Monday, April 14, 2008

5356: Higher Pay, Higher Risk.

From The Chicago Tribune…

Higher pay puts older workers on firing line

By Barbara Rose

Older workers are more vulnerable to losing their jobs than younger ones when companies cut costs. They know this instinctively, even though the law of the land forbids age-related discrimination.

More experienced workers generally earn more than their younger counterparts. It’s illegal to fire them based on their age, but courts long have ruled that cost-cutting is an acceptable reason for firing higher-paid employees, even when the cuts fall disproportionately on workers older than 40.

A proposed rule change by the U.S. Equal Employment Opportunity Commission wouldn’t change that fact, but it would tweak the rules in a way that worker advocates say is positive. It would also open the door to a debate about the reasons employers can offer to justify their actions. And it comes at a time when age-bias claims are soaring.

The number of age-discrimination charges filed with the EEOC is up 21 percent compared with a decade ago, while total charges climbed less than three percent. The jump reflects changing demographics. The youngest of the Baby Boom generation entered their 40s during the decade, and older Boomers entered their peak earning years.

“When a company’s looking to cut expenses, those who are most heavily compensated are most heavily at risk,” said Chicago employment attorney Peter Steinmeyer.

Former EEOC Vice Chairman Paul Igasaki called this cost issue the “fault line” in age-discrimination cases, the divide where protection falls away.

If an employment decision falls disproportionately on minorities or women, for instance, an employer must be able to show it did not discriminate on the basis of race or sex but was forced to take action for a pressing business reason—a “business necessity.” But in age-discrimination cases, employers need only cite “reasonable factors other than age.” And cost generally is one.

Vulnerable ages
A study of more than 2,000 age-bias cases over a 15-year period in a large industrial state found older workers were most likely to experience discrimination when they approached 50, and again at 60 when they neared retirement. The Ohio State University study said the cases were rich with examples of qualified individuals who were laid off or forced into early retirement in a restructuring or downsizing. Many were long-term employees with good evaluations.

“Workers nearing 50 years old tend to be upwardly mobile middle managers that, particularly during harder economic times, tend to be seen as more expensive,” said lead author and sociology professor Vincent J. Roscigno. “Employers start contemplating whether they can replace these fiftysomething workers with younger workers who may not expect as much.

“Discrimination faced by the sixtysomething crowd seemed to be related to cost-reduction strategies surrounding health care and pensions, which can be big savings over time. In the one group the employers were looking at costs here and now, and the other, strategizing about future costs.”

Typical of the younger group was a 49-year-old service manager for a leasing company who, despite 17 years in management and repeated letters of recognition, was let go while a 35-year-old manager who had been with the company for one year was kept on. The company cited financial pressure in eliminating the older manager’s job, saying the decision was based on the “best service manager at that particular time, as well as who would be the best in the future,” the study reported.

Justifying actions
Employers used age stereotypes to justify their cost-saving strategies, Roscigno said. “The rationale we saw in the case material was wanting more ‘flexible,’ more ‘motivated’ workers. [Yet] some of these older workers were the ones who won awards. I don’t know about more motivated workers, but I’m pretty sure they wanted cheaper workers.”

The EEOC’s proposed rule change would make employers bear the burden of proving that a decision was based on a reasonable factor other than age.

“Any time an employer is required to prove reasonableness it puts more of the onus on the employer and ultimately increases the cost of defending these cases,” said Joel Rice of Fisher & Phillips in Chicago, who represents employers.

Advocates for older workers say that is where the burden belongs. “Requiring the victim to prove the employment practice was unreasonable was almost like proving a negative,” said AARP senior attorney Laurie McCann.

The EEOC also invited comment about whether the agency should issue additional rules explaining what “reasonable” means.

“That aspect is one of the most important parts,” McCann said. “AARP’s position is, there should be a job-related aspect for it to be reasonable. The whole area of cost is very difficult. It’s almost a knee-jerk reaction, when we need to cut costs that we’ll eliminate our longer-service employees. We will certainly argue additional guidance is necessary.”

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