The California Supreme Court recently ruled that when making benefits decisions, you don’t have to offer older employees the same perks you offer younger ones. Here’s what happened and why you still must be cautious when basing benefits decisions on age.
Older Worker Denied Education Reimbursement
For more than 10 years, Dan Esberg was a telecommunications specialist for Union Oil Co. of California (UNOCAL) in Anaheim. On supervisor Jeff Winston’s urging, Esberg, then 53 years old, enrolled in a bachelor’s of science program at the University of Redlands. UNOCAL paid $16,000 for Esberg’s education expenses.
But when Esberg, at 56, approached his new supervisor Walter Aldrich to request education aid for an MBA program, Aldrich said, “You’re too old to invest in.” A 42-year-old co-worker and two younger employees received education aid for the same program.
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Employee Cries Foul
Esberg sued UNOCAL, claiming the employer violated public policy and the state age discrimination law by refusing to fund his advanced degree because of his age. A jury agreed with Esberg and awarded him $86,000.
A California Court of Appeal, however, sided with UNOCAL and wiped out the jury award.
No Benefit Protection For Older Workers
Now the California Supreme Court has upheld the appeals court ruling. The court explained that California’s anti-discrimination law covers situations in which an employer refuses to hire or employ, discharges, dismisses, suspends or demotes an individual over age 40 because of their age. It does not, however, cover age when it comes to discrimination with respect to employment terms and conditions. The court said education benefits fall under the category of terms and conditions of employment.
Proceed With Caution
Although the employer won in this case, you still need to be very cautious about treating older workers differently from younger workers. That’s because Esberg only sued under state law, but federal law does prohibit discrimination based on age in employment terms and conditions. And pending legislation would amend the state law to specify that it is illegal to discriminate based on age in providing benefits.
In the meantime, continue to caution managers and supervisors never to make age-related comments. Even if such statements might be permissible under state law in a benefits situation, the remarks could be used as evidence of age bias if you take a different adverse employment action against the employee. Also, even though state law doesn’t currently require you to provide equal benefits to older workers, be sure to follow the terms of your employment policies and contracts that obligate you to provide certain benefits to employees, regardless of age.