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Pricey Older Workers Are Getting the Boot

As the Houston Chronicle puts it, “[t]he worsening economy seems to be good for something — the job-discrimination lawsuit business.” One particular growth industry seems to be bringing and defending age discrimination suits. 

In many of the economy-driven layoffs, older workers with more years of service and resultant higher pay are the casualties.  As ABC news.com puts it

Finding ways to shed older employees — who are at the top of the salary food chain and cull expensive medical and pension perks — is nothing new.

Most employers know that the Employment and Housing Act prohibits age discrimination against individuals who are at least 40 years old. Govt C §12940(a)-(c).  But some employers may believe that this applies only to intentional discrimination against older workers — which it clearly does — but not to layoffs focusing on higher paid employees. But when such focused layoffs have a  “disparate impact” on employees at least 40 years old, they are also prohibited.

Disparate impact discrimination occurs when an employer’s practice or policy, although neutral on its face, adversely affects the employment opportunities of members of a protected class. Smith v City of Jackson (2005) 544 US 228, 231, 161 L Ed 2d 410, 416, 125 S Ct 1536.

California law explicitly states that using salary to differentiate between employees for purposes of layoffs is a distinction that can constitute age discrimination if older workers as a group are adversely affected. Govt C §12941.

Similarly, the Equal Employment Opportunity Commission’s guidelines state that discharging older employees to save money is not a legitimate business justification under the federal Age Discrimination in Employment Act. 29 CFR §1625.7(f).

This all means that employers looking to cut their bottom line by laying off those employees with the higher salaries need to carefully consider whether this plan has a disparate impact on its older workers, and if it does, find another way to save money.

For everything you need to know about bringing and defending wrongful termination suits based on unlawful discrimination of any kind, turn to CEB’s books Advising California Employers and Employees, chap 15, Wrongful Employment Termination Practice, chap 2, as well as the action guide Handling a Wrongful Termination Action. Also check out my related blog post on recessionary discrimination.

© The Regents of the University of California, 2011. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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