One of your supervisors has counseled Joe a half dozen times over the past six months, advising him to quit for his own good. Several times you have even offered Joe an attractive retirement deal.
One day you walk into your office to discover that Joe has filed a wrongful-discharge suit against your company. This, despite the fact that you never really fired him.
Does he have a case?
Yes. Continual counseling of an older worker like Joe constitutes harassment. It can support a lawsuit for “constructive discharge.” That’s an attorney’s term for the act of making an employees’ work environment so unpleasant that he is forced to quit. Even the attractive retirement package doesn’t get you off the hook. Further, you may not fire someone for health reasons, unless you can make it clear that the employee’s performance has been affected.
Joe is protected under the laws that protect workers against age discrimination and he is not alone in his grievance. In 1991, employees filed 27,748 such complaints with the Equal Employment Opportunity Commission and at state agencies. That was a 19 percent increase from the year before and observers expect it to keep growing.
“We haven’t reached the full potential in terms of age discrimination lawsuits or problems that can be expected by management,” says James N. Adler, a partner with the Los Angeles law firm of Irell & Manella.
Why? The work force in general is getting older. As people pass the age of 40, they are protected by the federal Age Discrimination in Employment Act.
“Once the baby boomers start hitting that age, we will see even more claims,” says Cathy Ventrell-Monsees, manager of worker equity at the American Association of Retired Persons.
Employers are getting the word. In 1991, the AARP filled 105,000 requests from businesses for its pamphlet “Age Equity Checklist.” That was up by 150 percent over the previous year. (To get your free copy, see the sidebar, “Get More Help!”)
While lawsuits for discrimination in the areas of sex and race are also prevalent, age discrimination are much more likely to be won by workers. “All jurists relate to age,” explains Jeffrey M. Bernbach, a New York attorney who specializes in discrimination cases. “A person is either old or has parents who are old. So everybody can sympathize with an age plaintiff, whereas I am not sure that a man can put himself in the place of a woman or a non-minority in the place of a minority.”
Furthermore, when employers lose an age bias case they find that the penalties are much higher than for sex or race or religious discrimination. The amount is based upon the earning history of the plaintiff and the amount of time the plaintiff is out of work. Both of those numbers are apt to be higher in an age-bias suit.
“Age-bias plaintiffs tend to be older white males at a later stage in their careers, and that elevates the damages,” says John J. Donohue III, a professor of law at Northwestern University in Chicago.
Finally, employers who are found guilty of willfully violating the federal age discrimination law are fined double damages. What is “willful violation”? The definition varies by court case and by state, but here are a couple of cases that led to successful charges of willful violations. In one case, a memo from the plaintiff’s personnel file said, “Joe is too old for the job. . . .” And in another, an employer had requested guidance from an attorney for formulating employee policies, then had ignored the advice.
There are, however, legitimate reasons for terminating older workers. “The act does not insulate people who are over 40 from legitimate business actions,” says Joseph Cleary, assistant legal counsel for the EEOC. Older employees can be terminated if that documentation in their personnel records shows that they are not performing to the level demanded by the position.
Or, a business may be trimming costs. “A genuine reduction in force is a legitimate reason,” says Henry C. Blackiston III, a partner with Shearman & Sterling, New York. “The person may have been doing a fine job, but perhaps you need to phase out a given department and you don’t need the number of people you have on staff.” Employers must not reduce the payroll in a way that treats the protected age group unfairly when compared with younger staff members.
What are the most common errors made by business people in the area of age discrimination? And how can you avoid making them? Here’s what attorneys have to say:
1. Do not establish internal policies that prohibit age discrimination.
Employers may not discriminate by age in the way they recruit, hire, pay, train, promote, terminate or conduct any other activity related to employment. Perks, conditions of employment and terms offered may not differ by people’s ages.
Many employers think that the law applies only to elderly workers. On the contrary. The federal ADEA protects anyone 40 years of age or older, except for some highly compensated top managers. State laws — those in Virginia and Vermont are examples — protect workers of age 18 or older.
Some employers may believe they cannot get into trouble if they discriminate against older workers, as long as they replace the workers with people over 40. Again, they are wrong. “You cannot, as a defense, say that you laid off someone who was 55, but replaced that person with someone who was 50,” says Cecily A. Waterman, a partner at the San Francisco law firm of Brobeck, Phleger & Harrison. “That’s a common misunderstanding of people who have not been schooled in this area.”
Non-discrimination policies must be communicated to managers and supervisors. Just having policies on the books is not enough. “When age discrimination cases come up, it’s frequently not even top managers who are involved,” says Bernbach. “It’s a manager further down the line. But if someone does something from lack of knowledge, the company is responsible.
“If all levels of management that have authority to make personnel decisions are not aware of the law, you have a time bomb sitting out there.”
Small employers are as liable as larger ones. Even though the ADEA takes effect for employers with 20 or more people, businesses with smaller staffs are subject to state laws in more than 40 states. New York, Vermont and Wisconsin age bias laws start with only one employee. Wyoming starts at two, Washington state at eight and West Virginia at 12.
