The $103 Million Verdict: Age Discrimination in the Workplace

Laws protect against age, gender, race discrimination. Helmer Friedman LLP represents discrimination victims.

The $103 Million Wake-Up Call: Age Discrimination in the Workplace

For thirty-one years, Joy Slagel was a loyal employee. She built a career, managed cases, and even won awards for her customer service. But in the corporate world, three decades of experience doesn’t always guarantee respect—sometimes, it paints a target on your back. After a leadership change in 2012, the atmosphere at her workplace shifted. Older colleagues began disappearing, forced into resignation or fired outright. Slagel found herself isolated, criticized for “setting the bar too high,” and eventually terminated without explanation after returning from medical leave.

Her story isn’t an anomaly, but the outcome was historic. A Los Angeles jury recently ordered her former employer, Liberty Mutual Insurance Co., to pay $103 million in damages. The verdict sends a thunderous message to boardrooms across America: discriminating against older workers is not just unethical; it is a massive financial liability.

Age discrimination remains a pervasive, often silent issue in the modern workforce. While we frequently discuss diversity in terms of race and gender, age bias often flies under the radar until it causes irreparable harm to careers and health. Whether it manifests as a subtle comment about “fresh energy” or a blatant firing of senior staff, ageism is illegal, harmful, and costly.

Federal Age Discrimination Laws

Understanding the Age Discrimination in Employment Act (ADEA)

At the federal level, the primary shield against this bias is the Age Discrimination in Employment Act of 1967 (ADEA). This law explicitly protects individuals who are 40 years of age or older from employment discrimination based on age. It applies to both employees and job applicants.

Under the ADEA, it is unlawful to discriminate against a person because of their age with respect to any term, condition, or privilege of employment. This is a broad umbrella that covers nearly every aspect of the working relationship, including:

Hiring: Employers cannot refuse to hire a candidate simply because they are over 40.
Firing and Layoffs: Targeting older workers for redundancy during restructuring is prohibited.
Compensation and Benefits: Older workers cannot be paid less or denied benefits offered to younger counterparts.
Promotions and Training: denying career advancement or upskilling opportunities based on age is illegal.

The law applies to employers with 20 or more employees, including employment agencies, labor organizations, and federal, state, and local governments. Additionally, the Older Workers Benefit Protection Act (OWBPA) amended the ADEA to prohibit employers from denying benefits to older employees, recognizing that the cost of providing benefits should not be used to discourage hiring experienced talent.

California Age Discrimination Laws

Fair Employment and Housing Act (FEHA)

The Fair Employment and Housing Act (FEHA) is a California law that offers strong protections against age discrimination for individuals aged 40 and older. Under FEHA, age discrimination occurs when an employer treats a job applicant or employee less favorably because of age. This can include actions such as denying promotions, terminating employment, or refusing to hire someone solely based on their age. FEHA applies to employers with five or more employees and requires that all workplace decisions be based on merit and qualifications rather than age. Additionally, FEHA prohibits practices like including age preferences in job advertisements or enforcing seemingly neutral policies that disproportionately affect older workers without legitimate, non-discriminatory reasons. This law serves as a crucial safeguard, ensuring that older employees are treated fairly and have equal opportunities in the workplace.

While the Fair Employment and Housing Act (FEHA) and the Age Discrimination in Employment Act (ADEA) offer similar federal safeguards, they aim to prevent age discrimination but differ in scope and application. FEHA applies to employers with five or more employees and includes broader protections against various types of discrimination beyond age discrimination. In contrast, the ADEA specifically addresses age discrimination and applies to employers with 20 or more employees, making its coverage threshold stricter.

Another key distinction between the two laws is the age group protected. Under the ADEA, the law specifically protects individuals aged 40 and older from discrimination. FEHA, however, doesn’t explicitly set a minimum age but prohibits age-based discrimination more generally, which may allow for a broader interpretation within California. Additionally, claims under the ADEA are typically filed with the Equal Employment Opportunity Commission (EEOC), while FEHA claims are processed through the California Civil Rights Department (CRD). This emphasizes the overlap yet distinct processes these laws provide. Together, FEHA and ADEA establish a comprehensive framework to protect workers from age discrimination, especially in jurisdictions like California, where state and federal regulations intersect.

