The hiring of someone who is at least 40 years old to replace an older employee doesn’t inoculate an employer from an Age Discrimination in Employment Act (ADEA) claim, even though both workers are old enough to be protected by the law.
“That’s not a defense,” said Michelle W. Johnson, an attorney with Nelson Mullins Riley & Scarborough in Atlanta. “If the replacement is substantially younger, the employer still can be liable for age discrimination.”
But what does “substantially younger” mean? Opinions vary.
In a Dec. 18, 2015, case (Liebman v. Metropolitan Life Ins. Co., No. 14-13197), the 11th U.S. Circuit Court of Appeals allowed to continue to trial an ADEA claim by a 49-year-old fired managing director, even though he was replaced by someone who also was over 40 years of age, a 42-year-old.
Seven years is substantially younger, the court stated, citing other courts that have held that five years is enough, four years suffices and even a mere three years is substantially younger.
“The case law does vary from jurisdiction to jurisdiction, so it is important to know the applicable standard,” said Tracy Billows, an attorney in the Chicago office of Seyfarth Shaw.
“Courts will generally not dismiss an age discrimination claim based only on the fact that the replacement worker is less than six or seven years younger than the discharged worker,” said Marcia Goodman, an attorney with Mayer Brown in Chicago.
When an employer believes it may have reason to discharge an older worker, the risk of an ADEA lawsuit means an employer should be doubly sure to use progressive discipline, including proper documentation, according to Shane Muñoz, an attorney with FordHarrison in Tampa, Fla.
“Progressive discipline gives employees a sense that the employer is being fair, which should improve morale and make employees more productive. Failing to use progressive discipline can have the opposite effect,” he noted. “Don’t forget that the employee might turn things around” and improve his or her performance.
If the older employee’s work does not improve, the ADEA may not be the only law the employer has to consider.
If an employee’s performance has been affected by deteriorating health, the employer should consider its legal obligations under the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA) and state laws, including workers’ compensation statutes, Muñoz noted.
Under the ADA, for example, Billows said that if the employee is suffering from a disability that substantially limits his or her ability to perform essential job functions, the company should talk with the employee to identify limitations and reasonable accommodations.
And under the FMLA, intermittent leave may be required for doctor visits to treat the underlying condition.
Mandatory Retirement—Don’t Go There
Some individuals’ work gets better over time. Johnson noted that some people’s work peaks when they are 69 years old, while others’ work is subpar at 50.
But if the work of someone near retirement age is flagging, it’s best to address performance issues with that employee exactly as the company would with a younger employee, Goodman noted.
“Mandatory retirement is not permissible in the U.S. except for certain very narrow exceptions,” she said.
One exception is for the top executives in a company, if they are entitled to a certain level of retirement benefits. A second exception is when the employer can prove that a maximum age requirement is a bona fide occupational qualification necessary to the performance of the duties of the position. Mandatory retirement may be lawful with certain pilots, Billows said.
But in general, don’t go there. “Any discussion with an employee about retirement plans should be handled very carefully and only after receiving HR and/or legal advice,” Goodman stated.
If an older employee’s performance is unacceptable and the employer wishes to treat the employee more gently than through the usual progressive discipline process, “the employer can discuss a transition plan or a plan for severance pay in exchange for a release. But it is very risky to ask an employee when they plan to retire or to attempt to force the employee to retire,” she cautioned.
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor