GPSOLO July - August 2008
It appears that old news is becoming new news. We are reading in our newspapers that the baby boomers are reaching retirement age, yet they are not retiring. I suppose they still have college tuition to pay. We also hear the economy is souring and belt tightening is in order. As a business and em-ployment lawyer, I have clients on the management side who tell me they have to create more vibrant teams and lay people off. On the employee side, older clients tell me that they are being questioned by their managers about moving on and are suddenly receiving complaints about their work—somehow their years of experience, rather than adding to their value as employees, have become a problem for their managers. In the current economic climate, age will increasingly play a part in business and employment matters. The purpose of this article is to assist general practitioners in evaluating how to recognize when age has become a factor for their clients—whether managers or employees—and how to deal with the situation when it arises.
Age: The Elephant in the Room
First, you should consider that a manager who is about to terminate or take disciplinary action against an employee may not even realize that age could be a motivating factor. Employers like to think that they are being fair or are simply trying to increase efficiency. But when your client justifies an adverse employment decision by saying the employee in question is “stubborn and set in her ways” or by declaring that “it is time to reinvigorate the institution with cheaper employees,” your client may have set himself up unwittingly for an age discrimination suit.
Employees who have just received an adverse employment determination or evaluation often are similarly loath to admit that age could be a motivating factor. They may even refuse to acknowledge that they could be considered an “older” employee. Instead, they will explain that they are being singled out because a younger manager does not respect their experience or, conversely, feels threatened by their experience. “Surely,” they will insist, “this has nothing to do with his age.”
Practitioners should remember that, especially in at-will employment jurisdictions (such as my jurisdiction in New York), age discrimination claims take on added significance because they are often one of the only means by which employees can challenge unfairness in employment decisions. In my experience, wrongful termination claims on other grounds, including common-law tort theories, do not fair well in front of judges or juries. Therefore, every employer and every lawyer who represents an employer or an employee should become familiar with the Age Discrimination in Employment Act (ADEA; 29 U.S.C. §621 et seq.), and they should not forget the bounty of remedies for the employee or the shadow of exposure for employers in their state laws and even their city human rights laws. For the employee, state and city laws governing age discrimination may provide better remedies, more coverage, and a friendlier venue, whereas the employer tends to do better in federal court or when faced with the federal version of the ADEA.
The ADEA covers any employer who has 20 or more employees on the payroll for each working day in each of the 20 or more calendar weeks in the current or preceding calendar year. (State and city laws can cover smaller companies, usually of four or more employees.) The ADEA also applies to overseas businesses that are U.S.-owned or controlled. Even apprenticeship programs are covered. When determining the number of employees that count toward the statutory minimum under the ADEA, you have to look to Title VII for the definition of an employee. The ADEA covers employees, job applicants, labor organization members, labor organization applicants, and individuals seeking referral from employment agencies. To be protected under the ADEA, the claimant must be age 40 or older at the time of the discriminatory act. It does not matter if the person was under 40 when hired, and the person replacing the claimant need not be under 40. Again, state and city laws may offer greater protection from age discrimination; New York’s human rights law, for instance, protects persons over the age of 18.
When evaluating whether your case could involve an age discrimination claim, lawyers must ask the following questions: Is the employee a member of the protected class? Has this employee been treated differently from others with the same job title or in the same work unit as employees who are not members of the protected group? Is there a documented and reasonable basis for the adverse employment decision?
If the employee has many years of service, you must ruthlessly scrutinize the discharge or demotion. I would ask the following: Why is the employee being fired after so many years? Was the employee given notice of a problem? Is there now a new or younger manager in place or are the tasks once performed by the employee now being performed by younger persons? Have standards of performance or job requirements changed? Was the older employee given proper notice of these changes? Was the older employee given the same training and other opportunities as the younger workers?
Even if an age discrimination claim is ultimately deemed unfounded and frivolous, the employer faces a grave risk of losing a lawsuit for retaliation if he or she takes an adverse action against an employee who has complained about being a victim of age discrimination or even complained that another employee was a victim.
This article addresses ADEA claims, but it bears noting here that age discrimination claims often are wrapped up with discrimination based on an employee’s health. In those instances, practitioners must consider whether a claim under the Americans with Disabilities Act (ADA), the Rehabilitation Act, or the Employee Retirement Income Security Act (ERISA) might also be involved.
