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Executive Summary: Age Discrimination
Date: December 20 2006
The Age Discrimination in Employment Act (ADEA) now covers almost half the country's labor force, about 70 million U.S. workers. Moreover, the number of people 65 and older working or seeking work has risen sharply - about 50% since 1980, the U.S. Census Bureau reports. In 2003, more than 4.5 million people 65 and older were on the job, and their numbers are expected to keep going up. Many members of the large Baby-Boom generation say they plan to work into their 70s and 80s.
The U.S. labor force will age rapidly over the next decade. By 2012, the share of 55-and-older workers in the labor force is expected to hit 19.1%, up considerably from 14.3% in 2002. New projections put the median age of the labor force in 2012 at 41.4, the oldest ever recorded. This growing pool covered by the ADEA is likely to generate an increasing number of age discrimination claims.
Age discrimination claims are, in fact, the fastest-growing category of charges filed with the U.S. Equal Employment Opportunity Commission (EEOC). They jumped more than 35% from 1999 through 2003, from 14,141 to 19,124, far outpacing the growth in race and sex discrimination charges. In 2003, age discrimination sparked close to one-quarter of the claims filed with the EEOC.
The number of age discrimination lawsuits filed in the U.S. has doubled in the past decade, and these suits are the most expensive bias suits to lose, warns Gerald Maatman, chair of Baker & McKenzie's global employment law practice. Age bias triggered 16% of discrimination lawsuits brought against U.S. employers in federal and state courts from 1997 through 2003, Jury Verdict Research reports. These cases brought the highest median awards of all job-bias cases in that period - $255,143 - compared with an award median of $178,500 in discrimination suits overall.
New issues continue to arise under the ADEA. Equity in funding health benefits for retirees, the impact of cash balance pension plans and disparate impact issues, all unresolved under existing law, are major questions working their way through the courts. Some state laws allow age discrimination claims by young workers, and reverse age discrimination cases are being tried in those places. Workforce demographics - large numbers of Baby Boomers working longer - could stymie young workers' advancement, producing more such suits.
In February 2004, the U.S. Supreme Court affirmed the legality of companies' offering retirement incentives to just their oldest workers in order to pare costs. The decision in General Dynamics Land Systems v. Cline resolved splits in the circuit courts on this issue of "reverse discrimination," so now companies can adopt the same policies in all U.S. jurisdictions. Also in 2004, the EEOC voted to allow employers to offer Medicare-eligible employees lower healthcare benefit coverage than younger retirees, but opposition from AARP, an advocacy and membership organization for people age 50 and older, is keeping the revised regulation in limbo.
In the face of labor force aging, employers would be wise to establish practices that include mature workers in their search for talent. Yet lawsuits, and even companies themselves, indicate they generally are not altering their practices for this major shift in workforce demographics. Most still concentrate on recruiting and developing young workers and largely ignore, or even eliminate, older ones. Consequently, age bias in hiring, training and termination continues to trigger lawsuits.
The impact of age bias goes far beyond litigation. As a U.S. Administration on Aging paper warns, "A corporate culture of expendability of older workers is probably throwing away the most productive years of many U.S. workers."
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