In a controversial decision last year, a California Court of Appealruled that you can discharge high-earning employees over age 40and replace them with lower-paid workers, provided your motivationis to save money and not discriminate against older employees. The California Supreme Court recentlyrefused to review the ruling. But now, two important proposalsare pending in Sacramento that would, in effect, overturn thedecision and provide older employees with more ammunition to challengetermination decisions.
Join us this fall in San Francisco for the California Employment Law Update conference, a 3-day event that will teach you everything you need to know about new laws and regulations, and your compliance obligations, for the year ahead—it’s one-stop shopping at its best.
Proposed New Job Protection For Older Workers
One new measure, Senate Bill 1098, would make it illegal to refuseto hire or to discharge or demote a worker over age 40 on theground that a younger person would do the job for a lower salary. Thebill has been approved by the Senate and awaits Assembly review.
Another proposed new law, Assembly Bill 643, would make it illegalto use salary as a basis for deciding who should be laid off,if older workers are disproportionately affected.
It’s unclear whether either proposal will win final approval bythe Legislature or Governor Wilson. However, the fact that thebills were introduced indicates there’s a serious backlash againstthe Court of Appeal’s ruling. Therefore, some precautions arein order:
- Base layoffs on seniority or performance. The safest approach for differentiating among employeesis to stick to seniority or performance criteria rather than salary.However, if you do consider salary, document the fact that yourreasons have nothing to do with age, but are entirely economic,such as to cut payroll costs.
- Offer lower salary as an alternative to a layoff. If you baselayoffs on salary, consider offering older employees the optionof staying on at a lower wage. This will help reinforce that economicconcerns were your only motivation.
- Don’t make age-based comments. Caution everyone involved inthe hiring, interviewing and layoff process that age-related comments-suchas wanting to bring in “young blood” or “freshfaces”-are fraught with danger. Also, make sure managersand supervisors understand the legitimate business reasons foryour actions so they can properly communicate them to your employeesand prevent speculation about why a particular worker was let go.