Bringing Global Age Discrimination Provisions into Compliance

For a U.S.-based multinational, often the toughest specific issue in crafting any international equal employment opportunity (EEO) compliance initiative is figuring out what to do about age discrimination. U.S. multinationals’ cross-jurisdictional EEO provisions tend to prohibit discrimination and harassment (and sometimes promote diversity) based on specific lists of protected traits, usually including gender, race, national origin, religion, disability—and age. While listing most of these traits in a multinational’s cross-border EEO initiative raises few eyebrows, the mere mention of the word “age” in a global anti-discrimination provision causes tough problems that too many American multinationals overlook.

Our discussion here focuses on the apparently benign, seemingly narrow but surprisingly intractable problem of whether, or how, an American multinational can afford to mention the word “age” in a global anti-discrimination policy, code of conduct clause or training module. Our discussion breaks into three parts: the problem (widespread age discrimination around the world); the challenge (crafting a cross-border age discrimination provision); and the solution (bringing international age discrimination initiatives into compliance).

Widespread Age Discrimination Around the World

The United States imposes the world’s toughest and best-developed laws against discrimination in employment, but most other countries do have laws that purport to ban employment discrimination. Other countries’ discrimination laws, though, differ from American discrimination law in significant ways. One of the starkest differences between American-style discrimination laws and overseas employment discrimination laws regards age discrimination. The U.S. Age Discrimination in Employment Act (ADEA), passed in 1967, is the world’s most robust, well-developed and frequently invoked age discrimination law, and it has few real counterparts overseas. Many other countries do not even bother to ban age discrimination in employment.

Even the growing group of jurisdictions that now do outlaw age discrimination tend to have laws that by U.S. standards are weak, poorly conceived, lightly enforced and riddled with exceptions. Most jurisdictions that now purport to prohibit age discrimination impose no minimum protected age (age 40, under U.S. law) nor do they let employers favor the old over the young, as the U.S. ADEA does. In theory this means foreign age laws are even broader than America’s ADEA, but in practice this means foreign age laws are broad to the point of being blunt: Because everyone is some age, foreign age discrimination laws protect everyone. In an age-related dispute involving applicants or employees of different ages, everybody gets to claim to be equally protected. Foreign age laws favor 20-year-olds as much as 41-year-olds as much as 72-year-olds. Therefore, foreign age laws can forbid employers from favoring older applicants and employees by offering the seniority-enhanced benefits that American employers commonly use—service-enhanced pension benefits, severance pay, and vacation benefits, as well as age-plus-service-based early retirement offers.

Not only do foreign legal systems tend either not to impose any age discrimination laws or to have blunt age laws, many jurisdictions outside the United States actually enshrine age-discriminatory concepts right in their employment laws. For example, laws in Bahrain, Oman and many other countries force employers to give all employees written employment agreements that must list employee date of birth. Italy, Germany, Turkey and many other countries let employers use the fact that an older worker has vested in social security (“state pension”) to help justify a dismissal or layoff.

That said, the global trend is in the direction of better protections against age discrimination. Some common-law countries including Australia, Canada and New Zealand passed tough age laws some years ago, and now an ever-increasing pool of civil law jurisdictions, including Costa Rica, Israel, Mexico and all the Continental states of the European Union (EU) purport to outlaw “age” discrimination. As to Europe, EU Directive 2000/78 bans discrimination on “age” as well as on four other grounds, and each EU state was supposed to have passed an age discrimination law by December 2006. Still, in practice most countries tolerate what to Americans look like blatantly ageist practices including, in particular, mandatory retirement and age caps in recruiting.

The United States and Canada ban mandatory retirement because firing someone for celebrating a certain birthday is indisputably a blatant act of age discrimination. But most other countries—even lots of those that purport to impose age discrimination laws—rationalize (or ratify employer rationalizations for) mandatory retirement in many contexts. For that matter, even trade unions overseas often buy in and enshrine mandatory retirement in collective bargaining agreements.

In addition to mandatory retirement, another pervasive and often perfectly legal ageist practice overseas is imposing age caps in recruiting. Employers abroad actually pay websites to post openly discriminatory job ads along the lines of “Wanted: Brand Manager ages 30-35” or “Seeking trainees up to age 28.”

Crafting a Cross-Border Age Discrimination Provision

In their global discrimination policies, codes of conduct and training modules, American multinationals tend to proclaim zero tolerance for age (and other) discrimination across their worldwide workforces. But making this claim globally can be a real problem because of the difference in social perspectives, because foreign laws ostensibly prohibiting age discrimination vary widely and allow exceptions, and because many American multinationals’ own foreign affiliates persist in embracing mandatory retirement, age caps in recruiting and other ageist practices.

