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Meeting of November 17, 2010 - Impact Of Economy On Older Workers

Written Testimony of R. Scott Oswald
Principal
The Employment Law Group

Good morning and thank you for inviting me to speak about the continued need for vigorous enforcement of the Age Discrimination in Employment Act (ADEA). My name is Scott Oswald and I am the Managing Principal at The Employment Law Group®(1), which is located in Washington, D.C. For over the past decade, I have regularly litigated cases under the ADEA and have experienced first-hand the challenges involved in age discrimination litigation. In inviting me to speak at the Equal Employment Opportunity Commission (EEOC) meeting today, you have asked me to comment on the following:

  • The issues of damages and other relief in age discrimination cases;
  • How the EEOC can better address age discrimination; and
  • The types of relief EEOC attorneys should be seeking.

I recommend the following:

  • The EEOC should fight employers efforts to offer pretextual reasons for a disparity in wages, benefits, or employment opportunities for older employees;
  • The EEOC should advocate for a “determinative factor” interpretation of the “but-for” test for proving age discrimination in the workplace;
  • The EEOC should regularly seek the liquidated damages available under the ADEA; the EEOC should not rely solely on the Department of Labor’s work-life tables to calculate lost wages;
  • The EEOC should employ vocational experts and economists in its enforcement actions to ensure that the unique challenges facing older employees are adequately reflected in the economic damages that the EEOC recovers for workers subject to age discrimination;
  • The EEOC should be creative in how it defines front-pay such that the front-pay calculations include the economic losses related to employees’ damaged reputation when losing a job due to age discrimination; and
  • The EEOC should seek injunctive relief enjoining employers who engage in age discrimination to adopt new policies and practices that eliminate age discrimination from the workplace.

I. The ADEA Statute

The Age Discrimination in Employment Act prohibits age discrimination against persons over the age of forty by employers, employment agencies, and labor organizations.(2) Portions of the ADEA are based on Title VII, but it is enforced through the enforcement provisions of the Fair Labor Standards Act (FLSA), which sets the national minimum wage and mandates the payment of overtime for many employees.(3) In 1978, the EEOC was delegated the responsibility of enforcing the ADEA, and has continued to do so ever since. New EEOC interpretations of the ADEA rescind prior Department of Labor interpretations of the ADEA; however, most DOL interpretations were adopted by the EEOC. The EEOC is required to seek voluntary settlement before issuing its findings, and may bring lawsuits on behalf of employees against their current or former employers in order to enforce the employees’ legal rights. Furthermore, the employer does not have to wait for a finding from the EEOC to file a lawsuit.

Since the enforcement provisions of the ADEA are based on the FLSA, “economic damages” are available once unlawful age discrimination is proven. Economic damages include back-pay, and it also includes front-pay when reinstatement is impractical. The EEOC should request the maximum backpay available and not settle for the two years of backpay expressly allowed for Title VII claims. In addition to economic damages, the employee is entitled to injunctive relief and broader affirmative relief such as the prohibition of unlawful employment practices or the setting of hiring and promotion goals. If the employer willfully violates the ADEA, the statute also provides for liquidated damages in an amount equal to and in addition to the employee’s “lost wages”.(4)

II. Current Issues Regarding Age Discrimination in the Workplace

We’ve already seen in the past three years a significant rise in age discrimination claims – as much as 30%.(5) The number of age discrimination cases is likely to continue rising. One reason is because people are living longer. The average American’s life expectancy is at an all-time high and has steadily increased over the past decade.(6) Because employees are living longer, they will on average need to work longer in order to save for retirement. Additionally, a majority of the “baby boomer” generation is at the retirement age. The recent economic turmoil further compounds the issue, leaving employees with stunted retirement accounts and forcing many to stave off retirement until after an economic recovery. In anticipation of this likely increase in age discrimination, the EEOC should focus on strengthening ADEA enforcement.