How Age Discrimination Manifests in Real Life

Bias rarely announces itself with a megaphone. Instead, it often creeps into the workplace through coded language and subtle exclusions. While the law is clear, the application of discrimination can be murky.

In hiring, it might look like job postings that seek “digital natives” or caps on years of experience, effectively filtering out older applicants before they even apply. In the office, it can be social exclusion—being left out of meetings, overlooked for challenging assignments, or subjected to “jokes” about retirement or adaptability to technology.

The most damaging forms often occur during restructuring. Companies looking to cut costs often target higher-salaried employees, who tend to be older workers with long tenure. If a layoff disproportionately affects those over 40, it may violate the ADEA.

Similarly, promotions may be withheld under the guise that an older employee “lacks long-term potential” or “isn’t a cultural fit,” phrases that often serve as smokescreens for bias.

Anatomy of a Verdict: The Liberty Mutual Case

To understand the severity of age discrimination, one need look no further than the recent case against Liberty Mutual. The details, as presented in court, paint a disturbing picture of a systematic effort to push out older workers.

According to court filings, the environment at Liberty Mutual shifted dramatically around 2012 following the promotion of a new regional claims manager, Ariam Alemseghed. The complaint alleged that a pattern emerged where employees in their 50s and 60s were forced to resign. Eventually, of the approximately 120 employees in the department, only two were over 40. Joy Slagel was one of them.

The harassment Slagel endured was calculated. Despite a spotless 30-year record, she was suddenly criticized for being a bad team player. The complaint detailed how she was ignored during morning greetings and singled out during meetings. When she won a customer service award and a $1,000 gift for her exemplary work, the regional manager allegedly undercut the achievement by telling her she “got lucky” and that it “would never happen again.”

The stress of this hostile environment took a physical toll. Slagel’s blood pressure worsened, forcing her to take a short-term disability leave. While she was away, the company sent a courier to retrieve her laptop—an unusual move that foreshadowed her fate. Upon her return, her access badge had been deactivated. She was called into a conference room and fired, effective immediately. She was replaced by a white male in his late 20s.

The jury’s verdict—$20 million in compensatory damages and $83 million in punitive damages—was a direct rejection of these tactics. Justin Shegerian, the lead trial attorney, stated that the verdict is a “resounding message” that juries will hold employers accountable for such harm.

Strategies for Employees Facing Discrimination

If you suspect you are being targeted because of your age, it can feel isolating. However, there are steps you can take to protect yourself and build a potential case.

Document Everything

Paper trails are essential. Keep a detailed record of discriminatory comments, exclusion from meetings, or sudden negative shifts in performance reviews that contradict your actual output. In the Liberty Mutual case, the timeline of events—from the leadership change to the specific comments made during the award ceremony—helped establish a pattern of behavior.

Know Your Rights Regarding Waivers

Employers sometimes ask departing employees to sign waivers releasing the company from ADEA claims, often in exchange for a severance package. Under the OWBPA, these waivers must meet strict standards to be valid. You must be given at least 21 days to consider the agreement and seven days to revoke it after signing. Most importantly, you should be advised in writing to consult an attorney. Do not sign away your rights without legal counsel.

Oppose the Behavior

Retaliation for opposing discriminatory practices is illegal. If you report age discrimination to HR or file a charge, and your employer punishes you for it, that retaliation is a separate legal violation.

For employers, the $103 million verdict against Liberty Mutual should serve as a stark warning. The costs of age bias extend far beyond legal fees; they damage reputation, morale, and institutional knowledge.

“This verdict is a resounding message to corporations nationwide: age discrimination is illegal, it is harmful and juries will hold employers accountable,” Justin Shegerian, lead trial attorney and founder of Shegerian & Associates, said in a statement.

Preventing discrimination starts with culture. Employers must ensure that performance reviews are based on objective metrics, not subjective feelings that can mask bias. Leadership training is crucial—managers need to understand that comments about “fresh blood” or “digital natives” can be evidence of discriminatory intent.

Furthermore, audits of hiring and firing practices can reveal statistical anomalies before they become lawsuits. If a reduction in force impacts 80% of your workforce over 50, you have a problem. Building an inclusive workplace means valuing experience as an asset, not a liability.

