An Aging Workforce, Ageism, or Age Discrimination

An Aging Workforce

As an aging population continues to correlate with an aging workforce, ageism, or age discrimination, has become a noticeable loss exposure for many companies. The trend of baby boomers working past the normal retirement age and into their 70’s has been a catalyst for age discrimination suits in recent years. The number of workers aged 55 and over will reach one quarter of the US workforce by 2022. As a result, companies could see a higher number of age discrimination lawsuits in the years to follow as they look to phase out older employees for a variety of reasons (Aging Workforce). First, companies may choose to force out older employees to make room for younger Millennial and Gen Z employees at much lower salaries as a cost savings mechanism. Second, older employees may not have the extensive education or advanced degrees that are increasingly important in today’s workplace. Finally, older employees may lack the technological skills that today’s employers value (Reger). Contrary to that, many will fairly argue that employers who do not retain older workers lose seasoned employees who have the experience, institutional knowledge, and professional networks that their younger counterparts simply cannot match. Companies must apply a cost-benefit analysis to make appropriate decisions regarding competing interests when it comes to the aging workforce, keeping in mind that age discrimination complaints are more common now than ever.

Regulation

Age discrimination, as well as all other forms of employer discrimination, is a highly regulated environment. The Age Discrimination in Employment Act of 1967 (ADEA) is the federal law that addresses ageism in the workplace and prevents employers from taking discriminatory measures regarding hiring, firing, promotion, and other actions against employees who are 40 years or older simply because of their age. Despite the presence of a federal law, states vary on this issue. For example, state laws in Pennsylvania align directly with the ADEA in that age discrimination is prohibited against anyone over the age of 40. In New Jersey, however, the law is designed to additionally include discrimination against anyone aged 18 or under, covering both ends of the age discrimination spectrum (Griesing). As a result, protecting against potential age discrimination complaints and lawsuits is essential.

The Cases

According to the Equal Employment Opportunity Commission (EEOC), over 16,000 age discrimination claims were filed in 2018, representing 22.1 percent of all discrimination claims, a slight bump from 21.8 percent seen in 2017 (Charge Statistics). In addition, several high profile cases have arisen so far in 2019, most notably, the IBM case, which is actively making its way through the legal system. The class action lawsuit, filed by former IBM employees, alleges that the company fired more than 20,000 employees over the age of 40 in order to create space for a predominantly millennial staff (Wbur). The tech giant has faced several similar allegations in recent years, but the company continues to defend itself and maintain that it did nothing wrong. It will be interesting to see how the IBM case manifests itself in the coming months, as this lawsuit against a well-known employer has brought a new level of attention to age discrimination that was not present prior.

EPLI and Other Loss Control Mechanisms

For some employers, Employer Practice Liability Insurance (EPLI) is the key mechanism in protecting against age discrimination claims. EPLI is a relatively inexpensive insurance product that can ultimately save companies tens of thousands of dollars or more in the long run. EPLI protects organizations from lawsuits filed by their employees for issues such as wrongful termination, harassment, gender, racial and sexual discrimination, and age discrimination (Hamill). The average cost of settling an employee claim ranges from $10,000-$50,000, and an unsuccessful effort in court can skyrocket those fees into the hundreds of thousands or more (Reger). When compared to these astronomical legal fees, EPLI premiums are modest. According to Richard Marburg, Executive Vice President at AmWINS, an expert in property and casualty insurance, “Smaller businesses can typically find quality EPLI coverage for around $1,000-$2,000 annually, with premiums increasing to approximately $4,500 for larger enterprises, making EPLI a smart and worthwhile purchase for companies of all sizes” (Marburg). Even with a valuable insurance product like EPLI, corporations still must take other loss control measures to protect against this risk.

One preventative effort all firms should take to avoid age discrimination suits is to document any poor performance of their employees. Doing so will provide proof that a business did not terminate an employee for discriminatory reasons, but rather due to substandard work (Reger). In addition, an employer may choose to provide technological training for some of its older employees in an effort to increase productivity. This is potentially a win-win, as through this, a company also demonstrates its willingness to support older workers as technology rapidly becomes more prevalent in the workplace. Finally, organizations should offer severance to all terminated employees, as well as leave any unemployment claims uncontested (Reger). This will create a far more positive image in the mind of the former employee, decreasing the likelihood of a discrimination suit.

Why Isn’t EPLI More Common?

According to amtrustfinancial.com, the percentage of companies who have an EPLI policy is about 23% for smaller firms, with that number increasing to 34% for middle markets, and then to 40% for larger corporations (“Employment”). With EPLI providing such protection at relatively low cost, the question is raised as to why more firms are not investing in this insurance product. According to Christina Reger, Esq., a labor and employment attorney, the answer to this inquiry is simpler than one would think. “Most small companies do not have EPLI. This is for one of two reasons: because they thought they would never need it, or they did not know there was an insurance mechanism to cover that risk” (Reger). In addition, “because age and other discrimination cases are often settled and never make it to court, companies are able to somewhat minimize costs and may not have an understanding, or even recognition, of the EPLI product and the benefits it provides, even in settlement situations” (Reger). However, as the data continues to compile, and age and other discrimination issues become more frequent and severe, this issue has become a priority. Companies are now more cognizant of the risks associated with not having and EPLI policy and are beginning to realize that protection from discrimination lawsuits is a necessary risk management investment.

Conclusion

Over the past several years, the #MeToo movement, although focused on sexual harassment, has propelled other workplace issues to the forefront, making it acceptable for an employee to take action against an employer. Age discrimination actions are no exception. EPLI is so appealing because it provides financial protection from the enormous legal and settlement fees associated with these kinds of suits. As the number of age discrimination claims continues to rise as the marketplace changes and Gen Z is fully added to the workplace, companies will need to protect themselves with EPLI.

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An Aging Workforce, Ageism, or Age Discrimination. (2021, May 10). Retrieved March 28, 2024 , from
https://supremestudy.com/an-aging-workforce-ageism-or-age-discrimination/

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