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The gist of the Age Discrimination in Employment Act of 1967 (ADEA), while chockablock with numerous and sundry nuanced provisions, remains alive and kicking: “Bosses can’t fire Grandpa for being old.”
While the essence survives, application of the Act in the workplace and litigation continues to evolve. So, what is the state of the law and economics surrounding age discrimination? How do employers protect themselves from meritless claims and pitfalls? How have juries responded? And, for those of us whose birthday candles set off smoke alarms, how do we protect ourselves? The ADEA is an old law, but it’s got a lot of new wrinkles (ADEA 29 U.S.C.S. § 621-634).
Current Employment Trends
Two trends are driving the evolution of the law: an aging workforce and the upheaval in the economy during the last several years. According to AARP, one fifth of the U.S. workforce is age 55 and older. About 64% of those workers say they have experienced or seen age discrimination in the workplace, and about 58% agree that age discrimination begins among workers in their 50s. As the workforce continues to age, the EEOC has seen a predictable increase in age discrimination claims.
Meanwhile, this aging workforce faced the country’s biggest financial crisis in 70 years. Along with massive job losses, the number of EEOC charges rose substantially. In 2000, about 16,000 charges were filed. In 2010, more than 23,000 were filed. During that period, according to EEOC statistics, the agency nearly doubled the money recovered for claimants. After 2010, as the economy continued to recover, the upward trend in discrimination claims started to flatten, but the picture remains muddled due to the aging workforce and other factors. The number of age-related filings went from 22,857 in 2012 (23 percent of all claims) to 21,396 in 2013. Age discrimination litigation, therefore, remains a prominent part of the overall labor law picture. As a result, careful employers need to remain apprised of potential claims and take affirmative steps to mitigate risk.
Current State of Law
Congress passed the ADEA in 1967 to protect individuals age 40 and older from discrimination in the workplace based on age. Another federal law, the Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. § 626(f), was enacted to prohibit employers from denying benefits to older workers. These two laws, which form the cornerstone of federal age discrimination law, are supplemented by a patchwork of state laws that either mirror federal laws or impose more restrictive age discrimination protections.
The ADEA has been interpreted to provide protection for older workers against two different types of discrimination, namely, disparate treatment and disparate impact. Disparate treatment applies when the employer discriminates against an individual 40-year-old or older employee or applicant, treating them less favorably than a younger employee or applicant because of age. Disparate impact applies when an employer implements or maintains a policy that has an adverse impact on employees 40 and older, even though the policy or practice itself is unrelated to age.
The ADEA sets out a number of statutory defenses, including the "bona fide" defenses (such as the "bona fide seniority system") and the "non-age" defenses (including "reasonable factors other than age" and "good cause"). In addition, many employers assert a "business necessity" defense. Plaintiffs face a substantial burden in proving age discrimination.
Employers face damage awards hire than other types of discrimination claims because older employees tend to be better paid. Employees who file age discrimination claims are seeking compensation for being turned out of what might have been their last, best chance for the highest wages they might earn in a lifetime. Juries can be highly sympathetic to plaintiffs in age discrimination claims. Anyone can picture themselves or a loved one on the losing end of discrimination.
Recent jury awards for age discrimination claims fall all over the map. In May 2014, a New Jersey jury awarded $1.7 million to a 59-year-old nursing home office worker who was terminated from her job. The verdict included a staggering $1.5 million punitive damage award. Prefach v. Franklin Care Center (Superior Court, Middlesex County). Meanwhile, in April, a Florida jury returned a defense verdict in a 59-year-old former lottery worker’s wrongful termination claim. Russ v. Florida Lottery (Circuit Court, Leon County). And in August, a Kentucky federal jury returned a defense verdict in a 52-year-old’s suit against an employer who replaced him with a younger worker. Sharp v. Aker Plant Services (U.S. District Court, Louisville).
Employer Best Practices
As with any type of labor discrimination lawsuits, employers can take affirmative steps to insulate themselves from potential liability. Because age discrimination can be proven by direct evidence of bias as well as inferences of bias, standardized and posted policies of non-discrimination are a good place for employers to start. At a minimum, ongoing policies should include:
1) Management Training. Obviously, managers should be trained to avoid making careless statements about an employee’s age or retirement status. Such comments can provide circumstantial evidence of age discrimination. Not surprisingly, employers have been held liable for age discrimination when an employee is described by a manager as “being too old to learn new tricks” or “not keeping up with younger employees” or “past her prime.”
2) Accurate Performance Evaluations. Employees deserve to have honest appraisals of their work. It gives them the necessary information for improving performance. But in the context of age discrimination, it also gives both parties an added layer of protection. If after years of sterling performance reviews, an older employee is terminated for poor performance, claims of age discrimination become more credible to a juror. Conversely, if an employee consistently underperforms, termination for poor performance is understandable, regardless of age.
3) Avoidance of Workplace Policies With a Disparate Impact on Older Employees. Policies regarding retirement, seniority, health conditions, and school graduation year have been viewed as directed at age. But that is not to say that older employees should be given preferences. Instead, they should be held to the same standards and rules as younger employees.
4) Releases in Severance Agreements. In the event of a layoff or other reduction in force, severance agreements should contain releases specific to the ADEA and the OWBPA. The ADEA requires, among other things, that the waiver specifically refer to the ADEA claims, a seven-day revocation period, an encouragement to seek legal advice, and consideration as to a work benefit that the employee is not already entitled.
As the workforce grows older, an employee’s risk of age discrimination and an employer’s risk of resulting claims and litigation will not be going away anytime soon.