Statement of Rae T. Vann, General Counsel, Equal Employment Advisory Council

Meeting of July 15, 2009 – Age Discrimination in the 21st Century-Barriers to the Employment of Older Workers

Acting Chair Ishimaru, Acting Vice Chair Griffin, Commissioner Barker, and colleagues: On behalf of the Equal Employment Advisory Council (EEAC), I appreciate the opportunity to appear before the Commission to discuss workplace programs and policies used by EEAC member companies to eliminate bias and promote nondiscrimination and equal employment opportunities for older workers.

Introduction

EEAC is a nationwide association of employers organized in 1976 to promote sound approaches to the elimination of employment discrimination. Its membership comprises a broad segment of the business community and includes approximately 300 of the nation's largest private sector corporations. EEAC's directors and officers include many of the industry's leading experts in the field of equal employment opportunity. EEAC's members are firmly committed to the principles of nondiscrimination and equal employment opportunity.

All of EEAC's members are subject to the federal Age Discrimination in Employment Act (ADEA) and thus are well familiar with their obligation to avoid practices that intentionally discriminate on the basis of age or which, as applied, result in significant adverse impact on older workers. While compliance-minded, EEAC's member companies also are among the most proactive in seeking ways in which to eliminate age bias and other forms of invidious workplace discrimination.

Given the reality of an aging U.S. workforce and a potential "skills gap," for instance, many EEAC member companies are identifying and implementing practices designed not only to ensure that the knowledge and expertise of workers approaching retirement is passed along to less experienced staff, but also to retain older workers seeking to remain in the workforce past traditional retirement age and to attract back to work recent retirees with skills sets that are difficult to replace — under terms and circumstances that meet the needs of worker and the company alike.

My remarks today will focus on those best practices and initiatives being undertaken by some large, private sector employers to ensure that the talents of older workers are being leveraged in a way that benefits both the employees and the companies for which they work. Strategies such as those I will describe in my testimony promote equal employment opportunities for older workers by breaking down stereotypes that, if left uncorrected, can lead to unlawful bias and, in turn, less efficient and productive workplaces. I will conclude by describing some of the efforts our member companies make to ensure their reductions-in-force are legally compliant and executed in a manner that does not unfairly disadvantage older workers as a group.

In preparing today's testimony, we asked for the input of EEAC member companies regarding the types of practices and initiatives they have undertaken to ensure that older workers are treated fairly in all aspects of their jobs. The helpful feedback they provided, as I will further discuss in detail, centered around attracting and retaining the best-qualified employees through, for instance, flexible work arrangements and retiree hire-back programs; and facilitating a smooth transition to retirement through formal retention and/or phased retirement programs.

Offering Flexible Work Arrangements

A number of EEAC member companies offer various flexible work options designed to assist employees in balancing the demands of work with family and personal responsibilities and preferences. These programs benefit many employees of different ages, but seem to be particularly beneficial in attracting and retaining older workers, who for a number of reasons may wish to retain more control over their time and schedules than was available earlier in their careers. Since corporate workplace flexibility programs are intended specifically to provide these types of options, they can be particularly useful tools for keeping talented workers — and attracting new ones with highly sought-after skills — who may be approaching retirement age and thinking about leaving the workforce.

The types of workplace flexibility offered to employees may vary in some ways from company to company, but whether and to what extent they are available typically will depend on the type of job/work being performed, as well as the company's business needs and the particular needs of the employee. Flexible work arrangements often include adjustable work hours, modified work weeks and/or telecommuting options that may be attractive to older workers who for financial reasons wish to continue to work at or near full-time, but for personal reasons want to scale back on how much time is actually spent at the workplace.

Retiree "Hire-Back" Programs

Some EEAC member companies have established programs designed to attract recent retirees back to work to perform special projects that take advantage of unique skills or institutional knowledge that is lacking among the current workforce. One company, for instance, offers recent retirees (who have been separated from employment for at least six months) the opportunity to return to the company to consult on an as-needed basis. The rehired pensioner remains a "retiree" and thus continues to receive company-provided retiree health benefits, but is limited by agreement to a specific number of hours that may be worked in a given timeframe.

