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Sep 2013
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September 24, 2013

Take Care When Talking Retirement


You may be assuming your older workers will retire soon. You may be wrong. A recent survey by the website CareerBuilder noted that 75% of people over 60 plan to delay retirement. In order to plan for the future, many employers want to know when their mature workers will be leaving. But proceed with caution; this is treacherous territory.

The Age Discrimination in Employment Act makes it unlawful to take adverse action against an employee or applicant simply because he or she is 40 or older.  Although many courts have held that age-neutral employment decisions related to retirement eligibility or inquiries about an employee’s future plans do not constitute age discrimination or evidence of it, that can be a fine needle for employers to thread.

Three scenarios frequently blur the line between age discrimination and retirement planning:
 
  • Suggesting retirement to avoid dealing with performance issues
  • Selecting older employees for areduction in force or layoff because“they were closest to retirement anyway”
  • Planning for succession when an employer is unsure when a worker is planning to retire

Consider a freight-shipping employee who had mediocre performance for a dozen years, and then began to accumulate performance complaints as he approached age 62. As the errors stacked up, his supervisor repeatedly asked him about his retirement plans.  The employee also claimed that his supervisor told someone else: “He is going to leave here when he is 62. I am going to see to it.”

The Sixth Circuit denied summary judgment for the employer despite the well-documented performance problems. The court distinguished the supervisor’s statement from a general, age-neutral inquiry about retirement plans.  This underscores the importance of relying only on accurate, discrete records for termination decisions based on performance.

In another cautionary tale, a federal district court in Kansas denied summary judgment where an employer told its employee of 26 years that it would host a retirement party in her honor if she would conclude her employment.  The court rejected the company’s argument that performance issues, not age, drove its decision to terminate the 62 year-old employee.

Similarly, when it comes to laying off employees, proximity to retirement should not be a proxy.  This was illustrated by the case of a machine operator who worked in a plant that was sold.  The new owner later went through two rounds of layoffs. After the plaintiff’s plant ceased high-volume work, it scaled back its workforce again. The managers allegedly told the plaintiff that she was being laid off because she was “close to retirement age” and they “wanted younger blood” in the department.

Despite considerable evidence that the company would have laid off the plaintiff regardless of her age, a federal district court denied the company’s motion for summary judgment. The lesson for employers:  do not consider nearness to retirement when making lay-off choices.

Companies should also give careful thought to how succession planning is handled. The Sixth Circuit has explained that: “Asking questions about an employee’s plans for the future, without referring to the employee’s age... does not amount to pressure to retire.”  But that should not give employers a false sense of ease.

One school administrator learned this lesson the hard way. The administrator instituted one-on-one “information sessions” to plan for the future with only those employees who were over age 55. A federal district court concluded that these age-specific “information sessions” could constitute evidence of age discrimination. The take away: do not make a succession planning meeting look like an intervention to push retirement.  Make sure employees of all ages are involved.

To sum up, the law recognizes that employers have a legitimate need to plan for the future. Conversations about retirement can be beneficial so long as employers do not make them about the worker’s age. In addition, employers can make performance-based decisions involving older workers without violating the law. However, they should not deflect hard choices by leaning on a worker’s proximity to retirement.

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