Age Discrimination in Your Small Business

Age discrimination occurs for all sorts of reasons. For instance, a business might cut older workers because they make the highest salaries. Or, maybe a business wants to promote a "young" image with younger workers.

The federal Age Discrimination in Employment Act (ADEA) provides some severe penalties for most employers who discriminate on the basis of age. Many states have similar laws as well. Before you start firing older employees, you need to have an understanding of how age discrimination laws work.

The ADEA

The ADEA applies to employers with 20 or more employees, as well as employment agencies, labor unions and governments. Even if you have less than 20 employees, your state might have an age-based discrimination law that applies to your business. So, be sure to check the labor and employment laws in your area.

How Does the ADEA Protect Employees?

The ADEA protects employees in a variety of ways, such as by placing rules on:

• Job notices and advertisements, which generally prohibit you from including age preferences, limitations or specifications when advertising a job opening. If your want ad reads, "Looking for young, talented sales persons," a court would likely find that it violates the ADEA
• Benefits, so that you can't deny benefits to older employees. However, because the cost of providing certain benefits to older workers is greater than the cost of providing those same benefits to younger workers, the ADEA allows some circumstances where you can reduce benefits based on age, so long as the cost of providing the reduced benefits to older workers is the same as the cost of providing benefits to younger workers

Some Exceptions

The ADEA provides exceptions that will allow you to make some employment decisions on the basis of age, such as when:

• Age is a "bona fide occupational qualification (BFOQ)" reasonably related to the "essential operation" of your business and it's reasonable to believe that all or most employees of a certain age can't perform the job safely or it's impossible or highly impractical to determine job fitness on an individualized basis. For example, you might be able to ask a 60 year-old employee to retire or take a lower paying job if his job requires strenuous physical labor and you have a reasonable belief that most 60-year-old workers doing the job would pose safety risks to themselves or others
• There are "reasonable factors other than age (RFOA)," such as an employee's education, skill level and experience that justify treating the employee differently than an employee who is younger
• There is a "bona fide seniority system" that bases employee benefits and wages upon how long the employee has worked for you

Waivers of ADEA Rights

You can ask an employee to waive his or her ADEA rights or claims. Waivers typically arise when an employee has filed a discrimination claim with the Equal Employment Opportunity Commission (EEOC), or in connection with an exit incentive program, such as an "early retirement" program. For example, you might offer a severance package to an employee if he or she voluntarily resigns and request an ADEA waiver in exchange.

For a waiver to be valid, it must:

• Be in writing and written in "plain English"
• Specifically refer to ADEA
• Not waive rights or claims that may arise after the employee's job ends
• Give the employee something extra in return for signing it, like better-than-usual severance pay. You can't just promise something that the employee is already entitled to
• Advise the employee in writing to consult an attorney before signing it
• Provide the employee at least 21 days to consider the waiver and at least seven days to revoke it after signing it

If a group of workers is being laid off at the same time, the waiver requires even more: you have to give employees 45 days to consider it and disclose the job titles and ages of every person who's getting cut, as well as everyone who still has a job.

And, even if an employee signs a waiver, he can still sue you if the waiver is not valid, so make sure your waiver meets all of the ADEA requirements.

ADEA Suits

Generally, an employee must first file a complaint with the Equal Employment Opportunity Commission (EEOC) or the Fair Employment Practices Agency (FEPA) in your state. The claim must be filed with the EEOC within 180 days of the claimed discrimination, or within 300 days if a state law is involved.

The EEOC or FEPA can either file suit against you on behalf of the employee, or it can give the employee a "right to sue letter" so that he can sue you in court. An employee can't file a lawsuit without a right to sue letter.

If it's found that you've violated the ADEA, a court could award the employee:

• Back pay, or the wages and benefits that the employee would've received if the discrimination had not occurred
• Reinstatement, which could require you to re-hire an employee
• Money damages, if the discrimination was "willful", or deliberate, in an amount equal to the back pay award
• The employee's attorney's fees and court costs

ADEA lawsuits are usually complicated. If an employee files a claim against you, consider contacting an experienced business law or labor law attorney immediately.

Questions for Your Attorney

• Does our state have an age-based discrimination law, and if so, does it apply to my small business?
• If an employee files a complaint with the EEOC, how long will it take to resolve?
• Twice now, the same employee has filed age-based discrimination claims against me, and each time the EEOC has refused to file suit on his behalf, and the employee has never received a right to sue letter. Is there anything I can do to get the employee to stop filing complaints? Can I fire him?
• Will the EEOC look at my seniority system and give me an opinion on whether it allows me to make wage and benefit decisions based on age without violating the ADEA?