Reverse
Age Discrimination Is Not Unlawful Under ADEA
According to the U.S.
Supreme Court ruling announced February 24, 2004, the Age
Discrimination in Employment Act (ADEA) does not prevent
employers from granting better treatment to older
employees over younger employees, even when those younger
workers are over age 40 (part of the ADEA protected
class).
A different lower court
decision had threatened long-standing employer practices
of grand-fathering or protecting older employees from
adverse changes in benefits plans, and could
have had a severe impact on early retirement programs.
General Dynamics Land
Systems, Inc. v. Cline - In 1997, General Dynamics
and Land Systems, Inc. negotiated a collective bargaining
agreement with their employees' union that effectively
eliminated health benefits after retirement, but exempted
those employees that were over age 50 at the time of the
agreement. This in attempt to eliminate drastic
changes to employees in their later years of employment.
This separated the class
of employees covered under ADEA (those over age 40) by
granting special consideration to those over age 50 that
was not allowed to those age 40-50. Until this
labor-management agreement was signed, all employees with
more than 30 years of employment had been covered by
health benefits after their retirement.
Employees who were then
between age 40-50 years old claimed that this was a
violation of ADEA because it discriminated against them
because of their age. To this the Supreme Court of
the United States disagreed.
While the implications of
this ruling are obvious in certain cases, it could also
have far reaching implications as the language is applied
at lower court levels to other issues. What these
might be at this time is purely speculation, but could
include the granting of many kinds of special
consideration to older workers.
This case is a positive
one for employers who want to grant older workers certain
benefits under principles of fairness, who now have
flexibility in fashioning health, severance or early
retirement packages that favor their oldest employees
without the threat of liability under the ADEA. Any
employer considering such a plan should ensure that it
complies with their own state age discrimination laws as
well.
Early retirement
incentives were also at risk with this case. When an
employer needs to cut back on employees, there are often
only two options, involuntary layoffs or voluntary
incentive programs to leave the company employee rolls. If
forced to treat everyone that falls under ADEA protection
exactly the same, a company could not offer early
retirement to someone at age 60 unless they also offered
it to anyone over the age of 40. The potential
financial consequences of this are obvious.
Voluntary early
retirement programs are generally favored by both
employers and employees, because they accomplish the
necessary task of reducing the workforce, and because they
are much better for morale. You may have seen many
early retirement parties, but seldom will you find one for
someone who has been fire. The remaining workers
also feel more comfortable and less worried about who goes
next because the employer is perceived as caring about its
employees.
These programs work
because older employees are typically thinking more about
retirement. An early retirement incentive program is
often the factor that tips them in the direction of
retiring sooner rather than later. A typical incentive
program might include a lump-sum payment of several months
to a year of pay for anyone over a certain age who wishes
to retire.
If this program had to be
offered to anyone over 40 it would simply cost too much
for many employers, and it is reasonable that there could
be many valued employees who are relatively young that
would be convinced to take the money and run, go to work
for a competitor, or launch a second career. Instead of
taking these risks, an employer would be much more likely
to resort to mass layoffs without benefits to
anyone.
When benefits are
voluntary and employers are faced with having to choose
between providing benefits to everyone or to nobody, they
will often choose the later. This Supreme Court
decision should be heralded because it allows employers to
be compassionate and give those benefits to older workers
who need them most.
