus, the court found that IBM knew it was violating the law when it announced the new plan in 1999.

IBM gave various pretexts at the time but the real reason IBM implemented the cash balance plan has since become clear: to boost the report of profit under a pension fund accounting rule and to boost executive pay based on that "vapor profit" report.

IBM announced that it will appeal the court decision. Unfortunately, the Bush administration is offering substantial help to IBM. The Treasury Department is expected to release new regulations that would allow the very cash balance pension plans that the federal court ruled illegal. The Treasury Department may also file a brief in support of IBM's appeal.

Countering those plans, however, Sanders has offered an amendment to prevent the Treasury Department from assisting IBM in overturning the federal district court ruling. The Sanders amendment passed by an overwhelming 258 to 160.

As Bernie Sanders told Congress before that important vote, "The White House policy on cash balance pension plans is a direct assault on the retirement plans of millions of American workers."

In short, IBM's pension changes brought no money into the company, sparked massive protest, generated negative publicity, harmed employees when they are old and most in need, deceived stockholders about actual earnings, led to the civil suit employees won, and led to a historic vote in Congress. Only executives gained -- at company, employee and stockholder expense.

IBM should apologize to employees, end age discrimination in its retirement policies, and restore the earned retirement benefits in full.

James Marc Leas is a patent attorney in Burlington who worked for IBM for 20 years as an engineer and patent agent.

Law Office of James Marc Leas
37 Butler Drive, S. Burlington, VT 05403
802 864-1575 802 864-9319 (fax) 802 734-8811 (cell)
www.vermontpatentlawyer.com


Coverage on H1-B and L1 Visa and Outsourcing Issues
  • ComputerWorld: ITAA panel debates outsourcing pros, cons. The Bush administration has no plans to block offshore outsourcing. Excerpt: Although the Bush administration may be uncertain about the move to outsourcing and what it means for the IT industry, Phil Friedman, CEO of Computer Generated Solutions Inc., is not. Friedman, also a panelist at yesterday's event, said his New York-based company, a systems integrator and managed services provider, recently opened a technical services center with 300 jobs to fill. The company got 3,000 applications in three days. "That tells me the story," said Friedman, "We have plenty of talent. So we are not moving jobs [offshore] because we cannot find talent or we don't have the quality of talent in this country. But I'm wondering [if] in the rush to send jobs offshore, we, in some respects, are neglecting the moral responsibility we have with our employees. "We need those technology skills. This country is making productivity gains only because of the technology we've been able to implement, and all of a sudden, we are abandoning those employees, and it's bothersome," said Friedman. He said the offshore trend could also affect national defense. "One morning we will wake up 10 years from now and we will not have the skills needed to support the infrastructure of this country," said Friedman.


  • Action alert from FAIR: H-1B News Flash. Contact Congress Now! Excerpt: As FAIR has suspected for some time, the high-tech industry and immigration law bar would never sit still for a decline in the annual H-1B ceiling from 195,000 to the currently scheduled October 1 ceiling of 65,000. That mobilization has now taken place. Less than 30 days following a Senate Immigration Subcommittee hearing generally sympathetic to serious reforms in both the H-1B and L-1 visa programs, Senate Judiciary Chairman Orrin Hatch (R-UT) held a full committee hearing on "the importance of the H-1B program for the U.S. economy." Witnesses called for complete removal of the annual ceiling on the H-1B program and Chairman Hatch stated that unemployed tech workers should not blame foreigners for the loss of their jobs. He's right, the public in general and unemployed high-tech workers in particular should blame Senator Hatch and the rest of those in Congress who place cheap foreign labor ahead of the American worker. (Editor's note: FAIR makes it easy for you to contact your senators and representative. Just follow the link above and type in your ZIP code to get started).


  • WashTech News: Congressman Smith: H-1B is a 'Positive Program'. Excerpt: In a sometimes heated exchange with CNN anchor Lou Dobbs, Rep. Adam Smith (D-Wash) yesterday called the H-1B visa a "positive program" that helps U.S. companies to hire foreign workers for jobs that would otherwise remain vacant due to a lack of qualified Americans. “I can give you case after case of companies in my district that desperately need people with specialized knowledge that they can’t find (in the United States),” Smith said Thursday on the CNN television broadcast “Lou Dobbs Tonight.” The 9th District congressman said the foreign workers that companies such as Microsoft, Boeing, Amgen, and Immunex bring into the United States “help create jobs here” and that assertions that the H-1B visa program is a problem for U.S. workers are misguided.
This week on the Alliance@IBM Site:
"The test of our progress is not whether we add more to the abundance of those who have too much; it is whether we provide enough for those who have too little." — Franklin D. Roosevelt
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