By Nancy Owen, PHR, Senior HR Consultant, East Coast Risk Management
You may want to read on before you decide to ask your employee to retire.
Federal law does not support mandatory retirement based on age, except in a few instances… one being an airplane pilot.
Airline pilots are required to retire at age 65. And even before they reach retirement age, on international flights, a pilot aged 60 years or older must be paired with a pilot under 60. However, there isn’t a mandatory retirement age for general aviation pilots.
Another exception is a private employer with certain bona fide executives or high policymakers. They may also have mandatory retirement rules for those individuals. ADEA allows employers to require mandatory retirement at age 65, if an employee has been:
- Employed for at least two years prior to retirement; and
- Is entitled to immediate and non-forfeitable annual retirement benefits from the employer of at least $44,000.
Even if an employee qualifies as an executive under the definition, the exemption from the ADEA may not be claimed unless the employee also meets the further criteria specified in the Conference Committee Report. According to the Cornell Law School, typically the head of a significant and substantial local or regional operation of a corporation [or other business organization], such as a major production facility or retail establishment, but not the head of a minor branch, warehouse or retail store, would be covered by the term “bona fide executive.” Individuals at higher levels in the corporate organizational structure who possess comparable or greater levels of responsibility and authority as measured by established and recognized criteria would also be covered.
Beyond the exceptions
Discussions of retirement with employees beyond this Pilot and limited executive/policymaker exception can be extremely risky. Employees cannot be forced to retire because of their age. Employers who ask an employee to retire are giving the employee evidence of age discrimination.
However, as an employer you do have some rights when it comes to business planning. For a company to be able to succession plan, they may need to start a conversation with older employees about their retirement plans. If that is the case, tread lightly and be careful. You should avoid any conversation that may seem encouraging or expecting retirement from the older employees. For example, if the employee says that they are not ready for retirement or they say something like; they enjoy working and plan to continue working, then it would be in the employer’s best interest to end the conversation there.
But, if your employee volunteers information about retirement, for instance, if they are thinking or planning their retirement; then it would be okay for an employer to ask if the employee has any idea of when that may be, so you can begin planning for business changes. But if the employee lets you know they are not sure or have no date in mind, it would be best to not ask more questions.
So, what is an employer to do when they see that the older employee is less productive, starting to slow down and giving less effort in their job? This behavior should be managed from a performance and conduct perspective and not have anything to do with age. This older employee should be held to the same standards of performance and conduct expected of any other employee. The standard needs to be consistent for all employees, regardless of an employee age. Follow your regular performance disciplinary policy and past practice.
One thing you can do-
Some companies consider extending an offer of early retirement that includes a severance package that encourages employees to accept. Voluntary retirement is an early retirement incentive that is offered to eligible staff members who meet certain criteria. The incentive is used by HR and management to right size an organization. Companies may use this form of a retirement in order to reduce their workforce without conducting a layoff. This allows their employees to make the switch into retirement at an earlier age while also helping the company right size their company.
“Companies as diverse as Anheuser-Busch, Best Buy, Harley Davidson and Verizon all have one thing in common. These companies have all used buyout packages and early retirement plans to cut costs, reduce painful layoffs and adapt to an ever-changing business environment,” reports Bonnie Conrad from Bizfluent.
If you are an employer that has questions on any issue relating to human resources, safety, or workers’ compensation, contact East Coast Risk Management by calling 724-864-8745 or emailing us at email@example.com.
Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.