Upholding Dignity in the Workforce

Joy Slagel gave 31 years to a company that ultimately treated her as disposable. The jury’s decision to award her over $100 million restores a measure of justice, but it cannot undo the stress and indignity she suffered.

Age discrimination is not merely a legal issue; it is a human one. We will all age. Creating a workplace that respects tenure and experience protects everyone’s future. Whether you are an employee facing bias or an employer seeking to avoid liability, understanding the high stakes of age discrimination is the only way forward.

October 28, 2024October 28, 2024

Forced Arbitration Clauses: What’s at Stake and Why it Matters

Pay discrimination, Forced arbitration clauses challenge consumers, employees. Helmer Friedman LLP aggressively protect your rights.

Imagine signing up for a new credit card, starting a new job, or signing up for a streaming service trial, only to find out later that you unwittingly waived your right to take disputes to court. This scenario isn’t just hypothetical; it’s a reality for many due to the widespread use of forced arbitration clauses. While these clauses are often buried in contracts, their impact is significant, influencing both consumers and employees in profound ways. This article explores what forced arbitration clauses are, how they affect individuals, and what actions can be taken to address them.

Understanding Forced Arbitration Clauses

Federal Arbitration Act

On February 12, 1925, President Calvin Coolidge put his signature on the Federal Arbitration Act, giving a nod to private dispute resolution as the cool alternative to courtroom drama. Think of it as arbitration: where the gavel gets a vacation, and the arbiter’s decisions pack a punch—only with a sprinkle of judicial review on the side!

What Are Forced Arbitration Clauses?

“Forced arbitration clauses are a quiet way to strip consumers and employees of their rights.” U.S. Senator Elizabeth Warren

Forced arbitration clauses are provisions in contracts that require disputes to be resolved through arbitration rather than in court. These clauses are common in various agreements, from consumer contracts to employment contracts. Consumers often aren’t aware they’ve agreed to arbitration because these clauses are usually hidden in the fine print.

Why Are They Common?

Businesses favor arbitration because it generally favors their interests. Arbitration can be less costly and quicker than court litigation, allowing companies to avoid lengthy legal battles. Additionally, arbitration results are often confidential, preventing public scrutiny. Elizabeth Warren has criticized this practice, saying, “Forced arbitration clauses are a quiet way to strip consumers and employees of their rights.”

The Prevalence of Arbitration Clauses

The rise of arbitration clauses is a concerning trend that has surged recently. A revealing study by the U.C. Davis Law Review indicates that 81 of the 100 largest U.S. companies now rely on arbitration when dealing with consumers. The Economic Policy Institute reports that mandatory arbitration agreements bind more than 60 million American workers. This escalation raises critical questions about their fairness and legality, as critics warn that such clauses erode the judicial system and compromise consumer rights. A recent article in the New York Times, titled “It Shouldn’t Be This Easy to Sign Away Your Right to a Trial,” highlights the urgency of this issue.

The Impact on Consumers

Limiting Legal Recourse

For consumers, forced arbitration means giving up the right to sue in court. This limitation can be problematic when dealing with defective products or unfair charges. Arbitration typically favors corporations, making it challenging for consumers to win cases against large companies. Gregory D. Helmer of Helmer Friedman LLP, commenting on a recent California Supreme Court victory, said, “When an individual is forced to arbitrate, they are giving up their fundamental constitutional right to a jury trial. As with all constitutional rights, we should analyze any waiver with an extremely high level of scrutiny.”

The Financial Burden

Arbitration is often portrayed as a cost-effective alternative to litigation, but this isn’t always the case for consumers. The costs can escalate quickly, and since the arbitrator’s decision is final, there are limited avenues for appeal. As highlighted by various consumer advocacy groups, this scenario puts consumers at a disadvantage.

Confidentiality Concerns

Unlike courtroom proceedings, arbitration lacks transparency. The outcomes are private, which means repeat offenders can continue bad practices without public accountability. This lack of transparency is a significant concern for consumer rights advocates.

The Impact on Employees

Employment Contracts and Rights

In the workplace, forced arbitration clauses are embedded in employment contracts. Employees often have no choice but to agree if they want the job. These clauses can restrict workers’ rights, making it difficult to challenge issues like discrimination or wrongful termination.

