Recently, a 66-year-old client came to us with a "transition agreement" her employer had presented. Under the agreement, she would be required to train her replacement for one year and, at the end of that period, receive a severance payment equal to one year of salary. She was also told that if she did not sign the agreement, she would be terminated.
Does that raise concerns about age discrimination? It did for us.
This scenario strongly suggests age discrimination under the Age Discrimination in Employment Act (ADEA). The ADEA prohibits employers from forcing employees to retire. By presenting our client with a "sign this or be fired" ultimatum, the employer was effectively pushing her into retirement.
If an employer believes it has too many long-tenured, higher-earning employees nearing retirement age, there are lawful options. One is to offer a voluntary retirement plan. To be compliant, such a plan must truly be voluntary-meaning employees who decline cannot face negative consequences. These programs typically include financial incentives like severance pay, may be offered to employees of a minimum age such as 60 or older, and may include a deadline for participation.
Another option is a reduction in force (RIF), which can be lawful if driven by legitimate economic reasons. However, employers must evaluate their entire workforce when deciding whom to include, not just older employees. After implementing a RIF, employers should avoid rehiring for the eliminated roles for several months. There are additional legal requirements for RIFs, and our firm can guide employers through them.
Importantly, the ADEA does not prevent employers from terminating older employees for documented poor performance or misconduct. The key is maintaining clear, consistent documentation to support the decision.
If you are considering a RIF or a termination, our team at Employer-Lawyer is here to help. We can guide you through the ADEA and other employment laws to ensure your decisions are compliant and well-supported.
