Spike in Age Discrimination Claims Cautions Employers Undergoing Workforce Reductions
March 20, 2009
Last week, the Equal Employment Opportunity Commission announced that in its 2008 fiscal year, age discrimination claims increased 29% over the prior year. The EEOC indicated its belief that the spike was due in part to the impact of corporate reductions in force on older workers. These statistics merit careful review by employers of the effects of layoffs or other workforce actions on older workers.
Why do layoffs often disproportionately affect older workers? If the employer’s main goal is to reduce labor costs, often older workers are the highest compensated, due to seniority and to years of pay increases. In other circumstances, managers charged with making performance-based layoff decisions will use the reduction in force as an opportunity to eliminate what they view as longer-term workers with outdated job skills or deteriorating work performance.
Management and human resource professionals should carefully review performance-based layoff decisions for indications of age and other biases. If a manager’s selections appear to be weighted toward older workers, the performance criteria or other justification used for the selections should be carefully vetted. While cost savings may be legitimate grounds for selection regardless of age, stereotypical judgments about older workers’ flexibility or ability to learn new job skills cannot be legally justified.
Even in situations where no direct bias based on age is apparent, statistical disparities in the ages of the laid off employees as compared to the overall population can form the basis for discrimination claims. If such disparities arise, management must be confident of its ability to demonstrate legitimate business reasons for the criteria used to make the layoff decisions.
The risk of age discrimination claims arising from layoffs can be managed in several ways. In some circumstances, employers may use seniority-based criteria for the reduction, usually eliminating any disparate impact on older workers. In other situations, employers may want to offer voluntary early retirement or severance packages that include releases of legal claims, including age discrimination claims. The Older Workers Benefits Protection Act requires that such release contain special provisions and waiting periods in order to create an effective waiver of age bias claims.
As the Baby Boom generation nears retirement age, the number of age claims is expected to rise based on demographic trends alone. When coupled with the current economic downturn, the EEOC statistics clearly point out an important area of legal concern for employers.