We already noted that every multinational needs to comply both with local discrimination laws and with its own global policies against discrimination. Outside the United States, complying with the age discrimination laws of any given jurisdiction tends to be fairly straightforward at least for on-the-ground local management and human resources professionals. For American multinationals, the cross-border age-discrimination compliance challenge is how to craft and enforce a single, workable, cross-border age discrimination provision like a policy, code of conduct clause or training module. Merely to mention the word age in a global provision risks liability exposure even in jurisdictions without age discrimination laws, because overseas, an employer’s internal rules tend to be enforceable against the employer as part of each employee’s employment contract. Outside employment-at-will, a so-called “employment-at-will disclaimer” written into a human resources policy is, obviously, unenforceable. This means a multinational that issues global age discrimination provisions may someday have to answer, in court, to overseas applicants and employees claiming the organization denied them rights under its own provision. In one case some years ago, a group of Chinese forced retirees sued in a Chinese labor court alleging that while their forced retirements did not violate any Chinese statutory law, the employer, when it retired them, breached its own guarantee of freedom from workplace age discrimination.

It would seem that any American multinational voluntarily claiming, in its own global anti-discrimination provision, that it does not tolerate age discrimination must have processes in place to comply with its own internal rule. But too often this assumption is wrong. Many American multinationals suffer from a disconnect between idealistic headquarters-drafted anti-ageism pronouncements and entrenched ageist practices overseas. A little secret in global HR administration is that the overseas operations of even U.S.-based multinationals commonly impose mandatory retirement and cap job eligibility at specified ages. A German employment lawyer once estimated that more than 90 percent of American employers in Germany write mandatory retirement clauses right into their local German employment contracts. These days at U.S. organizations’ European offices mandatory retirement and age-capped recruiting may be on the retreat, but many U.S. multinationals still use these practices widely across Africa, Asia, India, Latin America and the Middle East.

In addition, ageist practices abroad threaten to implicate an entirely separate danger: adverse consequences in a U.S. domestic age discrimination lawsuit. What if a U.S. domestic age discrimination plaintiff trying to prove systemic age bias (such as in a U.S. class action) tried to convince an American judge to order discovery, or to admit evidence, about a multinational defendant’s overseas mandatory retirements or age-capped recruiting, on the theory that any multinational that forcibly retires its own overseas staff and disqualifies its own overseas applicants from jobs because of their ages violates its own global age discrimination provision—and likely harbors ageist animus?

Bringing International Age Discrimination Initiatives Into Compliance

Any multinational faces a problem if it has issued a global anti-discrimination provision, policy, code of conduct or training module that mentions the word age while its own overseas affiliates still impose mandatory retirement, age caps in recruiting or other locally acceptable ageist practices. Can such a multinational possibly come into compliance with its own global anti-age-discrimination rule? The good news: the answer is yes, there is a solution here, if the multinational is willing to take four steps:

Step 1: Assess noncompliant practices abroad. Human resources professionals and employment lawyers at a multinational’s U.S. headquarters often have no idea that their own organization’s overseas affiliates openly discriminate on age. Find out whether your overseas affiliates impose mandatory retirement, age-capped recruiting or other ageist practices. The answer may surprise you. Some progressive multinationals have made headway stamping out age discrimination internationally, but ageist practices remain surprisingly common in many markets around the world, often unbeknownst to U.S. headquarters.

Step 2: Align the global prohibition with actual practices. Where headquarters imposes a global provision that purports to ban age discrimination, but where headquarters discovers that its own overseas affiliates may be violating that provision, headquarters needs to select one of five possible strategies for getting into compliance:

• Stamp out mandatory retirement, age-capped recruiting and other noncompliant practices worldwide by better policing overseas affiliates.
• Write an express exception into all global age discrimination prohibitions that excludes mandatory retirement and age caps in recruiting—recognizing, of course, that this exception all but swallows up the global anti-age-discrimination rule.
• Remove from the global policy’s list of protected traits all mention of the word age.
• Remove lists of protected traits from the global policy entirely, including references to age, replacing those lists of traits with a general statement that the organization tolerates no illegal discrimination under applicable law.
• Replace the global discrimination policy with tailored local-country policies which, where appropriate and legal, omit references to age discrimination.

Step 3: Police outsource partners. Many multinationals have contractually bound their overseas suppliers and outsource service providers to supplier codes of conduct that are completely separate from their internal ethics codes of conduct. Check the anti-discrimination clause in any supplier code. If a supplier code expressly prohibits age discrimination—as many supplier codes do—then monitor whether outsource partners actually comply with this particular prohibition. If suppliers flout the age prohibition by imposing mandatory retirement or age-capped recruiting, then either police suppliers accordingly or edit the supplier code to eliminate the reference to age.

Step 4: Ensure practices abroad comply with local age discrimination laws. A completely separate global age discrimination problem is how to comply with emerging foreign age discrimination laws like those in Costa Rica, Israel, the European Union and Mexico. In discussing how U.S. age discrimination laws tend to be more strictly enforced and less riddled with exceptions than age laws abroad, we mentioned that age laws abroad tend to be, in theory, much broader than the U.S. ADEA. This means that many ADEA-compliant practices common in the United States violate these broader foreign age laws. For example, overseas age discrimination laws that prohibit discrimination against the young can stop an employer from imposing minimum experience levels in recruiting. And overseas, lockstep and seniority-linked compensation and vacation benefits can be suspect, as can linking severance pay to years of service and offering voluntary early-retirement incentives to older staff.

Donald C. Dowling is a partner in the New York office of international law firm White & Case.

Republished with permission. © 2013 White & Case. All rights reserved.

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