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Age Discrimination: New EEOC Guidelines

August 15th, 2007 Posted by Amelia

The EEOC recently issued new guidelines to clarity age discrimination in the workplace in accordance with a 2004 Supreme Court Decision. The landmark General Dynamics Land Systems, Inc. vs. Cline. While most EEOC announcements result from court cases that the Commission wins, this one resulted from a defeat.

In 2003, the EEOC brought a suit on behalf of employees of General Dynamics Land Systems who were between 40 and 50 years of age. Under a new collective bargaining agreement, the company was providing certain benefits only to employees over the age of 50. The issue was promised healthcare coverage during retirement. The new contract extended this benefit to GD employees over 50, but not to younger employees.

Essentially, the EEOC filed a suit alleging that the employees over the age of 40 were being discriminated against for being too young, to qualify for the benefit. General Dynamics won the case in the Supreme Court in 2004, establishing the fact that employees over the age of 40 cannot sue for reverse discrimination. As a result, the EEOC has issued new guidelines covering this issue.

The guidelines protect a company’s ability to offer certain benefits, such as retirement, pensions, healthcare or other benefits, to older employees. For example, a company can offer retirement benefits to employees over the age of 65, but not to those who are under 65. This does not represent discrimination against those aged 40 to 65.

While it’s okay to discriminate against younger employees, employers should still be cautious about discrimination against older employees. For example, in a recent EEOC case against the BNSF, or Burlington Northern Santa Fe Railroad, the company offered early retirement incentives to younger employees. It did not offer the same incentive packages to older employees, who already qualified for a pension.

The EEOC brought a suit on behalf of 137 older employees and won. BNSF had to pay incentives worth $800,000 to the employees.

Under the exit incentive plan, employees who stopped work early received $2,500 per month for three years, or a lump sum of $90,000. However, no employee over the age of 60 was offered the exit incentive.

When the clerical jobs were abolished, many of the workers were “bumped” into lower-paying jobs and retired as a result. The EEOC identified several of the 102 employees who were involved.

Erma Gossage was 63 when she was denied the opportunity to participate in the exit incentive plan offered to younger workers. Because the three years of exit incentive pay qualified as employment, Gossage would have qualified for a higher pension with the plan.

Ellen Foste was a 72-year-old clerical employee who was offered a choice. She could retire, or take a job driving a van at night. Foste had 27 years of employment with the BNSF. If she had been offered the exit incentive, she would have qualified for a full pension under the federal Railroad Retirement plan.

Both business and labor groups were on hand to applaud the latest regulations.

Under the updated regulations, an employer may favor an older employee over a younger one, even if both are protected over 40. Employees over the age of 40 are protected from discrimination based on age under the Age Discrimination in Employment Act or ADEA.

There is no federal law that prohibits discrimination against workers under the age of 40, although several states, including Kansas, have such laws.

“With the graying of the American workforce, the ADEA has become more relevant than ever to both employers and employees,” said EEOC Chair Naomi C. Earp. “These revisions harmonize the Commission’s age discrimination regulations with the Supreme Court’s ruling in Cline, which clarified the law on this question. The decision, along with the revised regulations, will aid the EEOC in its enforcement efforts.”

The ADEA applies to employer with 20 or more employees, including state and local governments. It also applies to employment agencies, labor unions, and the federal government.