Provided by: Judge Ruth B. Kraft
Question:
Dear Judge Ruth: It is legal to set a mandatory retirement age for employees? CK
Answer:
Dear CK: Thank you for an excellent question. Generally, employers may not impose a mandatory retirement age on most employees. Under the Age Discrimination in Employment Act (ADEA), as currently in effect, a mandatory retirement age is considered age discrimination. Interestingly, when the act was passed in 1967, protection was limited to workers between the ages of 40 and 65. Later, this was expanded to age 70 and now the upside limit has been completely eliminated except in two major categories.
The first ADEA exception permits a mandatory retirement age for certain executives and high level policymakers under limited circumstances, which are narrowly construed by the courts. The exemption is applicable to employees who are:
Dear Judge Ruth: It is legal to set a mandatory retirement age for employees? CK
Answer:
Dear CK: Thank you for an excellent question. Generally, employers may not impose a mandatory retirement age on most employees. Under the Age Discrimination in Employment Act (ADEA), as currently in effect, a mandatory retirement age is considered age discrimination. Interestingly, when the act was passed in 1967, protection was limited to workers between the ages of 40 and 65. Later, this was expanded to age 70 and now the upside limit has been completely eliminated except in two major categories.
The first ADEA exception permits a mandatory retirement age for certain executives and high level policymakers under limited circumstances, which are narrowly construed by the courts. The exemption is applicable to employees who are:
- At least 65 years old;
- Employed in a bona fide executive or high policymaking position for the 2 year period immediately before retirement; and
- Entitled to an immediate, nonforfeitable annual retirement benefit from an employer pension, profit-sharing, savings or deferred compensation plan, or any combination thereof, with a minimum aggregate income of at least $44,000 per year.
Critically, title isn’t everything. Think of all the business organizations with legions of vice presidents! The exemption does not apply to middle management regardless of retirement income. Instead, it addresses the highest echelon of workers with major decisionmaking power over a large number of employees or those who have less line authority but play a significant role in the development and implementation of corporate policy (i.e., general counsel, chief financial officer, etc.)
The second ADEA exemption permits an employer to impose a maximum age if it can establish that it is a bone fide occupational qualification (the acronym is BFOQ) which is reasonably necessary to the normal operation of the business. Again, this is narrowly construed. In order to use the BFOQ standard the employer has the burden of proving that the age limit is reasonable necessary AND that either (1) all or substantially all affected individuals would, in fact, be disqualified OR (2) some of the excluded individuals possess as disqualifying trait that cannot be ascertained except by reference to age.
Parenthetically, many court systems throughout the United States do set mandatory retirement ages for the judiciary (but not the legislature). Truthfully, these are designed to open up slots for the next generation. Federal judges may continue to serve at their discretion as long as they desire, but with senior status. State judges in New York are required to retire at age 70 and their attempt to lift the mandatory retirement age by referendum was rejected by the electorate in the November 2013 election.
Because all forms of discrimination in employment are fodder for plaintiffs’ counsel, employers must pay special attention to how they handle older workers. Although they should be subject to progressive discipline consistent with that imposed upon other employees, care must be taken to articulate and insure that their rights under the Americans With Disabilities Act and Family Medical Leave Act are complied with.
Have a question or comment?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or at (516) 747-6700 x. 302.
The second ADEA exemption permits an employer to impose a maximum age if it can establish that it is a bone fide occupational qualification (the acronym is BFOQ) which is reasonably necessary to the normal operation of the business. Again, this is narrowly construed. In order to use the BFOQ standard the employer has the burden of proving that the age limit is reasonable necessary AND that either (1) all or substantially all affected individuals would, in fact, be disqualified OR (2) some of the excluded individuals possess as disqualifying trait that cannot be ascertained except by reference to age.
Parenthetically, many court systems throughout the United States do set mandatory retirement ages for the judiciary (but not the legislature). Truthfully, these are designed to open up slots for the next generation. Federal judges may continue to serve at their discretion as long as they desire, but with senior status. State judges in New York are required to retire at age 70 and their attempt to lift the mandatory retirement age by referendum was rejected by the electorate in the November 2013 election.
Because all forms of discrimination in employment are fodder for plaintiffs’ counsel, employers must pay special attention to how they handle older workers. Although they should be subject to progressive discipline consistent with that imposed upon other employees, care must be taken to articulate and insure that their rights under the Americans With Disabilities Act and Family Medical Leave Act are complied with.
Have a question or comment?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or at (516) 747-6700 x. 302.