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Harassment & Discrimination

Is Mandatory Retirement Age Discrimination?


By Josh Young Sep 27, 2016

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Trending Toward an Older Workforce

Thanks to improvements in healthcare, longer human life expectancy and declining birth rates, the average age of the U.S. labor force has steadily risen over the past few decades, and current projections indicate that this trend will continue through most of the next century.

The Bureau of Labor Statistics estimates that in the decade leading up to 2024 the number of people active in the workforce between the ages of 16 and 24 will drop by 13.1 percent, and the number of workers between 25 and 54 will increase by 3.9 percent. In stark contrast, the number of employees over the age of 55 will increase by 19.8 percent by 2024.

The Rise of Age Discrimination Claims

With an older workforce in place, incidents of age discrimination have become more frequent. In 2015, 22.5 percent of all discrimination claims reported to the U.S. Equal Employment Opportunity Commission (EEOC) were age-based. And according to research conducted by the AARP, 64 percent of workers aged 55 or older claim to have experienced age discrimination while on the job.

Perhaps most concerning is the potential impact that losing a job can have on older workers. On average, the length of unemployment for those over 55 is nearly one year.

Want to create a more inclusive workplace for older employees? Read: How to Avoid Age Discrimination in the Workplace

Businesses are facing the increased challenge of accommodating this aging workforce and the accompanying higher salary costs tied to older employees. And while many organizations recognize the values offered by seasoned staff, some businesses have employed a strategy of forced or mandatory retirement to keep wages in check and encourage a "more virile" workforce.

The Costs of Mandatory/Forced Retirement

These strategies, however, can prove costly. Over this past summer, a California appellate court upheld a wrongful termination and age discrimination ruling that will force a major office supply retailer to pay $16 million in damages.

According to the suit, a supervisor at the store enacted a policy of removing older employees to replace them with younger, cheaper workers. To justify the terminations, the manager would increase workloads to impossible levels, force employees into unwanted retirement, or fire them for minor, previously overlooked infractions.

This behavior was determined to be a violation of state law as well as the Age Discrimination in Employment Act. The act protects employees from discrimination on the basis of age, making mandatory retirement programs a risky proposition.

It is possible for your business to put in place programs that can offer aging employees the opportunity for early retirement, and you can even tie incentives to this decision. However, these programs need to be carefully worded, and any discussions with employees nearing retirement should avoid the hint of any pressure or coercion. Obviously, you should consult with legal counsel before enacting any changes to existing retirement plans.

Focus on Creating an Inclusive Work Environment

Rather than considering options to encourage retirement among your older employees, you should consider creating a more accommodating environment for all of your staff.

It may seem obvious, but you should treat your older employees like any other staff member. Provide them with access to the same training opportunities, promotions and incentives that are available to everyone else in the company.

By following this simple strategy, you can avoid placing your business at risk for a potential lawsuit and take advantage of the experience and skills offered by a broader pool of the job force.

According to research conducted by the Center on Aging and Work at Boston College, schedule input and flexibility are two of the main drivers of employee engagement for workers over the age of 55.

Consider implementing adjustable scheduling plans that allow employees to work outside regular office hours or from home. Enable staff to trade shifts or adjust starting or quitting times to accommodate unexpected personal and family matters.

The Next Step

The aging workforce is here to stay. And research indicates that the pool of younger workers with the education and skills to replace the baby boomer generation is not growing fast enough to keep pace with the aging generation's departure.

By embracing your older employees, creating a more inclusive workspace that caters to all age groups, and instituting fair retirement policies, you can give your business a distinct advantage.

To learn more about our multigenerational diversity course, you can fill out the form on the right to request a demo.

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