Employers may be experiencing the nagging dread of age discrimination more frequently these days. Simultaneous to the surge of baby boomers reaching retirement age comes the decision by many to delay their exit from the workforce, setting up a perfect legal storm centered on age discrimination.
Employees who saw their retirement nest eggs dwindle during the recession may elect to stick around to rebuild savings. That can be a win-win if the employer wants to retain their knowledge and experience as long as possible, but when the employer notes a drop in performance, the situation gets sticky.
Is the employee actually performing poorly, or is the employer claiming poor performance to hide a bias against employees of a certain age?
If performance truly has slipped, an employer needs to take action regardless of the employee’s age. But the employer needs to be careful about approaching the issue.
“Saying anything about age or retirement can open you up to age discrimination claims,” said Reggie Gay, a shareholder in the Anderson, South Carolina, office of McNair Law Firm, P.A. “That’s going to come back to haunt you. I would avoid discussing that. I would focus on their job performance.”
An employer needs objective documentation such as evidence of sloppy work, missed sales or production quotas, or a record of counseling and progressive discipline. The employer should talk to the employee about whatever is going wrong and explore ways to solve the performance problems — without making age the issue. “The minute you say, ‘maybe you should consider retirement,’ they’re going to twist that around.”
The key is for the employer to treat the older employee the same way it would treat a younger employee in a similar situation. Often an employer can be well-intentioned in suggesting retirement but still on shaky legal ground. Gay says he’s heard of employers saying things like “Joe, it’s hard to teach an old dog new tricks . . . maybe it’s time for you to go home and stay with the grandkids” or “If I were you, I’d want to just enjoy this time of my life.” But those are examples of what not to say.
Gay says he knows of a situation in which a business owner had a close relationship with a longtime employee and even thought of him as a mentor. When performance slipped, the employer suggested retirement and his comment “was all twisted around.”
Sometimes an employer will encourage an employee to retire and then the person talks to a spouse, child, or trusted friend who will say, “They can’t do that to you,” and it then becomes “a whole different situation,” Gay says.
It’s also a mistake to ignore performance problems because of an employee’s age. “Just because someone is older, you shouldn’t ignore their job performance,” Gay says. They still have to meet the essential functions of their job. They don’t get a free pass. You don’t want to treat them differently.”
The poor job market makes age discrimination claims even more dangerous because the person terminated is less likely to get another job, Gay says. That’s why it’s important to focus on performance and avoid mentions of age and retirement when discussing problems. Age is “one of those taboo topics to me,” Gay says.
Cal Keith, a partner in the Portland, Oregon, office of law firm Perkins Coie LLP, agrees that it can be dangerous when employers notice falling performance in employees of a typical retirement age. Sometimes an employer will find that an employee “is not the same person he was 10 years ago,” he says, and then the employer is faced with the question, “How do I exit them?”
For younger employees, the employer would go through a procedure and exit them without a lot of concern, but when it’s an older worker it can be perceived as age discrimination. Often the employer will inquire about the employee’s retirement plans, hoping the employee will say he’s planning on leaving soon. But if the worker has no plans to retire, “the employer is in the position of ‘I’ve got to go down the performance path, and that looks bad.'”
That’s why it’s better to have the conversation about performance as it comes up rather than after the employee says he’s going to stick around a while, Keith says.
Basic Training for Supervisors guidebook series, including a guide on documentation and evaluations
What the law says
Federal as well as some state and local laws offer older workers significant protection. The federal Age Discrimination in Employment Act (ADEA), which covers employers with at least 20 employees, protects most workers 40 years old and older from discrimination based on age. That includes prohibiting mandatory retirement policies for most — but not all — employees.
The ADEA “permits compulsory retirement of any employee in a ‘bona fide executive or a high policymaking position’ who has attained the age of 65,” according to the compliance manual from the Equal Employment Opportunity Commission (EEOC). “The exemption does not apply to federal employees,” the manual says.
The manual further states that an individual subject to compulsory retirement must have held the executive or high policymaking position for the two-year period before retirement and must have an annual retirement benefit totaling at least $44,000. The specific requirements to be a “bona fide executive” or “high policymaker” also are spelled out in the manual.