Fired salaried workers sue Ford for age discrimination
Four former leadership-level employees say Ford Motor Co. deprived them of retirement benefits by firing them during a sweeping global restructuring in May based on their age and how close they are to obtaining full pensions.
The former white-collar employees — who all worked in Dearborn — filed a lawsuit seeking class-action status against the automaker for allegedly targeting employees who were close to hitting benchmarks of 30 years with the company or 55 years of age. According to a lawsuit filed Thursday in U.S. District Court in Detroit, reaching those benchmarks in some cases would have more than doubled the values of their pensions and retirement plans.
The lawsuit alleges Ford violated Section 510 of the Employee Retirement Income Security Act when it used an algorithm created by management consulting firm Boston Consulting Group to "target older and higher pension-cost salaried employees" and fire them as part of CEO Jim Hackett's "Smart redesign" of Ford. The lawsuit also alleges the automaker violated the Elliott-Larsen Civil Rights Act by discriminating against employees based on their age.
Ford called claims made in the lawsuit "baseless," and Ford spokesman T.R. Reid told The Detroit News the company would defend the headcount reductions made in May "vigorously." Reid said the claim that the automaker had used an algorithm to target higher pension-cost employees was untrue.
"The process was careful," said Reid. "It was thorough. The considerations taken then were appropriate, and retirement status wasn't among them."
The lawsuit filed on behalf of Monica Nicolaysen Dowhan and three other employees of similar rank seeks lost wages and benefits, and a return to their jobs. That could cost the automaker some of the millions it seeks to save by cutting 7,000 white-collar jobs globally by August.
"I'm convinced as I've ever been of a case that this was done deliberately," said Michael Pitt, of Royal Oak-based law firm Pitt, McGehee, Palmer and Rivers, which is representing the plaintiffs.
"They terminated these people not because they were bad performers or because there was no place for them," he said. "They did it because they wanted to deprive them of the retirement benefits. That is illegal. Ford Motor Company crossed a line with this one."
As part of a retirement plan for those hired before Jan. 1, 2004, Ford employees are eligible for full retirement benefits upon reaching 30 years of employment at Ford, regardless of age, or hitting age 55 and having worked at Ford for at least 10 years. Those suing the automaker were terminated before they could hit those benchmarks, the lawsuit claims.
'Performance not considered'
Nicolaysen Dowhan, 52, of Grosse Ile, was manager of governance risk and compliance at Ford in Dearborn. She would have hit her 30-year benchmark in March 2020, but Ford let her go May 31.
As a result, her lump-sum pension is worth $552,595 instead of the $1,144,019 she would have received as her full lifetime pension if she been allowed to work until March 31, according to the lawsuit. If she had worked until age 65, her pension would have totaled $2.1 million.
Nicolaysen Dowhan and the others said they expected their jobs might change or that they would be reassigned as part of the restructuring. Two months prior to being fired, she had received a performance-based bonus. She says was one of the top performers in her department, and expected she'd be kept on in a different, possibly lower-ranking role.
"I asked for a demotion," Nicolaysen Dowhan said. "I was told no. And then I come to look on the internet to see that Ford's hiring and looking for six people? I could have taken five of those six jobs to do very easily. And nobody could say that I'm not qualified.
"I was told, 'Your performance was not considered.'"
At 6:16 p.m. May 31, her last day on the job, Nicolaysen Dowhan sent a 737-word email to Executive Chairman Bill Ford and Chief Financial Officer Tim Stone. She warned them as a risk-assessment specialist that the "potential business impact could be substantial if a class-action lawsuit is filed against the company which should be avoided if possible." And then she left her office for a final time.
She has not heard back from either.
Benchmarks and bridges
Under Hackett, Ford has been on a cost-cutting path for most of the past two years. The automaker aims to trim $25.5 billion in operational costs, while spending $11 billion to restructure the company. The automaker on Thursday morning announced in Germany it would trim some 12,000 jobs in Europe and close or sell six plants there.
In May, Ford said it will have cut 7,000 white-collar jobs globally by August. Eight hundred of those positions would come out of North America. Five hundred of those were notified during the week of May 20, including those who filed the suit.
Nicolaysen Dowhan and the three others in the lawsuit who were fired in May said they stayed with the company for nearly 30 years because of what they called "golden handcuffs," a term used to describe retirement packages intended to keep good employees around.
The retirement packages were something the former employees had planned to live on once they retired. They included pensions, retiree healthcare and lifetime A-plan discounted lease vehicles.
Nicolaysen Dowhan said Ford wouldn't allow her to "bridge" to meet her benchmarks, which would have allowed her to meet them sooner or delayed her termination so her retirement plan could fully vest.
The suit claims that higher-ranking employees let go in earlier waves of the layoffs were "bridged" to obtain their full retirement benefits. The plaintiffs also allege their former roles have been reassigned in some cases to less-qualified employees. They allege that employees who'd already met their retirement benchmarks but still worked for Ford were largely unaffected.
The three others named in the suit spoke with The Detroit News on the condition that they would not be directly quoted. They said their pensions would have amounted to similar figures as Nicolaysen Dowhan.
The four plan to decline severance pay offered by Ford, which amounted to nine months salary, six months of health care coverage and three years of A-plan car leases. Nicolaysen Dowhan's severance pay was worth around $130,000.
She and the others said they felt let down by Bill Ford, who frequently refers to the Dearborn company as a family.
"How could you do this to your family?" Nicolaysen Dowhan said. "It's completely believable. It's just unacceptable."