Disparate Impact

Arbitration can perpetuate systemic biases, particularly against marginalized groups. Employees facing discrimination may find it difficult to prove their case in arbitration, where the rules of evidence are less strict than in court. Many labor advocates argue that this issue underscores the need for reform.

The Silence Effect

The confidentiality associated with arbitration proceedings means that systemic issues within companies often remain unreported. Employees cannot discuss their cases publicly, which hinders broader awareness and prevents meaningful change. This “silence effect” is a significant drawback of the current arbitration system. Arbitration typically occurs behind closed doors, and the outcomes are rarely disclosed, allowing serious problems to stay hidden.

A notable example of this occurred with Wells Fargo, which, between 2009 and 2016, opened approximately 3.5 million unauthorized bank and credit card accounts in the names of actual customers. Starting in 2013, customers attempted to hold Wells Fargo accountable through lawsuits but were constrained by arbitration clauses buried in the bank’s fine print. This forced them into confidential settlements, resulting in these unethical practices going unnoticed until investigative reports emerged. This led to a government inquiry and eventually a substantial financial settlement for those affected. The situation raises critical questions about transparency and accountability in corporate practices.

The Legality of Forced Arbitration

Recent Court Decisions

The legality of forced arbitration clauses has been a contentious issue. Recent court decisions have upheld these clauses, emphasizing the binding nature of the agreements. However, courts have also ruled against employers when arbitration agreements were deemed unfair or improperly disclosed.

Enforceability Challenges

While arbitration is generally enforceable, challenges arise when agreements are vague or deceptive. Courts have occasionally ruled against enforceability, especially when consumers or employees lack informed consent. These decisions highlight the importance of transparency and fairness in arbitration agreements.

Regulatory Efforts

Regulatory bodies have attempted to address the imbalance created by mandatory arbitration. Efforts include proposals to ban certain types of arbitration clauses or to increase transparency. While progress has been slow, continued advocacy and legislative interest suggest possible changes on the horizon.

Strategies for Consumers and Employees

Reading the Fine Print

Awareness is the first step in navigating arbitration clauses. Consumers and employees should carefully read contracts before signing, looking for any mention of arbitration. Understanding what you’re agreeing to is crucial in protecting your rights.

“When an individual is forced to arbitrate, they are giving up their fundamental constitutional right to a jury trial. As with all constitutional rights, we should analyze any waiver with an extremely high level of scrutiny.” Greg Helmer Helmer Friedman LLP

Challenging Unfair Clauses

When faced with an unfair arbitration clause, individuals can contest its validity. Legal assistance can help determine whether the clause is enforceable or if it violates consumer protection laws. In some cases, public pressure or negative publicity can lead companies to abandon unfair practices.

Advocacy and Support

Joining consumer advocacy groups or unions can provide additional support and resources. These organizations often work to educate the public on arbitration issues and advocate for policy changes to protect rights. Collective action is a powerful tool for effecting change.

The Future of Arbitration

Potential Legislative Changes

The future of arbitration may see significant changes as lawmakers consider reforms. Proposed legislation aims to restrict the use of forced arbitration, particularly in sensitive areas like employment and consumer rights. These efforts reflect growing concerns about fairness and access to justice.

Implications for Consumer and Worker Rights

If successful, legislative changes could enhance protections for consumers and workers, ensuring fairer dispute resolution processes. Such reforms could lead to a more balanced approach between arbitration and traditional litigation, preserving individual rights.

The Role of Public Opinion

Public opinion plays a crucial role in shaping the future of arbitration. Increased awareness and advocacy can drive change, encouraging companies to adopt voluntary and fair arbitration practices. In one notable case, a woman died from an allergic reaction after eating at a restaurant in a Walt Disney Parks and Resorts location. The company claimed that her widower had waived his right to sue when he signed up for Disney+ years earlier. However, following public backlash, Disney reversed its stance in August and agreed to take the case to trial. This incident highlights the significant power that consumers and employees have to influence corporate behavior.

Conclusion

Forced arbitration clauses present significant challenges for consumers and employees, impacting their rights and access to fair dispute resolution. Understanding these clauses and advocating for change is essential for protecting individual freedoms. By staying informed and engaged, individuals can contribute to a more equitable system that respects consumer and worker rights. Numerous resources, advocacy groups and experienced attorneys are available to support those seeking further information.