Another company has a retiree bring-back program designed, in part, to maintain longstanding client and business relationships that were cultivated by the retiree during his or her employment. The returning retiree might assist his or her successors to better understand key business relationships and what it takes to maintain them, thus helping to ensure a smooth transition for both the client and the company representative.

Phased Retirement Programs

Among the strategies that companies are developing to manage impending labor and skill shortages brought on by the retirement of older workers are flexible or phased-in retirement arrangements. Companies see such arrangements as a way of combating the sometimes perceptible skills gaps that result when too many experienced older employees retire before fully qualified replacements are ready to step in.

The idea behind phased retirement is to enable older workers to begin working a reduced schedule while drawing both a partial pension (or other retirement benefits) and a partial salary. The concept of phased retirement is popular both with workers who would like to scale back without leaving the workforce entirely and with employers who are concerned about the brain drain and want to keep experienced workers at least on a part-time basis.

Leave Considerations

In addition to concerns over "brain drain" issues associated with the full or partial retirement of older workers, EEAC member companies also are aware of the reality that caregiver responsibilities increasingly are falling on both men and women workers, particularly those within the "sandwich generation" (described as those between the ages of 30 and 60 who are raising children while caring for aging parents).

To help employees better manage their caregiver responsibilities, many EEAC member companies offer generous leave policies in addition to the minimum leave entitlements available to eligible employees under the federal Family and Medical Leave Act (FMLA). These policies may enable employees to use sick or personal leave to care for seriously ill family members, purchase additional vacation time, or use other leave so as to address pressing family and personal medical needs. Leave policies such as these can be very beneficial to all employees, but to older workers in particular, given the unique caregiving responsibilities faced by many within the "sandwich generation."

Legal and Practical Considerations for Managing Reductions-in-Force

Let me turn now to the legal and practical considerations for managing reductions-in-force, and how EEAC's member companies manage them. The ADEA bars employers from discriminating against workers age 40 and older. In Smith v. City of Jackson, the U.S. Supreme Court for the first time recognized a disparate impact cause of action under the ADEA under which the application of a policy, practice or procedure with statistical adverse impact on older workers will be unlawful unless the employer can justify the disparity based on "reasonable factors other than age."

The Court further interpreted this principle in Meacham v. Knolls Atomic Power Laboratory, holding that in ADEA disparate impact cases, the employer, not the employee, bears the ultimate burden of proving "reasonableness." Both the City of Jackson case and the more recent ruling in Meacham highlight the importance, from a compliance perspective, of ensuring that reductions-in-force are undertaken with care so as not to discriminate on the basis of age.

Because reductions-in-force often (though not always) affect large groups of employees, poorly executed programs can lead to potential class liability and unwanted employee relations issues, with those selected for layoff feeling unfairly selected and/or those selected for retention worrying about their long-term job security. In addition, the public announcement of worker layoffs can affect customer/client/investor confidence.

Proactive employers such as EEAC members that seek to implement ADEA-compliant reductions-in-force thus often explore and resolve the following issues:

Whether the company has developed and documented a sound business justification, including its reason(s) for the force reduction and goals to be attained;

Whether the company developed job-related, nondiscriminatory assessment/selection criteria;

Whether the company has analyzed preliminary selections for potential adverse impact;

If adverse impact exists, whether the selections can be justified based on reasonable factors other than age; and

Whether proper documentation exists to support the reduction-in-force decision.

In order to reduce the potential legal liability and market impact a force reduction can have on a business, EEAC member companies recognize that such decisions must be planned, designed and implemented in a thoughtful and deliberative manner.

Conclusion

EEAC commends the Commission on its efforts to address workplace bias issues affecting older workers, and we appreciate the opportunity to provide the agency with our thoughts on employer best practices. Thank you.