A. The Burden of Proving Age Discrimination

The EEOC should fight the employer’s efforts to offer pretextual reasons for a disparity in wages, benefits, or employment opportunities for older employees. Age discrimination is often difficult to prove. The Supreme Court has previously held that pay is not directly synonymous with age when claiming age discrimination under the disparate impact theory or disparate treatment theory of liability. Employers can exploit this ruling to mask their animus against age by simply claiming the employee’s termination was based on salary and is therefore not actionable under the ADEA. The EEOC should challenge such employer’s assertions as pretext. Furthermore, the EEOC should seek liquidated damages under either the disparate impact or disparate treatment theory when the employer shows reckless disregard for whether its policies or practices are discriminatory.

In the wake of Gross v. FBL Financial Services, the standard for proving age discrimination has become even more stringent. The Supreme Court ruled that age cannot merely be a motivating factor, but must be a “but-for” factor. Employers argue this means age must be the sole factor. However, I believe that a proper reading of this decision means age must only be a “determinative factor.” The EEOC should advocate for a “determinative factor” interpretation of the “but-for” test for proving age discrimination in the workplace. Otherwise, employers’ pretextual reasons for terminating an employee could prevent a recovery under the ADEA even when an employer is primarily motivated by age-based bias.

B. The Economic Damages Calculation

The U.S. population is living longer and older employees often have more difficulty obtaining new positions substantially similar to their prior positions when they lose their jobs. Therefore, the EEOC should seek the maximum economic damages available under the ADEA when a judge or jury has found the employer has discriminated based on age. The EEOC should enlist the services of vocational experts and economists to ensure the unique employment challenges facing older employees are adequately reflected in the total economic damages calculation that it seeks from U.S. courts. The Department of Labor’s work-life tables cannot solely be relied upon to calculate damages, because they are outdated and do not reflect that the U.S. population is now routinely working past the traditional retirement age, oftentimes by necessity. Vocational experts can gage the likely additional difficulty that an employee over fifty will face when searching for new employment opportunities. For example, a vocational expert can define, in terms that an economist can value, the impact that an involuntarily loss of one’s job has on an older worker’s reputation and her job prospects. With the help of an expert, the EEOC should seek the following backpay damages:

  • Salary or wages;
  • Non-discretionary bonuses;(7)
  • Vacation pay;
  • Pensions and health insurance benefits;(8)
  • Right to purchase stock;(9) and
  • Reasonable raises and annual salary increases.(10)

Frontpay determinations should be based on the following factors:

  • Salary and benefits at the time of termination;
  • Any potential increase in salary through regular promotions and cost of living adjustment;
  • Work life expectancy;
  • The reasonable availability of other work opportunities;
  • The period within which the employee may become re-employed with reasonable efforts; and
  • The employee’s future in the position from which he or she was terminated.

With the help of an expert, the EEOC should seek the following as frontpay damages:

  • Salary or wages;
  • Non-discretionary bonuses;
  • Stock options;(11)
  • Damage to reputation; and
  • The loss of future job prospects.

In some cases the vocational expert may conclude that the employee may never do meaningful work again as a result of age discrimination in their job search, the reduction in demand for their prior position, or other economic reasons. This directly affects the employee’s retirement contributions and savings. When resources are limited, the EEOC should at least use experts where the employee was terminated. The EEOC’s regular use of vocational experts in its cases will help the EEOC recover front-pay damages that more accurately reflect an older worker’s true economic loss, helping the worker and society at large. When employees who are unlawfully discriminated against are undercompensated, taxpayers end up paying the differential, because undercompensated employees are more likely to enroll in government entitlement programs earlier than they otherwise might had they been compensated consistent with their true economic loss.

C. Under-compensation for Hostile Work Environments

The EEOC should seek damages on behalf of the employee when their employer willfully subjects them to a hostile work environment. Employees face an uncertain result on their damages when an employer subjects them to an ageist motivated hostile work environment but does not terminate their employment. Courts have rejected punitive damages as a remedy under the ADEA in light of its provision for liquidated damages.(12) In some Circuits, liquidated damages are not available if the employee did not experience any “lost wages” or benefits even though the employer willfully violated the ADEA while harassing the employee.(13) For example, i n Collazo v. Nicholson, the First Circuit ruled that there is no remedy for employees who have no “lost wages” and are merely seeking compensatory damages for the pain and suffering they endured as a result of unlawful ageist harassment.(14) Congress should amend the ADEA to award punitive damages when the employer either willfully or recklessly violates the ADEA.

