The Maturing Workforce and Federal Age Protections
By: ANNE M. RADOLINSKI
June 2004
Every few decades bring their own peculiar change in demographics. Our population is and will continue to be increasingly diverse in terms of cultures and background. In addition, our population is aging: the large baby boomer generation is growing older and the generation just behind them is considerably smaller. The U.S. General Accounting Office has reported that 17.3 million of our workforce were over the age of 55 in 2001 and that the numbers are expected to reach 25.3 million by 2015, or 20% of the workforce.
The aging population and lower birth rate will continue to require serious discussion regarding health care coverage, retirement benefits, and long-term care for the elderly and disabled, as well as how on earth to pay for what will be required. Employees are extending their working years, whether by continuing to work full-time or moving to a more flexible schedule. Employers will have the advantage of the experience of their more senior workforce for a longer period of time; however, the cost of health and other benefits will continue to rise.
As our age demographics shift, the various federal and state agencies and the courts are likely to experience increased activity in the claims typically made by those in the older age brackets. For instance, the Equal Employment Opportunity Commission reports that the number of age discrimination charges have been steadily rising. The agency received just over 16,000 age discrimination charges in 2000; that number had increased to over 19,000 in 2003, or about 23% of all charges filed.
Federal law, specifically the Age Discrimination in Employment Act (“ADEA”), protects individuals over the age of 39, prohibiting employers from considering such age in employment decisions. Age discrimination lawsuits, when successful, can be particularly costly to employers in part due to the availability of front-pay awards – those that extend damages for lost pay and benefits beyond the trial date and, depending on the circumstances, up to the date of expected retirement.
The ADEA prohibits employers from favoring younger workers over older workers in the protected age group, but allows employers to favor the older workers, for example, in benefits and related programs. In this regard, the United States Supreme Court issued a decision in February confirming that an employer does not violate the ADEA by providing a substantial benefit to workers 50 and older, while denying the benefit to workers under 50. General Dynamics Land Systems, Inc. v. Cline, 124 S.Ct. 1236 (2004). A collective bargaining agreement between General Dynamics and the UAW eliminated a program for retiree health benefits, except as to then-current workers who were at least 50 years old. Workers within the protected age class, but under age 50, challenged the agreement under the ADEA. The Supreme Court, rejected the discrimination claims of the employees in their 40s, reasoning that Congress did not intend to put 40-year-olds in parity with 50- or 60-year-olds.
On another front, the EEOC voted in April to adopt a rule that the agency hopes will encourage employers to offer or continue to offer retiree health benefit programs. (Employers are under no obligation to do so under the ADEA). According to the General Accounting Office, about one-third of large employers and less than 10% of small employers offered retiree health benefits as of the year 2000, compared to about 70% of employers in the 1980s. The EEOC previously took the position that employers who did offer retiree health benefits had to either provide the same benefits to Medicare-eligible retirees or show that they were expending the same costs for both groups. Employers and labor unions convinced the EEOC that its position was eroding retiree health benefits, because employers were choosing to terminate their programs altogether or not to offer such programs.
The new EEOC rule allows employers who do offer retiree health benefits to alter, reduce or eliminate the benefits when participants become eligible for Medicare or health benefits under a comparable state health plan. 29 C.F.R. § 1625.31. Employers can also offer a “carve-out plan” that reduces the benefits available under the employer plan by the amount payable by Medicare or a comparable state health plan. State law will afford greater or lesser protection for age-related benefit and employment discrimination or other claims depending on the various states in which an employer operates.
We can expect and will watch for further developments in the various laws affecting the older workforce.