Combating New Forms of Age Discrimination

During the decade of the 1990s, age discrimination charge receipts grew dramatically. Companies consolidating and streamlining staff often chose mechanisms that adversely affected older workers. All in all, almost 170,000 ADEA charges were filed in this decade, more than half of which involved allegations of discharges or layoffs based of age.

Concerned about the Supreme Court's decision that permitted employers inroads to discriminate against seniors in retirement benefits, Congress passed the Older Workers Benefit Protect Act (OWBPA) in 1990, which overturned the Supreme Court's decision in Public Employees Retirement System of Ohio v. Betts and eliminated any ambiguity that the ADEA covers discrimination in fringe benefits. In the OWBPA, Congress made EEOC's "equal cost" rule that employers must either provide equal benefits or incur equal costs for the benefits of their older and younger workers part of the law. The OWBPA also addressed the growing concern regarding seniors effectively signing away ADEA rights as a condition for taking an employer-offered incentive for retirement. This practice of requiring waivers or releases of ADEA rights in some instances unfairly prejudiced senior workers who often were unaware of their rights, or did not have an adequate opportunity to consider their options. The OWBPA set standards for evaluating the validity of employee waivers under the ADEA.

In developing guidance interpreting these standards, the Commission opted for a fully consultative procedure. It invited 20 experts representing labor, management, and employees from both private industry and the public sector to assist in a "negotiated rulemaking" process. A final rule on waivers was issued in 1998. The Commission also published in 1999 a proposed rule applying and providing guidance on the 1998 Supreme Court decision that held that employees cannot be required to tender back money or other benefits received under a waiver as a condition for challenging the waiver's legality.

Issues concerning retirement benefits have continued to emerge. A new challenge facing the Commission is the legality of "cash balance" pension plans under the ADEA. Unlike traditional defined benefit pension plans in which the value of the benefit at normal age retirement tends to accumulate exponentially with seniority, the normal age retirement value of the benefit in a cash balance pension plan arguably accumulates in a manner that decreases with age. Because cash balance plans take various forms, are invariably complex, and may in some cases be detrimental to older workers, EEOC has established a nationwide intra-agency team to address the myriad unresolved issues and to coordinate the charges filed with the agency alleging age discrimination as a result of employers' conversions to such pension plans. The Commission has been coordinating with the Departments of the Treasury and Labor and with the Internal Revenue Service, all of whom have specific expertise and jurisdiction over questions affecting cash balance pension plans.

EEOC's litigation program produced many victories for older workers during the 1990s. Some examples include:

A 1993 consent decree with McDonnell Douglas Corp. involving allegations arising from a reduction-in-force affecting approximately 900 employees over age 55. EEOC secured re-employment of former employees for at least a four-year period, and $20.1 million in back pay and pension benefits.
A 1997 resolution against Martin Marietta Corp., wherein EEOC obtained $13 million in monetary relief for approximately 2,000 individuals, and an agreement to hire 450 persons, as well as to provide outplacement services and retraining for the affected employees.
A 1999 settlement with a New York insurance and brokerage firm paying $28 million to 13 individuals. This followed earlier favorable court decisions on liability, causing the employer to abandon its policy requiring employee-directors to retire at age 60 or 62.

Next: The Civil Rights Act of 1991