Scarinci Hollenbeck, LLC
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201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: October 18, 2016
The Firm
201-896-4100 info@sh-law.comThe American workforce is aging rapidly, and many companies are not equipped to manage the legal challenges. Nearly every week, a major U.S. company is named in an age discrimination lawsuit. HP and Tesla are among the latest.The risk of liability will only increase as the Baby Boomer generation ages and works longer. The percentage of older workers over the age of 55 is projected to be one in four by 2022, according to the Bureau of Labor Statistics. With these numbers in mind, is your business prepared to deal with these potential employment law challenges?
Under the Age Discrimination in Employment Act of 1967 (ADEA), employers are generally not allowed to hire, fire, promote, or determine a worker’s compensation based on their age (defined as those over age 40). Accordingly, employers must work to ensure that they are making decisions based on abilities, not age.
When making hiring decisions, ageism can play a significant role, even if it’s not intentional. A recent study at the University of California at Irvine and Tulane University revealed age discrimination often impacts hiring. The researchers submitted 40,000 fake job applications that included signals regarding the ages of the applicants and then analyzed the response rates. Overall, applicants age 49-51 applying for administrative positions had a callback rate 29 percent lower than younger workers. For workers over age 64, the response rate was 47 percent lower.
While age discrimination can occur across industries, the tech industry has recently come under fire for explicitly seeking out younger workers using advertisements that seek “new grads.” Because the jobs ads discourage older workers from submitting resumes, the Equal Employment Opportunity Commission (EEOC) takes the position that they are discriminatory. Even more subtle hiring motivations, such as “we need young blood around here” “or “let’s bring in the young guns,” could be the basis for an ADEA claim.
The good news for employers is that ADEA claims are more difficult to prove under the Supreme Court’s 2009 decision in Gross v. FBL Financial Services, Inc. By a slim majority, the Court held that plaintiffs must show that age was the “but for” cause of discrimination to establish ADEA liability. Nonetheless, the EEOC still secured more than $99 million in ADEA cases on behalf of aggrieved employees last year.
Questions of age discrimination often arise when an older worker is terminated, particularly when the employment decision is not based on cause. To minimize the risk of potential litigation, many employers offer departing employees a severance package in exchange for a release (or “waiver”) of liability for all claims connected with the employment relationship, including those under the ADEA.
When drafting severance agreements, employers must be cognizant that, in addition to meeting the requirements for a valid contract, waivers of age discrimination claims must comply with provisions of the Older Workers Benefit Protection Act (OWBPA).
The OWBPA sets out specific minimum standards that must be met in order for a waiver to be considered knowing and voluntary and, therefore, valid. They include the following:
If a waiver of age claims fails to meet any of these seven requirements, it is invalid and unenforceable.
If you have any questions or if you would like to discuss the matter further, please contact me, Jorge R. de Armas or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
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