Rumsey v. IBM
What’s at Stake
Under the Older Workers Benefit Protection Act (OWBPA), you have the right to sue your employer for age discrimination up to 90 days after the Equal Employment Opportunity Commission (EEOC) completes an investigation into your employer. EEOC investigations sometimes take years. This case is about an arbitration agreement that IBM forced laid off workers to sign that reduces that time frame from years to just 180–300 days after the discrimination occurred. Ultimately this means claims that would have been timely in court are instead subjected to a radically shortened window to act. What’s worse, IBM bundled the arbitration agreement with laid-off workers’ severance packages. If they didn’t “agree” to give up their rights to sue the company for age discrimination in court, they wouldn’t receive severance pay and their health care benefits would not be extended. That’s not a choice at all.
We are seeking a declaratory judgment that the limitations period in the arbitration agreement is unconscionable and prevents laid off workers from effectively vindicating their rights.
Summary
We allege that our client, Michael Rumsey, was one of tens of thousands of workers who were terminated in mass layoffs by IBM between 2013 and 2020 as part of a scheme to replace older workers with younger “early professional hires.” At the time he was laid off in 2016, he signed a separation agreement that, in exchange for a very small severance and continued health insurance benefits, released all his claims against IBM except his federal age discrimination claims. For those claims, IBM had an arbitration agreement with a collective action waiver. This meant Michael would only be able to file age discrimination claims with a private arbitrator outside of court, and he would have to do it alone. (The agreement did not outright release age discrimination claims because, we contend, if it had, IBM would have been required by OWBPA to provide information about the other workers laid off and their ages, potentially exposing its discrimination.) Within 300 days of his layoff, Michael filed a charge of discrimination with the EEOC alleging that IBM fired him because of his age. Between 2013 and 2018, hundreds of other IBM workers filed similar EEOC charges. In 2018, the EEOC began consolidating these charges and investigating the company-wide pattern of discrimination at IBM.
In 2019, Rumsey and six other IBM workers filed a lawsuit in federal district court in New York alleging age discrimination by IBM and arguing that the individual arbitration requirement in IBM’s agreement was an invalid waiver of their statutory rights under the OWBPA. To preserve their rights, they also filed a collective action arbitration demand with IBM, but IBM refused to participate in the process until the court case was decided. Ultimately, the Southern District of New York and the Second Circuit ruled that IBM’s collective action waiver did not violate the OWBPA and ordered the workers to individually arbitrate their claims against IBM.
Core Legal Problem
In August 2020, the EEOC issued a decision concluding that IBM likely engaged in discrimination in its layoffs between 2013 and 2018. The EEOC’s decision described how it had “uncovered top-down messaging from [IBM’s] highest ranks directing managers to engage in an aggressive approach to significantly reduce the headcount of older workers to make room for” younger workers. The EEOC also looked at data it had gathered from all the EEOC charges filed and concluded that more than 85% of the workers considered for layoff were older.
Within 90 days of that EEOC decision, hundreds of other former workers filed individual arbitration demands, and Rumsey and the other six IBM workers who had originally filed a collective action demand re-filed individual demands. Those demands have been stayed by agreement of the parties pending the outcome of related litigation that has now concluded. At the same time, other separately filed individual arbitrations against IBM have moved forward. IBM has taken the position that the individual arbitration demands are untimely because a provision in IBM’s arbitration agreement required that “if the claim is one which must first be brought before a government agency,” the statute of limitations is “the deadline for filing such a claim.” IBM interpreted that to mean that all laid off workers were required to file their arbitration demands within the 180- or 300-day deadline for filing with the EEOC in their state, rather than the statute of limitations for filing an age discrimination claim in court, which is 90 days from the EEOC’s final determination and issuance of a notice of right to sue.
Rather than litigating the timeliness issue in hundreds of individual arbitrations, Rumsey filed suit in federal district court seeking a declaratory judgment that the limitations provision is unconscionable and an invalid waiver of the former IBM workers’ statutory rights. In particular, the case contends that the provision improperly shortens the limitations period to less than a year from the more than four years that Rumsey would have had to file his claim in court had he not signed the arbitration agreement, and that filing an arbitration demand within 300 days would have prevented Rumsey from participating in and benefitting from the EEOC’s investigation, which uncovered significant evidence of discrimination that Rumsey did not have.
IBM has moved to dismiss the declaratory judgment, and the district court heard argument on that motion on August 22, 2025.