Under the ADEA, a charge of discrim-ination may be filed with the Equal Employment Opportunity Commission (EEOC) within 180 days of the adverse employment decision or up to 300 days in a jurisdiction that has an investigatory sharing agreement with the federal government by which the local state agency will investigate these charges.
Under your local law or your state law, you may not need to file any charge with the investigating agency in order to proceed in state court. Under the federal law, the EEOC will investigate an ADEA charge as it does under other Title VII charges (i.e., sex, race, national origin).
A claimant who files with the EEOC should use the EEOC’s specific form accompanied by an affidavit. I recommend that the affidavit be in the form of numbered allegations so that the employer is more likely to answer each of the numbered statements.
This first step is very important because the EEOC will categorize the merits of your claim soon after the intake of same. This is the claimant’s first and often only chance to make a good impression. The EEOC has adopted a charge processing system under which its field officers categorize and prioritize charges into three categories (A, B, and C) based on the likely merits. Prior to the institution of this system, the EEOC had a policy that required a full investigation of every charge. In the new system, Category A includes those “high priority charges” where it appears more likely than not that discrimination has occurred or that an issue identified as a high priority in the national enforcement plan or the local enforcement plan is involved. Category B includes those charges that “initially appear to have some merit but will require additional evidence to determine whether it is more likely or not that a violation occurred.” Category C includes those charges that are “appropriate for immediate resolution.” Charges in this category will likely be discharged at intake with a notice of what is called a “right-to-sue letter,” which gives the plaintiff up to 90 days in which to file a lawsuit or lose the right to proceed in federal and state court on the ADEA claim.
The EEOC itself can undertake a significant amount of investigation against an employer. If you represent the employee, this can mean significant savings in time spent and attorney fees. If you represent the employer, you will have the opportunity to respond to any charges and convince the EEOC or the local state agency that there is a valid reason for a particular employment decision. In some cases, the EEOC or the local state investigating agency will request the claimant to submit a rebuttal to the employer’s response.
If the EEOC is backlogged and does not release the matter within 180 days of filing, you can ask for a right-to-sue letter. Some jurisdictions will permit you to request a right-to-sue letter before the 180-day investigation period has passed on the grounds that they won’t reach your claim within that period. I recommend not to do so—your lawsuit still can be challenged as premature. Another word of caution: Courts have held that pending EEOC investigation does not toll the statute of limitations for those causes of action that don’t require a right-to-sue letter.
Both the employer and the claimant should realize that a finding of no probable cause does not prohibit a lawsuit from proceeding in federal court. In most cases the EEOC will issue a right-to-sue letter, even when it finds no probable cause for the charge. The EEOC generally will allow you to get a copy of the file after the determination is made.
The potential damages or awards in an age discrimination case are: (1) injunction to prevent future discriminatory employment practices, (2) reinstatement, (3) an award of back pay and front pay, and (4) liquidated damages. Liquidated damages are potentially double the amount of the total monetary damages, and the court awards such damages when there is a finding of a willful violation. The ADEA permits recovery of liquidated damages that have been viewed as punitive in nature. However, punitive damages continue to be unavailable under the ADEA.
Plaintiff’s counsel should be cognizant of the requirement to exhaust administrative remedies before filing an age discrim-ination lawsuit. For example, many brokerage houses have arbitration agreements that require an employee to submit such claims to arbitration. The federal courts have enforced this requirement.
The ADEA does not provide for damages for pain and suffering and other non-economic losses. If you represent an employee, you must look to other statutes for this type of damages, such as your local or human rights law, the ADA, or ERISA. That being said, an employee who has been retaliated against for making a complaint under the ADEA can get damages for emotional distress and punitive damages in addition to the usual remedies (including liquidated or double damages); see Part 29 U.S.C.A. §1216(b).
What about retirement? The ADEA does not protect some high-level employees from forced retirement under certain conditions. Examples include persons employed in a bona fide executive or high policy-making position for the two-year period immediately before retirement, as well as persons entitled to an immediate and non-forfeitable annual retirement benefit from a pension, profit sharing, savings, or deferred compensation plan or a combination of those plans of the employer equaling in the aggregate of at least $44,000 (with an appropriate adjustment in the event that the retirement is not in the form of a straight life annuity; see 29 U.S.C.A. §631(c)(1) and 29 C.F.R. §1625.12.
