merica’s workforce is reaching a crossroads. Baby boomers, who represent the
largest segment of the country’s workforce, are or should be on the road to
retirement. Instead, many boomers are extending their careers in the face of
inadequate savings and underfunded 401(k) accounts. Add that trend to an uneven
economy and the fact that companies shrink as well as grow, and it’s almost
inevitable that age discrimination claims are going to rise in the next few
years. While some claims undeniably will have merit, many age discrimination
claims are brought against companies that have made legitimate business
decisions in which an employee’s age is not a factor. A recent age
discrimination case tried before a jury in federal court exemplifies the dilemma
facing employers today.
Recipe for a discrimination claim
A corporation in the energy sector hired a 52-year-old engineer who had very
solid "on paper" credentials and relevant experience, and interviewed very well.
The company viewed the candidate as someone who could help build and train a
project management team and lead the company into the future. The company also
hired the engineer knowing he had accepted an early retirement package from his
prior employer.
Initially, the engineer did well. He successfully led the creation of a project
management manual and accompanying training program. He was well respected
within the organization. Once this project was completed, however, the company
expected the engineer to actively manage a number of major projects. This job
included considerable travel and relentless attention to detail, as projects
were expected to be delivered on time and within budget. The job also required
that the engineer learn the company, as an understanding of other employees’
various capabilities was essential.
As the engineer’s primary focus shifted from teaching others to managing
projects, his performance suffered, largely because of his lack of commitment.
It was no secret that he was wanted to retire in the near term. He was not
interested in traveling to job sites and delegated many tasks to others. While
his younger supervisor demanded performance from all members of the team, the
engineer was looking to work for five years until company retirement benefits
vested. The engineer also believed, at least subjectively, that he knew more
about the job than his younger counterparts, many of whom he had trained.
As time passed, the engineer’s performance continued to slip, and problems
continued to arise on his projects. Accordingly, upper management pressed his
supervisor to address the problem. The engineer was placed on a performance
improvement plan, but resented the fact that he was being disciplined at all.
Moreover, the engineer’s boss was 13 years younger and had more of a business
background, but less project management experience than the engineer.
Despite a number of counseling sessions, the engineer’s performance problems
continued while he was on the performance improvement plan, and he was
terminated. The company offered him a severance package, which he rejected.
Notwithstanding the objectively valid reasons for the company’s decision and the
considerable efforts made to help the engineer improve over time, the engineer
sued the company for age discrimination.
Defending against the claim
Recognizing these facts, consider what the engineer was able to say: His boss
was 13 years younger than him. He was the oldest member of the project
management team. Other, younger project managers received better reviews. Two of
these project managers even received promotions shortly after the engineer was
terminated, albeit to the same position he had held. The engineer also tried to
use his inquiry into retirement requirements against the company, indicating
that the inquiry had influenced the company’s actions.
These facts, in large part, allowed the case to proceed to trial. While many
employers would have tried to settle the dispute out of court, the company chose
to fight the claim, knowing that it had done no wrong.
Over the course of trial, the company relied on a theme of "accountability, not
age." The company was able to demonstrate that it repeatedly advised the
engineer of what was required of his position, even citing the project manual
that the engineer helped to create during the first year of his employment. Even
with the technical requirements of the job, the company was able to communicate
its fair dealing with the engineer during the trial. The jury understood what
was expected, in simple terms, and was told again and again about the employee’s
refusal to be held accountable for the problems on his projects. While others
may have contributed to these problems, the buck stopped at the project
manager’s desk.
By relying on these consistent themes and documents that confirmed them, the
company was able to overcome a fundamental disadvantage associated with a
defense against age discrimination claims: Every juror can envision being an
older worker (or is an older worker) and may well know someone who was
terminated before he or she was ready to retire. Furthermore, every person
subjectively wants to retire on his or her own terms. In other words, companies
don’t have an even playing field if an age discrimination case gets to trial.
