Age Discrimination Claims Increase: Employers Beware

Michael D. Karpeles

Reproduced with permission from HR.com, www.hrwire.com. Copyright 2002
November 25, 2002

Age discrimination is the fastest growing category of discrimination claims filed with the U.S. Equal Employment Opportunity Commission (EEOC). In 2001, 17,405 EEOC age discrimination claims were filed, up from 16,008 in 2000--the highest number of claims since 1995 and the greatest year-over-year increase out of the eight discrimination categories followed by the commission. These statistics should be a wake up call for employers.

The workforce is aging as baby boomers reach their 40s and 50s. Companies are cutting costs by laying off employees with higher compensation levels--typically older workers. This combination is a key factor driving the increase in age discrimination claims. Despite the increase, employers faced with the prospect of laying off workers, many of them older, can take steps to protect themselves from age discrimination lawsuits.

HOT WATER QUESTIONS
Avoiding the appearance of age discrimination begins when an employee is hired. Don't ask potential employees for their age in job interviews or on job applications. If your company is later sued for age discrimination, it's hard to say age didn't matter when you specifically asked. Supervisors should be trained to avoid off-handed age related comments or jokes. It is also important that management doesn't make sweeping comments such as "our company is looking for young, aggressive people,"--these comments are red flags. As a general rule, employers cannot impose a mandatory retirement age and employers cannot use age as a basis for making hiring, firing or promotion decisions.

WHEN LAYOFFS OCCUR
When layoffs are planned, companies need to analyze the proposed layoff demographics to ensure workers age 40 and over are not disproportionately affected. Preparation is critical. Determine what percentage of the proposed layoffs will affect workers over and under age 40. If applicable, break down the numbers by division or by job title. Age should be only part of the analysis. Race and gender must also be considered.

Ideally, a company should develop its layoff criteria well before a layoff is necessary. The documentation needs to show that the company uses legitimate and justified criteria when determining who qualifies for a layoff. It is perfectly legal, for example, to lay off workers with high compensation levels, even if older workers are most effected. During the layoff planning stage, consult with legal counsel to develop the correct wording to include in the documentation.

To prove age discrimination, employees must show direct evidence (i.e., a company memo indicating that age is a factor in company layoff decision making) or circumstantial evidence (i.e., inferring discrimination from a set of facts that were a pretext for discrimination). If caution and diligence is used in establishing the layoff policy, this evidence will be difficult to come by.

EFFECTIVE OWBPA RELEASES
Under the Older Workers Benefit Protection Act (OWBPA), which applies to employers with 20 or more employees, employers can ask older laid off workers, to sign releases that will waive their right to file an age discrimination case in exchange for severance or other benefits. It is the ultimate safeguard from age discrimination lawsuits, but the release must be written carefully so it stands up in court. A 1998 U.S. Supreme Court decision, Oubre v. Entergy Operations, Inc., found that if the releases are not written properly, they are void, giving older workers the ability to sue.

Under the OWBPA, waivers must:

1. be in writing and easily understood;
2. discuss the worker's age discrimination rights;
3. allow the worker to file a discrimination claim in the future if new issues arise;
4. state that the worker is being compensated for signing the waiver;
5. advise the worker to consult with an attorney before signing;
6. give the worker 21 days to consider the agreement and 7 days to revoke the agreement after signing.

As members of the baby boom generation continue to age and a sagging economy triggers additional layoffs, expect more age discrimination lawsuits. Companies with a comprehensive layoff plan, however, will have taken the proper steps to reduce their legal exposure.