ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, September 28, 1996 TAG: 9609300033
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
THIS IS THE FIRST time a group of ex-workers will be able to conduct a legal investigation of the motives behind their firing.
A federal judge ruled Friday that a group of former IBM workers could seek information from the company on its job-reduction efforts as they press for tax refunds on their severance payments.
The step marks the first time a group of former corporate workers will be able to conduct a legal investigation of the motives behind their company's downsizing.
The 737 former IBM workers sued the Internal Revenue Service in March, contending the payments amounted to a non-taxable legal settlement since the workers had to sign a form releasing IBM from legal liability to get the payments.
The IRS exempts certain kinds of legal settlements from income tax, such as personal injury awards and some types of discrimination.
The IRS asked Judge Thomas Macavoy to throw out the case, saying the former workers would have had to sue IBM before they left for the severance to be considered a legal settlement. In addition, the agency argued IBM's intent with the payment was to help out the departing workers until they could get new work.
At a hearing Friday morning in Binghamton, N.Y., Macavoy denied the motion, leaving open the question of IBM's intent. That will allow the former workers to seek IBM documents and interview executives, laying out the thinking behind its downsizing process.
``We can now proceed full bore into discovery to develop evidence of IBM's corporate intent in making the payments,'' said Jim McDermott, an attorney representing the workers. The process could take a year, he said.
To respond to major changes in the way companies use computers, IBM cut its staff from just over 400,000 in 1986 people to around 220,000 now.
Millions of workers lost jobs in work-force reductions at other companies during the late 1980s and early 1990s. But, because of their large numbers and concentration in places like New York and North Carolina, the former IBM workers have been able to fight for tax refunds in an organized fashion.
The suit was brought by western New York-based members of the National Organization of Downsized Employees, a Poughkeepsie, N.Y., organization started by former IBM workers.
For some former workers, thousands of dollars are at stake. Often, the payment for a departing IBM worker was a year's salary or more. And employees who left near the end of the year had their payment taxed at a higher rate since it was added to salary already earned.
LENGTH: Medium: 55 linesby CNB