Surprisingly to most employees and employers, the ADEA requires employers to take certain actions and institute policies that benefit older workers. One is the requirement that employers provide employees and their spouses age 65 or older the same group health insurance provided to younger employers.
What Makes a Good Case?
The best plaintiff’s cases involve “disparate treatment,” whereby a manager’s language provides a “smoking gun” as to discriminatory intent. The use of so-called trigger words or terms in help-wanted notices—such as “ages 25 to 39,” “college student,” “young,” “recent college graduate,” “boy,” or “girl”—that will deter an older person from applying for the job are a gift to plaintiff’s counsel. Similarly, a supervisor’s statement that “we believed the plaintiff would not be able to keep up with how fast the company was growing” is sufficient proof to the court that the company’s decision to either reduce the claimant’s pay or offer him or her a severance package was actually motivated by age. Yet another example would be a dismissal of an employee after a manager told the employee that she suffered from memory loss “but that was usual with age.” Other damaging phrases include statements that the employee was “set in his ways” or “over the hill.” Discriminatory intent also can be shown if the employer lays off older employees during a reduction in force only to phase the job duties back to younger employees.
The toughest cases for the employee involve “disparate impact.” In these situations a business puts in force an age-neutral policy that, although not explicitly or deliberately tied to age, nevertheless impacts older workers more than it does younger ones. An example would be a policy to terminate employees who make over a certain salary. If such a policy were applied to teachers, the older teachers would be negatively impacted; they tend to make higher salaries because of their years in service and post-graduate degrees. Disparate impact cases are falling out of favor in most of the country.
The most common defense against a claim that an action or policy adversely affects older workers is that the action or policy is nevertheless a bona fide occupational qualification (BFOQ), even though age is admittedly a factor. For example, in the cases of firefighters and police officers, age is considered a permissible factor in determining whether a person can be hired. The burden then shifts to the plaintiff to show that this purportedly bona fide business reason was actually a pretext. To assert a BFOQ defense, the employer must show that a substantial basis for believing that all or nearly all persons from outside an age group lack the qualifications for the position or that it is highly impractical for the employer to ensure by individual tests that individuals from outside that age group will have the necessary qualifications for the job.
Taking on an ADEA Case
If, after analyzing all of these factors, you are the attorney for the employee and you decide you want to go forward with the case, you should consider whether you want to be paid on a contingency fee basis, an hourly fee basis, or a combination of the two. Personally, I prefer a combination of the two, as experience shows that these are difficult cases to win in today’s climate, and it is important that your client have a sense of reasonableness in pursuing the claim. Of course, you should check your local rules to determine whether you can enter into such an agreement and what percentages should be appropriate. Keep in mind that if you are including a personal injury claim, it may be controlled by stricter statutes and rules with respect to those agreements.
In addition, whether or not you do a contingency fee agreement you should keep records of your time just as you would if you were billing on an hourly basis. The statute provides for an award of reasonable attorney fees; if the plaintiff is the prevailing party, you will be required to submit your time sheets, and they must be contemporaneous with the actions taken.
When you are the employer’s attorney and your client is providing severance to the employees, you must consult the statute with respect to its rules regarding requirements for a release of an age discrimination claim. This statute is very specific and requires certain time periods to be complied with, including a revocation period for the employee. It also requires giving an employee who is about to be severed supporting data regarding the distribution of age groups. This is perhaps the most overlooked and least complied with requirement.
Finally, you should keep in mind that whether you represent the employer or the employee, age discrimination cases are emotionally charged. They are akin to divorce actions. Employees feel that, after many years of contributing to an enterprise, they are being discarded and passed over for a younger person. Employers feel that they are being accused of something that is reprehensible, and that the employee bringing the claim is disloyal.
The best age discrimination cases are the ones that can be settled with a sense of dignity for both sides and a resolution that allows clients to move on to be successful managers or successful employees in their future ventures. But, of course, that is old news.
Brian McCaffrey practices with Leffler Marcus & McCaffrey LLC in New York City and may be reached at email@example.com.