After nearly two years of litigation, the company prevailed. But there was a
price, of course. Litigation not only entails paying lawyers, but has another
considerable cost—time spent on the lawsuit means time not spent on the business
of the company. Yet ignoring performance problems, including those of older
workers, can be even more costly. A company cannot succeed without a motivated
workforce that shares a common vision. If certain employees are just putting in
time, productivity and morale inevitably suffer. Such consequences can have a
long-lasting effect on relationships with clients, vendors, partner companies
and stakeholders.
A shifting market gives rise to claims
With an economy that seems to be moving toward recession, the likelihood of
litigation based on age discrimination claims is exacerbated. Many workers have
seen their savings and retirement accounts take significant hits, thanks to a
weakened stock market. The slumping real estate market compounds the problem.
Equity that otherwise could be used for retirement is not available. Family
homes sit with "for sale" signs in the yard, and many people are strapped with
multiple mortgages. All these factors increase the likelihood that baby boomers
will look to the courts if they are terminated, no matter what the actual reason
might have been.
The challenge for companies, then, is creating a structured employment
environment that lessens the likelihood and potential severity of discrimination
claims. Companies should:
-
Set expectations: In dealing with all levels and generations of employees, the
first mandate is to clearly and repeatedly communicate the objective
expectations of all positions. The playing field has to be even. Employees
cannot reasonably be expected to meet the responsibilities of their positions if
at the time of hire they do not clearly understand their ongoing targets and a
defined set of boundaries in terms of reporting relationships and roles.
-
Deal with problems: Do not be afraid to address performance problems as soon as
they arise. One of the biggest mistakes that companies make is to allow an
employee who is not meeting expectations to continue down the path of
mediocrity. In the case of baby boomers, there is often a sense of deference
that is expected or implied because of tenure. There also often is an
accompanying sense that younger workers should be the "hard chargers." These
beliefs have no place in a successful workforce. All employees, regardless of
age, need to abide by the same set of expectations. Ultimately, the employee
will benefit from proper guidance and the company will benefit from obtaining
desired performance. Applying consistent approaches across all generations and
levels of employees ensures that some persons are not viewed as a protected
class while others are not afforded due respect. If expectations are not being
met, the problem must be addressed as soon as possible.
-
Consider the role of communications in management training:
Different
generations of workers communicate differently. What resonated with boomers and
preceding generations at work won’t necessarily work with Generation X, which is
seeing a rise in prominence at the management level. With a flood of Generation
Y employees entering the market, the styles and forms of communication will
continue to shift. Understanding these differences will greatly help in
providing guidance and setting expectations. Successful communication across all
generations is essential to an organization’s success.
-
Instill solid policies and procedures: Seek counsel on the development and
implementation of management training and performance-review policies. Beyond
looking to other companies or industry associations for best practices, look to
legal counsel for assurance that policies and procedures are uniform across all
employee groups and that exposure to discrimination claims is minimized. The
benefits derived from bringing in an attorney at this stage far outweigh the
costs associated with fending off discrimination claims, even those that are
frivolous.
-
Consult with legal counsel when trouble arises:
At the first sign of trouble
with an employee, especially one who is nearing retirement, is in a highly
compensated position or who has an unusual sense of entitlement, consult with
legal counsel. Whether in developing a performance improvement plan, reassigning
roles and responsibilities or simply addressing dissatisfaction, legal counsel
can help manage risk from a more emotionally removed perspective. The best money
spent is money that avoids the escalation of problems into litigation.
-
Consider the circumstances in terminations: Even with best practices in place,
companies will sometimes need to end employment relationships, including those
with workers who are nearing retirement. Be mindful of retirement-benefit
eligibility when making decisions and crafting severance packages. While a
company must strive for uniformity in policies and procedures across all levels,
particular risks have to be identified and factored into consideration when
terminating older workers.
Workforce Management Online, July 2008
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