HR Hero Line

Asking About Retirement: Is It Good Planning or a Legal Danger?

Talking to older worker about retirement“Sea change,” “massive demographic revolution,” “boomer brain drain.” They are terms  economists and sociologists use when discussing the aging of the baby boomer generation – children born between 1946 to 1964. Countless volumes have been written about what will happen as the more than 78 million boomers age and leave the workforce.

Despite all the research, certain questions from employers remain unanswered. Among the most vexing questions for human resources professionals is: Can I ask employees if they’re thinking about retiring?

Federal and state laws give employers reason to think carefully before asking the question. The federal Age Discrimination in Employment Act (ADEA) makes it unlawful to take adverse action against an employee or applicant simply because he or she is 40 years old or older. Instead, employment actions should be taken for business-related reasons rather than because of a bias against people who have reached a certain age. In addition to federal law, some states have laws that impose further restrictions.

Mastering HR Report: Discrimination

Don’t be afraid to ask . . . carefully
Although asking an employee about retirement plans can put the words “age discrimination” on an employee’s radar, it’s not unlawful to inquire.

“Yes, you can ask,” says Cal Keith, a partner in the Portland, Oregon, office of law firm Perkins Coie LLP. “In fact, a bunch of courts have looked at it, and there’s nothing unlawful about asking.” But it’s important to ask the right way, he says. Done wrong, the question can become evidence of age discrimination. When a supervisor or manager keeps asking, pushing, and treating someone badly for giving a “wrong answer,” that’s when age discrimination becomes a serious threat.

Chris Butler, a partner in the Atlanta office of law firm Ford & Harrison, agrees. “There is nothing inherently unlawful or particularly risky about asking an employee what his or her long-term goals and future aspirations are with the company,” he says. “However, the employer should always seek to avoid the appearance of age discrimination and should not limit these types of inquiries only to older employees. Rather, seek this information from all employees — whether or not approaching retirement age.”

Keith recommends that a trained HR professional ask the retirement question. It also should be someone who has a decent relationship with the person being asked. He suggests opening the conversation by explaining that the question of retirement is being asked because the business needs to plan for the future.

“If the answer is no, you’re done,” Keith says. Don’t push any harder because it can look like an employee is being harassed into retirement. You can ask again maybe a year later. “You can also say, ‘If you do decide to retire, let me know for planning purposes’.” If an employee answers that he is thinking about retiring, you can then begin the conversation about how to make the transition.

Although it’s lawful, and even advisable, to find out employees’ retirement plans, it’s easy to venture into a legal minefield. “Sometimes it’s how, now what, you ask,” Butler says.

“When having retirement-related conversations, avoid using comments and descriptors such as ‘age,’ ‘old/older,’ ‘young/younger,’ ‘Generation X and Y,’ ‘baby boomers,’ and the like. While seemingly innocuous and usually well-intentioned, these words can easily become direct evidence in an age discrimination lawsuit should an employee conclude — correctly or erroneously — that he or she has been unlawfully phased out by a younger employee,” Butler says.

HR’s Age Bias Prevention Workshop: Smart Policy Practices Under New EEOC Rules and Realities

What employers can expect
With the retirement wave the baby boomer generation is expected to generate, employers can expect to be having a lot of retirement conversations in the future. Although many boomers who saw their retirement savings dwindle during the recession are planning to delay retirement, evidence shows that plenty more are retiring sooner rather than later.

Insurance, investment, and employee benefits giant MetLife studies employees’ retirement behavior and found that hordes of the oldest boomers — those born in 1946 — already are retired. The study released in April, “Transitioning into Retirement: The MetLife Study of Baby Boomers at 65,” surveyed 1,012 respondents born in 1946.

The study reports that 59 percent of those in the sample were at least partially retired. Forty-five percent were completely retired, and 14 percent were retired but working part-time. Of those in the sample still working, 37 percent said they plan to retire in the next year and on average plan to do so by the time they’re 68.

With the numbers showing so many employees at least thinking about retiring soon, employers need to know that it’s not just the questions they ask that can raise the age discrimination danger. The employer’s actions are just as important.

When employees see a difference in the way they’re treated — maybe they feel they’re being phased out or they’re suddenly placed on an improvement plan — they can see themselves as victims of age discrimination.

Regardless of how well-trained employers are, just the huge numbers of people approaching retirement indicate that the opportunity for age discrimination is growing.

“I don’t know if we’ll see more lawsuits, but employers are certainly going to face the issue more,” Keith says.