We’ve been brainstorming ideas for retaining our older workers who have skills we need and that we have trouble recruiting for. Most of our ideas would require us to bend our policies. We’re considering offering our older workers these incentives:
- full benefits for part-time work when hours per week fall below our usual eligibility requirement of 32 hours per week
- long periods of leave (months at a time)
- work-from-home arrangements
What risks do we run if we bend our policies like this? — Dexter, HR Manager in El Cajon
This issue is becoming increasingly common for employers. The workforce is aging. Competition for skilled workers is increasing while, at the same time, retirement is reducing the availability of workers with certain specialized skills.
In general, the incentives to retain older workers suggested in the question are feasible. Although there are some risks, they are probably manageable.
ADEA Claims
The most obvious issue is whether an employer can treat older workers more favorably than younger workers to make it easier for—or to encourage—the older workers to continue to work. In other words, is it illegal age discrimination to favor the old over the young?
The U.S. Supreme Court has ruled that General Dynamics Land Systems, Inc., and its labor union didn’t violate the federal Age Discrimination in Employment Act (ADEA) by favoring older workers over younger workers with respect to retiree health benefits. General Dynamics and its union agreed to a collective bargaining agreement eliminating the company’s obligation to provide benefits to employees who retire after the date of the agreement, except for current employees at least 50 years old. Employees who were over 40 but under 50 sued, complaining that they were being treated differently because of their age—because they were younger than 50. According to the Supreme Court, the younger employees had no claim because the ADEA doesn’t prohibit treating older workers better than younger workers.
According to a recent U.S. Equal Employment Opportunity Commission rule, employers are not liable under the ADEA if they favor older employees over younger ones, even if both are within the protected class of employees over age 40. Although there isn’t a court case applying the General Dynamics ruling to the California Fair Employment and Housing Act’s (FEHA) prohibition against age discrimination, California courts frequently follow interpretations of the ADEA when deciding cases under the FEHA.
Therefore, there doesn’t seem to be a significant risk of an age discrimination claim if you change the company’s policies to favor and encourage older workers.
Other Legal Claims
There also doesn’t appear to be a significant risk based on any other laws if the ideas suggested in the question are implemented. For example, no regulation prohibits an employer from lowering the usual hours requirement for benefit eligibility. For benefits that are not provided through an insurance company or other contractual arrangement with a third party, no law prevents an employer from providing benefits regardless of the number of hours an employee works.
For insured benefits, however, often the insurance contract requires “minimum work hours” for employees to be eligible for benefits. Insurance companies will probably be willing to negotiate a change in that requirement, but the change could lead the cost of the benefits to be raised if providing benefits to older workers increases the use of those benefits. It is also likely that there will be a minimum number of hours below which an insurance carrier will not agree to provide benefits.
An Employee Relations Issue
Allowing older employees to take longer periods of leave or to work at home is generally more of a management and employee relations problem than a legal one. Because it is not illegal age discrimination to favor older workers, treating younger workers differently should not create any legal exposure.
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There is some risk that disabled employees will use older workers’ favorable treatment as to leave and work-at-home arrangements to argue that such benefits are reasonable accommodations that should be afforded to them as well. Permitting some employees to work at home would undermine an employer’s argument that being present at the worksite is an essential function of the job. This means that disabled workers with jobs similar to those of older workers allowed to work from home will also have to be accommodated if they ask to work at home.
A nonexempt employee who is allowed to work or known by the employer to work at home is entitled to pay for all hours worked, and the employer is required to maintain records of the number of hours worked. Because the employee works outside the presence of management or supervisors, it is more difficult for the employer to verify the number of hours the employee claims to have worked. This creates some exposure to excessive overtime expense.
Policy Recommendations
To reduce potential employee relations problems resulting from bending policies for the benefit of older workers, employers can amend their policies to allow for flexibility. For example, the employer should add to the employee manual a policy on flexible work hours and working at home. Such a policy should provide that these benefits will be allowed on a case-by-case basis and only with management’s permission.
To avoid discrimination claims on grounds other than age, the employer should monitor the application of these policies in circumstances other than to help older workers. Even among older workers, the employer will need to ensure that employees are treated fairly based on gender and ethnicity.
With careful management, the employer should be able to use more discretion with respect to older workers and thereby encourage them to continue working.
Scott Silverman, Esq., is a partner at the Los Angeles office of the law firm Morrison & Foerster LLP.