Age bias in the workplace. Early-retirement `incentives' becoming offers that older American workers often cannot refuse

He had toiled 31 years for a large manufacturing company in the Northeast. The children had just finished college; at 56 he looked forward to six more years of earnings to make retirement possible at 62. But it was not to be. Out of the blue came an early-retirement offer that this man, who asked not to be named, could hardly refuse. His corporation, like many others across the United States, decided to trim its payroll; his job, it said, would be abolished in a few months. The company offered half-pay retirement for the next four years, provided he not work elsewhere.

He didn't know how he could afford those terms. But he was afraid that the alternative would be no job and no retirement pay. He wondered: Was he being discriminated against because of his age?

This is a typical case for thousands of older American workers. In the 1980s, many have been offered similar early-retirement plans; employment experts say these one-time incentives-to-retire will occur more frequently in the near future.

They are ``growing in favor among employers,'' says Burton Fretz, a Washington lawyer who monitors age discrimination, ``because it's a way of reducing the work force. At the same time, it's a really tricky area,'' because these offers can mask age discrimination. Mr. Fretz is executive director of the National Senior Citizens Law Center.

Many workers have been content with the offers: ``There are a lot of people who are very happy with this'' trend, says Rosalie Silberman, vice-chairman of the Equal Employment Opportunity Commission (EEOC). ``I hope that they will be heard from.''

But many others are mightily unhappy, feeling they have been discriminated against because of age. Increasingly they are being heard from: They are filing charges with the EEOC, whose mandate includes protecting Americans against age discrimination in employment, and going to court. They are complaining to organizations of older Americans, like the 28 million-member American Association of Retired Persons (AARP). And they are fuming to members of Congress.

These one-time incentives are not to be confused with the early-retirement options. No one criticizes these permanent programs, which enable employees to reach decisions about retirement age by planning ahead for years.

Age discrimination is ``one of the hottest policy issues that we are looking at now,'' Mrs. Silberman says.

As a society ``we need to do more everywhere'' to combat age injustice, says Jack Carlson, AARP's new executive director. Seven million organization members, all of whom are at least 50, are actively employed.

Fretz says ``if you judge by the number of charges filed with the EEOC, [age discrimination on the job] seems to be a growing problem. The number of these charges has tripled since 1980.'' Fretz says he personally believes ``the problem is a considerable one.''

He cites several reasons for inequity:

Because of economic pressures many companies are scaling down. ``When they do that, they tend to look at higher salaries,'' which are generally earned by longtime employees, who are older.

Age discrimination in society is still pervasive, because of hoary stereotypes that falsely assert older workers are less capable than younger ones.

Many young entrepreneurs run small companies; often they prefer people their own age around them.

There is a ``growing awareness'' among older workers that they can fight back against injustice, by contacting the EEOC or filing suit.

Early-retirement offers are the cutting edge of the age-discrimination issue. Individual cases vary; the EEOC and various courts have decided cases both for and against employees.

But in the broadest sense neither America's people nor its legal system has yet decided whether these one-time offers, and many other actions involving older workers, are legal or not. Job discrimination against the elderly ``is a developing area,'' Silberman says. ``In age [the law] is all over the lot.''

Laws exist that are designed to prevent discrimination; the keystone is the federal Age Discrimination in Employment Act. But this ``act is ... still in the toddler stage,'' Mich`ele Pollak, an AARP legislative representative, says.

Experts agree that many more court cases, and legal decisions, are needed before society can tell precisely which actions in the workplace are permissible, and which are not.

During 1987, the American Management Association surveyed its member businesses: It found that 45 percent of the more than 1,100 that responded had instituted ``significant reductions'' in the number of employees in the preceding 18 months. ``We found,'' says project director Eric Greenberg, ``that early-retirement incentives were the most popular'' way to decrease the staff.

Moreover, American businesses expect to offer more early-retirement incentive plans to employees, as international competition remains keen and signs multiply that an economic downturn is possible in the US in the near future.

In the same survey, Mr. Greenberg found that 44 percent of the responding companies expect to make future early-retirement offers to managerial-level employees. Further, 31 percent of companies expect to make similar offers to their hourly workers.

One-time incentives to retire are attracting much skepticism from older workers, their advocates, and members of Congress. Particularly at issue are waivers. Employees who decide to accept retirement incentives must almost invariably sign a waiver of all future rights to bring age-discrimination suits.

But that brings questions. Is an individual retirement incentive fair to older workers, or discriminatory?

