Question: Our company is experiencing a downturn. Our CEO recently met with department managers and directed them to identify positions that could be eliminated. One manager said that the oldest employee on his team should be let go because he can afford to “take the hit” and he’s “retiring soon anyway.” Can we take those factors into consideration in our decision?
Answer: No, your organization must be able to identify a job-related, non-discriminatory reason for layoff selections. A manager’s statement about an employee’s proximity to retirement in the context of layoff discussions should set off alarm bells. The federal Age Discrimination in Employment Act (ADEA) and many state laws prohibit discrimination based on age (generally 40 and over, except in Oregon which prohibits age discrimination against anyone age 18 or older). This means that an individual’s age (or perceived age) cannot be considered when making employment decisions. Thankfully, you have an opportunity to make a course correction.
Consistency and Objectivity in Reduction In Force Decisions
To ensure fairness and fend off discrimination claims, managers should follow the same selection process, and to the extent possible, apply the same objective criteria when making their recommendations in a reduction in force (RIF). If this employee is ultimately selected for layoff, even with a sound business justification, the employee could point to the comment as evidence that the real reason was age discrimination. Company leaders, in consultation with HR, should outline a step-by-step process and provide specific guidance to all decision-makers regarding how to conduct and document their RIF analysis to reach legally defensible termination decisions. The criteria you apply will depend on the situation, but may include objectively provable factors such as skills, performance, experience, or length of service.
Handling Retirement Plans in Workforce Decisions
If an employee has already talked about retiring, your ability to take those retirement plans into account depend heavily on how the communication was made, and to whom. For example, if an employee notifies HR in an email that they plan to retire on a specific date two months from now, you can rely on that officially communicated departure date in determining your future staffing levels. You shouldn’t accelerate the date unless you have objective job-related reasons that are unrelated to these retirement plans. In contrast, if the employee has merely discussed retirement informally with coworkers or even a supervisor, you’ll need to mentally separate those conversations from the decision-making process. The safest way to legally clarify who is ready to retire is to put together a voluntary exit incentive program for employees with a minimum number of years of service, or a combination of years of service and age.
For more information on planning for a RIF, see our previous article on this topic and our Legal Guide, Downsizing and Layoff Checklist. Our Model Form, Downsizing Evaluation, can help managers document the selection process properly. Please also consult with your Vigilant Law Group employment attorney sooner rather than later when anticipating a group layoff, given the complexity of laws at play.
