Company With “Best in Class” HR Settles $3 Million Discrimination Suit

Read these two statements and see if you can figure out which companies they refer to:

  • “We believe our human resource practices are fair, comply with federal and state laws and are widely recognized as best in class.”
  • “(Company X) has agreed to pay $3 million to settle an age-discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency said Monday. It is the third age-discrimination lawsuit (Company X)  has settled this year.”

Give up? Would you believe that these two statements are referring to the very same organization?

3M pays millions in age discrimination settlement

Yes, according to the Minneapolis Star-Tribune, Minnesota-based 3M paid millions of dollars to settle an age discrimination lawsuit this week. How that squares with the company’s claim they “are widely recognized as best in class” for HR practices is anyone’s guess.

Here’s the gist of the story:

Maplewood-based 3M Co. has agreed to pay $3 million to settle an age-discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency said Monday. It is the third age-discrimination lawsuit 3M has settled this year.

The EEOC charged that 3M unlawfully laid off hundreds of employees over the age of 45 from July 1, 2003, through Dec. 31, 2006. 3M laid off many highly paid older employees, apparently to save money, and cut workers in salaried positions up to the level of director, the agency said.

Pending judicial approval, the settlement will be paid to approximately 290 former employees, and 3M will post openings for positions it had not advertised previously to enable older employees to apply. The company agreed to establish a review process for termination decisions and to conduct training on how to prevent age bias.

In March, 3M announced it had reached a preliminary settlement of $12 million on a suit filed in Minnesota in 2004. That case affected as many as 7,000 current and former employees. The company reached an undisclosed agreement this spring in a separate case filed in 2009 in San Jose, Calif.”

“Best in class” HR practices?

Now, 3M does claim that the settlement with the EEOC “is not an admission of any liability,” and that it was done largely to to avoid taking up more time and paying more in legal expense.

“3M denies the allegations in the suit,” said 3M spokesperson Donna Runyon said. “We believe our human resource practices are fair, comply with federal and state laws and are widely recognized as best in class.”

OK, I get the notion of settling the lawsuit to cut your losses. That’s a pragmatic decision, but does 3M really believe that anyone in the world will buy the bit about the company having “best in class” HR practices after they just paid out millions of dollars in a settlement over employee discrimination?

Somehow, I don’t think “best in class” human resource operations are being forced to do that these days.

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And then there’s this, from the Star-Tribune report:

According to an EEOC investigation based out of the San Francisco office, older employees at 3M were denied leadership training and laid off to make way for younger leaders, according to the agency, which is responsible for enforcing federal laws prohibiting employment discrimination.

The agency’s investigation found an employee e-mail describing then-CEO Jim McNerney’s “vision for leadership development” as “we should be developing 30-year-olds with general manager potential.” …

“The law requires employers to base employment decisions upon each person’s strengths and talents instead of relying upon generalized assumptions calculated around an employee’s age,” said the EEOC’s Michael Baldonado.”

Is this what smart HR organizations do?

Yes, organizations with “best in class” HR practices don’t make it a habit of dealing with their older workers this way. It’s always great to develop younger talent and move them into the management pipeline, but smart HR organizations know you don’t do that at the expense of your older (and more experienced) workers. It should never be a choice of one or the other.

I hate to be so hard on 3M, but then again, they were the ones who decided to talk about how they have “best in class” human resource practices wedged into an announcement about a $3 million age discrimination settlement with the EEOC.

When did age discrimination become part of “best in class” HR? Maybe some sharp HR pro out there can weigh in on how you make THAT work.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.

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4 Comments on “Company With “Best in Class” HR Settles $3 Million Discrimination Suit

  1. I certainly agree with yoiu John. A compny who considers it self to be ” Best In Class in HR practices” should not be experiencing Discrimination suits. Their termination processes,policies and EEO training to include Senior execs should be formally implemented and in compliance throught the organization. This is pretty disappointing for a company like 3M to experience.

  2. OK, maybe they did.  But drawing that conclusion from the facts presented in the news article is ridiculous.  Saying “we should be developing 30-year-olds with general manager potential” is discriminatory? No. Following through on that statement is great practice to ensure a strong pipeline of leaders. That doesn’t mean anyone over 60 was treated inappropriately.  The two are completely unrelated.

    On the EEOC charge (that means an accusal by a government agency, not a decision of guilt — kind of important distinction) that older, more highly paid workers were laid off: many companies have not managed their pay practices properly and let salaries grow with tenure not with capabilities.  There might be a correlation between pay and age, but that doesn’t mean 3M is guilty.  

    Any junior generalist would tell you that what 3M likely didn’t do is the fundamental task of good performance management.  Wanting to be “nice” to Dave or Mary during their career, 3M never told them transparently about their performance and how it compared to others.  They likely didn’t have detailed goals and metrics, or had such sandbagged targets or unforced rankings so that they never heard the truth about their performance.  So when it came time to cut costs, some of those who were termed were judged to be earning much more than others for similar or lower levels of performance.  That’s a good reason to consider termination in that situation, except when you have no actual proof about their performance vs. others.

    So OK, maybe they did.  But just as likely, they didn’t.  What this feels like is a failure of HR to execute on the basics.  Like many companies, they likely do have “world class” HR practices.  LIke many companies, they probably execute effectively on very few of them.

    1. Marc — Multiple payments to settle EEOC changes of discrimination should tell you something. If this was just one event, one charge, I would agree with your point. I’m not a fan of the EEOC, but you would think that 3M would have gotten the message after the first million dollar plus payout. 

      I also think you miss my point. For 3M to tout their “best in class” HR practices as they’re making yet another big money payout over an EEOC discrimination charge is what is ridiculous here. If 3M does have world class HR practices — and I am certainly not saying that they don’t — touting them as you make yet another big money, EEOC-driven payout seems silly. Is that really the time or place to make that claim? 

      I do agree with you on this: it DOES feel like a failure of HR at 3M to execute on the basics. As for the distinction between having world class HR practices if you don’t effectively execute on them, well, that’s probably another argument for another day. I, for one, don’t think you really have the former unless you can do the latter. And, that was what I was trying to get at here in the first place.

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