It appears that old news remains new news. We hear in podcasts and newsfeeds that although the Baby Boomers are reaching retirement age, they are not retiring. I suppose they still have student loans to pay off (both their own and their children’s) or their retirement accounts have been depleted by the crash of 2008. We also hear that the economic outlook, although improving since 2008, remains uncertain, so belt tightening is in order. As a business and employment 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 federal Equal Employment Opportunity Commission (EEOC) reports that in 2014 some 20,588 age discrimination charges were filed with the agency, making up 23.2 percent of all discrimination charges filed. As a result of these claims, $77.7 million were paid out to EEOC claimants in 2014—not counting private lawsuits or private settlements.
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
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 “older” employees. 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 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 fare 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, a friendlier venue, and attorney fees, whereas the employer tends to do better in federal court or when faced with the federal version of the ADEA.
The Adea and Local Statutes
The federal 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 a case could involve an age discrimination claim, lawyers must ask the following questions: Can the plaintiff be characterized as an employee or job applicant under the ADEA or the equivalent state or city statute? Is the employee a member of the protected class? Has the employee been treated differently from other employees with the same job title or in the same work unit 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, the employer faces a grave risk of losing a lawsuit for retaliation if he or she takes an adverse action against an employee who made a good-faith complaint about being a victim of age discrimination or even complained that another employee was a victim of age discrimination or a company policy was discriminatory.
Likewise, if an employee participated in any way in an age discrimination investigation whether conducted by the employer or the EEOC or local agency, this employee—even if not yet old enough to claim to be a victim under the federal or state or city statute—can still bring a retaliation claim based on the statute.
Age discrimination claims often are wrapped up with discrimination based on an employee’s health. In such 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. For example, younger employees often can bring successful ERISA discrimination claims if they have been terminated just before 401(k) contributions vest (three or five years).
Under the ADEA, a charge of discrimination may be filed with the EEOC within 180 days of when your client was notified of the adverse employment decision (rather than the actual date of the adverse action, so calculate the filing deadline from when employees were told they would be fired, demoted, etc.) 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.
A word of caution: Watch your state statute of limitations while the EEOC investigates. The EEOC investigation does not toll the statute of limitations for your state causes of action; even though they arise out of the same set of facts as your ADEA or Title VII claim, they may be subject to different statutes of limitations.
Under your local law or your state law, you may not need to file any prior charge with the investigating agency in order to proceed in state court. If you wish to assert your federal statutory rights, however, you must file with the EEOC first. Under the federal law, the EEOC will investigate an ADEA charge as it does under other Title VII charges (e.g., sex, race, national origin).
Keep in mind that, although state and city administrative agency proceedings are quicker and less expensive than court actions, if you elect to file a charge with your state or local administrative agency rather than filing an action in state court, you can be held to have elected your remedy and waived your right to a jury trial. Often I am faced with a plaintiff client who has done so (out of a desire to save costs) before he or she retains me. In my jurisdiction we can remedy the situation by withdrawing the local agency charge without prejudice.
A claimant who files with the EEOC should use the EEOC’s specific charge form accompanied by a sworn verification. All relevant facts should be included. I recommend that the facts in the charge 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. If the EEOC finds a violation, it may attempt to negotiate settlement on behalf of the employee or issue a 90-day right-to-sue letter. In some cases, the EEOC may elect to file a lawsuit on the employee’s behalf. If not, it will issue a 90-day right-to-sue letter.
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 that the claimant 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. Unless you have a state statute of limitations issue, I recommend not doing so—your lawsuit still can be challenged as premature. Another word of caution: Courts have held that a 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” discrimination occurred does not prohibit a lawsuit from proceeding in federal or state court and is not a finding on the merits—and is usually inadmissible at trial. In 2014, 65.3 percent of ADEA cases filed with the EEOC resulted in a finding of no probable cause. In most cases the EEOC will issue a right-to-sue letter, even when it finds no probable cause for the charge. The lawsuit must then be filed within 90 days of the receipt of this letter. 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:
- injunction to prevent future discriminatory employment practices;
- an award of back pay and front pay; and
- 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; however, punitive damages continue to be unavailable under the ADEA but are usually available under your state and local human rights statutes.
Some federal courts have held that supervisors cannot be sued in an individual capacity for age discrimination, whereas most state and city laws do permit you to sue the supervisor or anyone in management who aided and abetted in the discriminatory conduct. Whether you chose to do so, however, is a tactical decision to be decided on a case-by-case basis.
Plaintiff’s counsel should be cognizant of the requirement to exhaust administrative remedies before filing an age discrimination lawsuit. For example, many brokerage houses have arbitration agreements that require an employee to submit such claims to arbitration and have a general time period within which to file same. Union employees may be required to file a grievance. Most courts have held that the pendency of these administrative proceedings does not toll the statute of limitations to timely file your charges with the EEOC or file an action under your local state or city statute.
The ADEA does not specifically 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 additional 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.
In the past the ADEA required employers to take certain actions and institute policies that benefit older workers. One was the requirement that employers provide employees and their spouses age 65 or older the same group health insurance provided to younger employees. Congress has recognized, however, that the cost of providing certain benefits to older workers can be greater than the cost of providing the same benefits to younger workers and thus a disincentive to hire older workers. Thus in limited circumstances an employer may now be permitted to reduce benefits based on age, as long as the cost of providing the reduced benefits to older workers is the same as the cost of providing benefits to younger workers. Don’t try this one without consulting an ERISA attorney.
What Makes a Good Case?
Language may be evidence of 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. In cases where an employee claims that the company’s decision either to reduce the claimant’s pay or offer him or her a severance package was actually motivated by age, 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.
“Disparate impact” cases involve an age-neutral policy or action 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 lay off the highest-paid employees. 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. To prevail in such a case, an employee must establish that the decision was not based on reasonable factors other than age.
An employer may rely on age when age is a bona fide occupational qualification (BFOQ). For example, regarding certain firefighter, police officer, and military positions, age may be 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 discriminatory pretext.
In 2009 in a 5–4 decision, the U.S. Supreme Court in Gross v. FBL Financial Services, Inc., 557 U.S. 167, held that, unlike Title VII, the ADEA does not allow a plaintiff to establish discrimination by showing that age was simply a motivating factor. Instead, the majority held that an ADEA plaintiff must prove by a preponderance of evidence that age was the “but-for” cause of the alleged adverse employment action, thus eliminating the mixed-motive case.
Taking on an Age Discrimination 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; 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.
Both plaintiffs and defendants should be cautioned to preserve all documents relevant to their case. Cell phones, computers, and other electronic memory devices should be backed up. I employ an outside vendor to do so and issue written instructions to my client regarding the issue.
I urge my employee clients to file for unemployment benefits promptly and to be accurate when filling out the questions, especially regarding the reasons they were told they were being terminated—whether they agree with their employer’s reasons or not. If I expect the employer to be contentious, I do not serve my litigation hold letter on the employer or otherwise notify them of my involvement in the matter until after they have taken a position on my client’s entitlement to unemployment benefits.
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 is important to note that the Older Workers Benefit Protection Act requires that employees who are waiving rights or settling ADEA claims have 21 days to consider their decision and seven days to revoke the agreement after signing; they must receive written notice of this right and of the right to consult an attorney. In cases of layoff or termination of multiple employees, the time frame to consider is extended to 45 days, and the employer must also provide information regarding positions eliminated, ages of employees in those positions, and a breakdown of the ages by position of the employees in the company who were retained.
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.