Age Discrimination in Employment Act
The Age Discrimination in Employment Act (“ADEA”) prohibits employers with more than 20 employees from discriminating against any worker with respect to compensation or the terms, conditions, or privileges of employment because he or she is age 40 or over.
The ADEA is primarily a civil rights law, but it was amended by the Older Workers Benefit Protection Act of 1990 specifically to prohibit employers from denying benefits to older workers. The ADEA does not require employers to provide workers with benefits, but benefit plans may not discriminate on the basis of age. In limited circumstances, an employer may be permitted to reduce benefits based on age, as long as the cost of providing the reduced benefits to older workers is the same as the cost of providing benefits to younger workers.
With respect to workplace flexibility, some commentators and employers had been concerned that the ADEA would prohibit an employer from establishing a phased retirement program, because the employers would be treating some older workers differently (and potentially more favorably) than other older workers. The Supreme Court, however, has recently held that the ADEA does not apply to claims of “reverse discrimination” (i.e., where “young” older workers receive less favorable treatment than “older” older workers.) As a result, employers may provide more favorable benefits (e.g., formal phased retirement programs) to older workers within the ADEA’s protected class. However, employers may still not treat older workers less favorably than younger workers in the design or implementation of benefit plans.