Is there any way for a would-be retiree to tell at the time he's required to sign the waivers? Are the waivers enforceable? And should the EEOC supervise them to make sure the programs are not unjust?

``There is no way in the world ... that we could supervise each and every waiver,'' EEOC's Silberman says flatly.

To do so, Clarence Thomas, EEOC's blunt-spoken chairman, says, would require a larger budget and bigger staff. ``We're here to carry out the responsibility of this agency,'' he says. ``But I'm not going to tell you that we can do everything that a committee staffer or an interest group dreams up, without new resources. It's as simple as that.''

Besides, Silberman says, ``implicit in the criticism ... is the [implication] that older workers are not able to take care of themselves and make decisions in their own best interests.'' She says that's an implication older Americans ``generally find insulting.''

AARP's Ms. Pollak has a quite different perspective. She says incentive programs, which can require a decision within a few weeks or even days, can be ``so sophisticated that ... there's no evidence of discrimination'' for months or years. Sometimes even if a program is discriminatory ``the evidence of the discrimination is just not there'' at the time workers are given the retirement option.

AARP does not like waivers. But it says that if firms do want to ask employees to sign them, then the EEOC should supervise them to make certain that they are valid, that no discrimination exists. Pollak stresses that AARP is certainly not against early-retirement programs per se. But, she says, ``like every other employment practice, these programs should not discriminate.''

Sometimes, she says, it turns out that companies have reduced their payroll by letting higher-salaried, older workers go, and hiring instead younger, cheaper employees to do virtually the same work.

Further, she says, some employers are ``basically indicating in a nice way that if employees don't sign [a waiver] ... they're not going to get their pension....'' Such a tactic, she says, is ``blatantly illegal.''

Pollak says that EEOC supervision of waivers would send employers a powerful message. It would tell companies that their early-retirement plans must be nondiscriminatory. But if waivers are unsupervised, ``the message is: `Go ahead and do whatever you want.'''

Over vigorous opposition from Congress and advocates for older Americans, the EEOC last summer decided it would not supervise the waivers. But Congress had other ideas.

As part of the frantic pre-Christmas package of major bills, Congress suspended for fiscal year 1988 the EEOC's rule that signaled employers that they could require employees to sign unsupervised waivers to retire early. This action sent the EEOC its own message: that some members of Congress are dubious about how zealous the EEOC is on behalf of older workers.

Equally dubious is AARP, which says that EEOC in these circumstances too often sides with business at the expense of the older workers that they are supposed to protect. ``I'd like to know what the last [court] case was that they brought on behalf of employees on an early-incentive program,'' AARP's Pollak says. ``They haven't brought any that we know of.''

All this criticism bothers EEOC chairman Thomas. ``We continue to fight, to pursue the age area,'' he says, ``and this kind of a rear-guard action [the congressional prohibition] is incredible to me.''

In the short run, no one is certain what effect the forbidding of unsupervised waivers for a year will have, although it likely will make companies think twice about the content and implications of their incentives.

Congressional committees are virtually certain to examine the issue this year. But whether Congress will take any sweeping action, or decide simply to forbid unsupervised waivers for a second year, is anyone's guess.

In the long run it may not much matter, EEOC's Silberman says. She notes the changing US demography with its lower birthrates, and the many forecasts that in a very few years the American economy will be in need of more workers, not fewer: ``We may very well have early recruitment instead of early retirement.''

On that point AARP's Pollak agrees. ``Employers that are looking to get rid of older employees now,'' she warns, ``and think that is good labor policy, are very shortsighted.''

But that is small consolation to those Americans now in their 50s and 60s who feel they are the victims of age discrimination in the workplace. They are expected to continue to file charges with the EEOC, and to sue in state and federal courts. ``The number of charges will keep going up,'' EEOC's Silberman forecasts. Most of them are of subtle discrimination, and thus ``are relatively difficult for us to deal with.'' Silberman says, however, that the EEOC frequently still receives clear-cut cases of ``let's get the old guy out.''

While the EEOC negotiates and the courts adjudicate, employers, older Americans, advocacy groups, and Congress will be watching. What else they will do, if anything, depends on how the EEOC and the courts themselves act.

You've read  of  free articles. Subscribe to continue.
QR Code to Age bias in the workplace. Early-retirement `incentives' becoming offers that older American workers often cannot refuse
Read this article in
QR Code to Subscription page
Start your subscription today