Even if your state does not have a restrictive age bias law, a plaintiff can sue you for emotional distress caused by age discrimination.
“Awards can be much higher in such cases,” warns Donohue. While the typical age bias case brought under violation of ADEA regulations averages $150,000 (not including the double damages for willful violation), wrongful discharge suits under state law have been known to run upwards of $1 million.
States vary as to how favorably their courts treat wrongful discharge suits. But even states that are not generally too tolerant of such lawsuits are more tolerant if they are brought by elderly people.
2. Remember to document performance problems.
“Employers get into difficulties because they do not document performance-related problems,” says Cleary. “Then they get to the point where an employee’s performance becomes intolerable. If the employee is terminated and he happens to be an older worker, the business is confronted with an age discrimination charge.” The terminated employee can point to his history of good performance appraisals for the past 10 years for a strong court case.
Why do so many businesses give good performance appraisals when more negative ones are appropriate? Good intentions. “There is often a real sentiment that the company does not want to hurt the employee’s feelings,” says Ventrell-Monsees. “That’s especially so if the employee has been with the company a long time. But that’s not good for the company or good for the employee.”
Be especially wary if a new supervisor takes over a certain department. Perhaps this person wants to sweep clean the department, getting rid of deadwood. First, management has to make sure the supervisor knows it is illegal to discriminate by age. And second, management has to make sure personnel records support decisions that certain employees are underperforming.
3. Do not conduct age-biased training programs.
One company in the Midwest selected younger staff members to participate in advanced training programs. A few years later, the employer decided to downsize for economic reasons. What criteria did management use to select who would be fired? Individuals who were not as highly trained were let go.
In court, that employer was fined heavily. He really committed two illegal acts. First, the company was biased in its selection for training programs. Then it compounded the error by terminating individuals who were older, even though the company was using skill-level as an excuse.
“Don’t presume that an older worker is less able to take the training or will not stay in the work force as long,” says Waterman. “Avoid the stereotypical notion that an older person is less capable than a younger one.”
4. Watch age-biased retirement policies.
Some employers have stumbled into court by firing older workers just prior to the time they vest their retirement rights. This interferes with their retirement rights.
Another illegal act is to force older workers to take early retirement. In a typical action, a company will threaten to fire an older worker without benefits if that worker does not willingly take early retirement.
You may not hassle older workers to the extent that they are forced to quit, as did the employer described at the start of this article. This is called “constructive discharge” and can lead to a lawsuit.
It can take many forms. “Sometimes an employer will take away an employee’s duties and give him a tiny table in a closet, to induce him to retire,” says Nira T. Kermisch, an employment law attorney in Rochester, N.Y.
“Other times an employer will give a series of frequent counselings about small matters. For some employers, it seems to be easier to make life so miserable that someone will quit, rather than openly fire the person.”
5. Watch the demographics of all employee practices.
When a group of employees is being hired, fired, promoted or when their compensation is being changed, employers examine the ages of the affected employees to make sure that older workers are not being unintentionally edged out.
Suppose management decides to terminate everyone with salaries that are higher than the average for certain positions. Because salary often reflects seniority, such action may discriminate by age.
So can terminating an employee because management feels his health has become so bad that it is not good for him to continue to work. He may well disagree. Since health can deteriorate with age, he may have a good age bias case to bring against the company.
“Be very careful when laying off older employees to make sure that age is not a factor,” says Adler. “Determine if there is a disparate impact being experienced.”
The problem is worse if terminated employees are replaced with younger ones. “If you fire someone over 40 and replace him with someone under 40, and if you look around and see all of your employees are under 40, you are facing a lawsuit,” says Newel B. Knight, partner with Stephens, Knight & Edwards, Reno, Nev.
Watching the demographics of employment management activities suggests that keeping records of employee ages is a good idea. That’s true, but it can be a two-edged sword. If managers do, in fact, discriminate by age, the existence of documents with employee ages can provide evidence for the plaintiff. If age records are kept, make sure all employment practices are clean.
It’s wise to isolate the age records from the people who make hiring and firing decisions. A higher level employee with access to age records can review and approve or veto such decisions.
Ridding the work place of age discrimination practices will not only reduce chances of a costly lawsuit, but also make for happier employees and a better image for business.
“This is a terrible form of discrimination,” says Marianne M. Jennings, professor of business law at Arizona State University in Tempe. “It’s the most heartbreaking, because very often these people have no place to turn. They become essentially unhirable because of their age.
“It’s tragic because they are extremely competent people.”
Supervisors Should Not …
- Discriminate by age in recruiting, hiring, compensating, training, promoting or terminating employees.
- Harass older employees with constant counseling about their retirement options.
- Neglect to keep written, honest appraisals of all employees.
- Terminate an employee for health reasons.
- Provide different training programs to different age groups.
- Terminate a number of employees who seem to be overpaid, without considering whether the act would constitute age discrimination.
Get More Help!
The American Association of Retired Persons makes available free copies of its “Age Equity Checklist” and helps employers review their policies so that they can eliminate any age bias.
The checklist covers areas from policy development, to hiring, training and termination. Contact AARP Fulfillment, 601 E Street NW, Washington, DC 20049.
