Aging Workforce Poses Employment Law Challenges

October 18, 2016
« Next Previous »

Is Your Business Facing These Employment Law Challenges?

The 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.employment law challengesThe 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?

Preference to Hire Younger Workers Can Lead to Liability

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.

Phasing Out Older Workers Can Lead to Liability

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).

Provisions of the 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:

  • A waiver must be written in a manner that can be clearly understood.  EEOC regulations emphasize that waivers must be drafted in plain language geared to the level of comprehension and education of the average individual(s) eligible to participate. Usually this requires the elimination of technical jargon and long, complex sentences.  In addition, the waiver must not have the effect of misleading, misinforming, or failing to inform participants and must present any advantages or disadvantages without either exaggerating the benefits or minimizing the limitations.
  • A waiver must specifically refer to rights or claims arising under the ADEA. EEOC regulations specifically state that an OWBPA waiver must expressly spell out the Age Discrimination in Employment Act (ADEA) by name.
  • A waiver must advise the employee in writing to consult an attorney before accepting the agreement.
  • A waiver must provide the employee with at least 21 days to consider the offer. The regulations clarify that the 21-day consideration period runs from the date of the employer’s final offer. If material changes to the final offer are made, the 21-day period starts over.
  • A waiver must give an employee seven days to revoke his or her signature. The seven-day revocation period cannot be changed or waived by either party for any reason.
  • A waiver must not include rights and claims that may arise after the date on which the waiver is executed.  This provision bars waiving rights regarding new acts of discrimination that occur after the date of signing, such as a claim that an employer retaliated against a former employee who filed a charge with the EEOC by giving an unfavorable reference to a prospective employer.
  • A waiver must be supported by consideration in addition to that to which the employee already is entitled.

If a waiver of age claims fails to meet any of these seven requirements, it is invalid and unenforceable.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Ramon Rivera, at 201-806-3364.