This post (the first of three) discusses common errors made by employers when terminating employees, all of which can be easily avoided.
Mistake No. 1: Offering an Older Employee a “Retirement” Package
Well intentioned employers sometimes are tempted to characterize a performance-based, involuntary termination of an older employee as a “retirement.” However, the mere mention of the word “retirement” in connection with a termination decision, even when offering an enhanced severance package, can lead to liability under the Age Discrimination in Employment Act (the “ADEA”).
Interestingly, the original version of the ADEA excluded from coverage employees who were 70 years old or older, as well as employees who were under the age of 40. Accordingly, employers could force employees to retire at age 70 under the original version of the ADEA without facing liability. However, the ADEA was amended in 1986 to remove the exclusion for employees who were 70 years old or older. Thus, with the exception of employees in safety-sensitive positions (e.g., pilots, firefighters, and police officers), employers generally may not force an employee to retire due to age.
Despite this well-settled law, some employers mistakenly believe that they can force an older employee. Perhaps this confusion stems from the original version of the ADEA, or may it is because the prohibition against age discrimination is not intuitive. Indeed, unlike other protected traits that have no bearing on one’s ability to perform the job in question (e.g., race, sex, and national origin), there sometimes is a correlation between advanced age and a diminution in the skills required to perform a job. For example, very few 95-year olds could perform a position that required the regular lifting of 100-pound boxes. Whatever the reason for employers’ mistaken belief that forced retirement is legal, the fact remains that it is not, and each employee must be evaluated based on his/her ability to perform the position without regard to the employee’s age.
For the foregoing reasons, the word “retirement” should never be mentioned to an employee. This does not mean that an employer may not terminate an employee for poor performance just because the employer suspects that such poor performance is related to the employee’s advanced age. To the contrary, the underlying reason for the employee’s inability to perform the job in this context (whether it is advanced age, laziness, or the wrong skill set) is irrelevant . It simply means that if the employer desires to terminate the employee, it must do so based on legitimate and non-discriminatory reasons unrelated to the employee’s age. Whether the employee decides to retire or move on to another job after being terminated is the employee’s decision (not the employer’s), and any suggestion by the employer that the employee should choose retirement can be used by the employee to argue that the true reason for the involuntary termination was illegal age discrimination.