On the other hand, in those areas covered by the U.S. Court of Appeals for the Ninth Circuit a court can award an employee liquidated damages in an ADEA case even though the employee did not suffer any “lost wages” or benefits.(15) The Second Circuit has followed the Ninth Circuit’s lead, holding that liquidated damages are available in such circumstances.(16) The EEOC should advocate the Ninth and Second Circuits’ position that liquidated damages are available whenever the employer has willfully violated the ADEA regardless of the amount of an employee’s lost pay. Otherwise, employers will avoid liquidated damages entirely even when an employer actively promotes a hostile work environment towards older employees. Since employers usually do not explicitly state their intent to discriminate, the EEOC should look for circumstantial evidence proving discrimination. Direct the employee to maintain a record of the employer’s comments or activities that the employee believes were discriminatory.

D. Injunctive Relief under the ADEA

The EEOC should seek injunctive relief enjoining the employer to adopt new policies and practices that prevent and remove age discrimination from the workplace. Courts are authorized to grant injunctive relief and even broad affirmative relief by prohibiting policies or practices found unlawful, ordering relief for victims, and ordering affirmative remedies including hiring and promotion goals and other numerical relief.(17) The EEOC should seek injunctive relief requiring the employer to amend its postings, policy manual, and training to prevent future age discrimination or properly address it when it occurs.

III. Conclusion

Employees are continuing to stay in the workforce longer and consequentially are more susceptible to age discrimination. Under the Supreme Court’s most recent jurisprudence, age discrimination can be difficult to prove. The EEOC should advocate legal theories that prevent an employer from being able to avoid liability under the ADEA by pointing to our challenging economic conditions to mask unlawful age discrimination. Furthermore, the EEOC should prepare for the likely increase in age discrimination claims by identifying vocational and economic experts who have the expertise necessary to evaluate and identify the true economic hardship older employees endure when they are subject to unlawful age discrimination. Finally, the EEOC should seek injunctive relief in its cases to force employers found liable under the ADEA to adopt new policies and practices that prevent and ameliorate the effects of age discrimination in their workplaces.


Footnotes

1. The Employment Law Group, P.C., http://www.employmentlawgroup.com/

2. ADEA, 29 U.S.C. § 623(a)-(c)

3. ADEA, 29 U.S.C. § 625(b)

4. 29 U.S.C. § 216(b).

5. EEOC, http://www.eeoc.gov/eeoc/statistics/enforcement/adea.cfm

6. N.Y. Times, http://well.blogs.nytimes.com/2009/08/19/us-life-expectancy-at-all-time-high/

7. See Bonura v. Chase Manhattan Bank, N.A., 629 F. Supp. 353 (S.D. N.Y. 1986).

8. See Marcing v. Fluor Daniel, Inc., 826 F. Supp 1128 (N.D. Ill. 1993).

9. See Scarfo v. Cabletron Sys., 54 F.3d 931 (1st Cir. 1995).

10. See Long v. Ringling Bros-Barnum & Bailey Combined Shows, Inc., 882 F. Supp. 1553 (D. Md. 1995).

11. See Custom Chrome v. CIR, 271 F.3d 1117 (9th Cir. 2000).

12. E.g., Prouty v. National R.R. Passenger Corp., 572 F. Supp. 200 (D.D.C. 1983).

13. McLaren v. Emory University, 705 F. Supp. 563 (N.D. Ga. 1988).

14. Collazo v. Nicholson, 535 F.3d 41 (1st Cir. 2008).

15. American Ass’n of Retired Persons v. Farmers Group, Inc., 943 F.2d 996 (9th Cir. 1991).

16. McGinty v. State. 193 F.3d 64 (2d Cir. 1999).

17. §60:1. Permanent injunctive and affirmative relief, 2 Emp. Discrim. Coord. Analysis of Federal Law § 60:1.