These managers claim IBM fired them after they argued a black salesman wasn’t paid fairly

IBM is facing more employment-related legal trouble, as a trio of former managers say the company fired them earlier this year after they questioned a manager’s decision to shortchange a black software salesman on a commission payment.

Scott Kingston, Andre Temidis and Michael Lee are suing IBM in a New York state court. Filed July 6, the lawsuit alleges IBM violated New York labor and human-rights laws by retaliating against them for sticking up for the salesman, which the filing identified only by the initial “J.”

He was due more than $1 million in commission on a deal, but received only about $200,000 because an IBM finance vice president stepped in and “decided that J’s commission was simply too high,” according to the lawsuit.

The vice president, Brian Mulada, ordered the reduction because company higher-ups don’t like it when a commission payout accounts for more than 10 percent of a deal’s value, they allege.

Kingston, Temidis and Lee objected to the reduction because an earlier sale had yielded a commission payment of more than $1 million to a white salesman their lawsuit identified only as “Nick.”

Both deals, completed in 2017, were worth “tens of millions of dollars in revenue” to IBM and in both cases the company’s in-house commission formulas indicated that Nick and J were due more than $1 million.

The managers were under orders to act as if “seller commissions for [sales-staff incentive] plans are uncapped,” and the payout to Nick received a higher-level OK, the lawsuit said.

But after they complained about the “discriminatory treatment” of J, IBM launched an investigation that ultimately led to their firing because they hadn’t reduced payments to Nick and a colleague also involved in selling software to Cary-based SAS Institute.

“In short, IBM decided that the right way to cure underpayment to an African-American employee was not to pay him the correct amount, but to blame [the managers] for not ensuring that IBM also paid white employees incorrectly as well,” the lawsuit alleges.

IBM’s response is due in court on Sept. 10.

“This case, filed by employees who were terminated for cause, has no merit and we will vigorously defend ourselves in court,” said company spokesman Doug Shelton.

NC lawyers involved

Kingston and his fellow managers have hired two-thirds of a Raleigh-based legal team, Matt Lee and Jeremy Williams, that helped IBM sales staffers challenge commission reductions in North Carolina. They’re also working with Seth Rafkin, a New Jersey lawyer.

Williams and Lee are fresh off of settling a lawsuit that alleged IBM shortchanged former Triangle-based salesman Bobby Choplin by $296,568 in 2015 when it handed out rewards for a $19 million software-licensing deal with Branch Banking & Trust.

Court records indicate they completed the settlement in Choplin’s case on July 16. Its terms are undisclosed, but Lee has said it was “settled to the parties’ mutual satisfaction.”

Choplin argued that management emails showed that at least one executive was enforcing a 10-percent-of-the-value-of-the-deal limit on commissions at the same time the company was telling sales staffers their earnings opportunities were uncapped.

Two similar lawsuits remain pending in a North Carolina-based federal court.

The company has argued that its incentive contracts with its sales staff give it the right to adjust commission payments as it sees fit.

IBM assigns its salespeople a territory or set of clients, and a sales quota. Its commission formula in theory allows commissions to escalate at increasing percentages if a sale beats the quota.

The New York case differs for looking at things from management’s end of the equation.

Kingston and his fellow managers between them had more than 63 years of experience at IBM. They said commission payments normally “flow automatically to the sales representatives” provided an in-house review confirms the paperwork concerning the value of a deal, the sale rep’s quota and the sale rep’s territory.

In the case of Nick’s deal with SAS, a supervisor wanted to reduce the commission paid to a second person who helped with it, identified only as “William.”

But Michael Lee checked with higher-ups who told him “that IBM’s policies did not permit an arbitrary adjustment of a sales representative’s commissions,” the lawsuit said. “If a sale representative’s territory and quota are correct, their commissions cannot be adjusted.” So, like Nick, William was paid in full.

When the word came down that J wouldn’t get a $1 million-plus payment, Kingston pointed out to his bosses that the decisions were inconsistent. In the lawsuit, the lawyers highlighted the discrepancy.

““Unlike Nick however, J was only paid approximately $200,000 by IBM,” they said. “The only difference between them? J was African-American.”

Kingston lives in Washington state, Temidis lives in New York and Michael Lee lives in Texas.

Other legal action

Along with the North Carolina sales-commission cases, IBM also is facing employment-related legal action in a federal court in Texas. There, a former salesman in the company’s Hybrid Cloud unit, Jonathan Langley, is suing over age discrimination, saying he was laid off because the company is pushing to hire millennials.

IBM is based in New York but has offices all over the world, including in the Triangle, where it’s one of the area’s largest employers.

This story was originally published July 24, 2018 at 8:15 AM.