Older Workers: Running to the Courthouse?

By Robert J. Grossman Jun 13, 2008
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HR Magazine, June 2008 Do greater numbers of aging baby boomers result in more age discrimination suits?

In March, when the U.S. Equal Employment Opportunity Commission (EEOC) issued its annual report of private-sector discrimination charges, the data painted a disheartening picture. All told -- with charges based on age, race, disability, sex and gender, religion, and retaliation -- almost 83,000 claims were filed in 2007, representing the largest year-over-year increase since 1993. Age discrimination claims, with 19,103 charges, had the dubious distinction of increasing the fastest, with a caseload 15 percent greater than the prior year.

Reflecting on the numbers, EEOC Chair Naomi Earp voices sharp criticism of employers. "Corporate America needs to do a better job of proactively preventing discrimination and addressing complaints promptly and effectively," she wrote in a press release earlier this year.

But a closer look at EEOC data raises an interesting question about age discrimination: In 2007, according to the U.S. Bureau of Labor Statistics (BLS), 76.9 million people in the workforce were age 40 and older. Last year, 99.98 percent of them did not complain to the EEOC about age discrimination. In contrast, people were more than six times more likely to allege race discrimination.

Tempest in a Teapot?

The relative scarcity of age discrimination cases is perplexing in light of the rationale the EEOC offers for last year's increase in complaints: "The jump in filings may be due to a combination of factors, including greater awareness of the law, changing economic conditions, and increased diversity and demographic shifts in the labor force."

True, age filings did inch up, but in context the overall number remains minuscule. By EEOC officials' own reasoning, if age discrimination exists, cases should be pouring in because:

  • Older workers have AARP, one of the most vocal and influential lobbies in the country, in their corner educating and advocating for them.
  • Workers age 40 and older -- who are protected by the Age Discrimination in Employment Act (ADEA) -- now account for more than 50 percent of the workforce, according to the BLS.
  • The percentage of older workers will continue to trend up as baby boomers move through their work lives.
  • The faltering economy is forcing people who had intended to retire to extend their time at work.

Still, last year only 0.02 percent of workers age 40 and older complained of age bias. So, when it comes to age discrimination, is the EEOC's criticism of employers over-the-top?

Brenda McChriston, SPHR, a principal at Spectrum HR Solutions in Baltimore, formerly an HR executive with an international hospitality company, says so: "Age discrimination is not as rampant as the EEOC suggests. The agency is just trying to beef up its case for what it does. In fact, employers have become increasingly savvy about how to keep their workplaces free from litigation -- and the EEOC numbers show it."

On the other hand, is it really possible for there to be so little age bias and negative stereotyping? Or has the EEOC, the federal government's star player in the fight against discrimination, moved from center court to the sidelines? Belying the EEOC statistics, workers, job seekers and even employers say the scourge of age discrimination continues to be endemic. For example, in a survey of 5,000 workers age 50 and older conducted by Bob Skladany, vice president of research for RetirementJobs.com in Waltham, Mass., 77 percent said they have experienced or observed workplace age bias. In a companion survey of 165 employers, 78 percent indicated that age discrimination was "a fact of life."

These findings parallel a study prepared by RoperASW for AARP, finding that two-thirds of workers ages 45 to 74 had experienced or observed age bias on the job and that 80 percent of job seekers said they were facing age discrimination.

U.S. Workers Age 40 and Older With 2007 Age Discrimination Claims

Why So Few?

Perceptions, of course, are not necessarily reality. But with so many people acknowledging and experiencing bias, why so few EEOC cases? Among the reasons:

  • Older workers are less likely to complain, especially if they're still employed. "People don't want to be at war," says Robert Gordon, a partner at Ropes & Gray in Boston and author of Dealing with Employee Lawsuits: Strategies for the Prevention & Defense of Workplace-Related Claims (Aspatore Books, 2005). "They don't want to paint a bull's-eye on the back of their heads. Perhaps with some justification, they feel [if they make noise] it will place a taint on them. Instead, they suffer in silence."

  • Employers, in the main, are practical and compassionate. They offer face-saving severance tied to counsel-approved releases that ease nonperforming workers out the door. "I find myself advising clients, 'If you want to get rid of Joe Doakes, isn't it better to pay him three months' severance than paying the money to your lawyer?' " Gordon says. "Most people are willing to sign the release if they get financial incentive," says Donna Ballman, an attorney in Fort Lauderdale, Fla., who represents claimants.

  • High-powered executives and star performers trade in the right to sue when they're hired. Employers tie them to binding arbitration clauses in employment contracts, ensuring that discrimination claims will be handled quickly and quietly.

  • The legal process is costly and creeps along. Though lawyers for plaintiffs still take cases on a contingency fee basis, many charge fees, requiring the complainant to pony up at least some money early on. Of course, employers could include arbitration clauses in employment contracts for everyone, but the speed, lower cost and easier access to a hearing might encourage more people to come forward.

Heart of the Storm

Despite the low number of age discrimination claims being filed, HR professionals know too well that quantity means little when you're in the heart of the storm. Even one case wears HR professionals and other managers down. And almost everyone has at least one. "It's a huge drain on an organization's resources; it eats away in terms of morale and productivity," says Michael Buda, SPHR, a consultant in Atlanta who served for seven years as executive vice president of HR and legal counsel at Jackson Healthcare Solutions in Alpharetta, Ga., a health care staffing and software company.

For HR managers, a charge filing from the EEOC marks the onset of a time-consuming, emotionally draining journey. Some insights into the agency will help you prepare -- and endure.

America's Watchdog

EEOC officials have near-impossible jobs. Citizens ask them to serve as champions for workers who see themselves as victims of discrimination, but the agency has limited leverage and resources. For example, it has the power to investigate and conciliate claims, issue findings of "reasonable cause," and bring cases to court. But it lacks authority to render final judgments on the merits of cases or issue financial awards to aggrieved parties.

Hence, EEOC officials learn to cherry-pick from among the charges, looking for obvious winners, especially those that will have an impact beyond the complainant and, perhaps most important, generate publicity, serving as a deterrent.

As complaints flow in, they're assigned to three baskets: Basket A, which contains potentially high-profile claims and those where discrimination seems apparent; Basket B, which holds claims that could go either way; and Basket C, which contains claims that don't look promising. When employers receive a charge, they are not told what basket it falls in. For cases in baskets B and C, the EEOC generally offers parties a chance to settle through mediation.

The EEOC is not the only game in town. Most states and many municipalities have comparable agencies. Their powers vary depending on state laws. Most have work-sharing arrangements with EEOC officials, so claims can be handled interchangeably.

If the complainant has a lawyer, the lawyer often will try to select the forum that can generate the best payday. For example, under the ADEA, when discrimination is found and the employer has acted willfully, the victim may be awarded "liquidated damages" of double the salary he or she lost. In some state courts, such as California and Ohio, the plaintiff may be awarded more-lucrative "punitive" damages.

Toll Booth to a Big Payday

While the EEOC or a state or municipal agency investigates, mediates and conciliates, plaintiffs' lawyers wait in the wings. They can't move cases to court until the agency issues a right-to-sue letter giving them access to what plaintiffs yearn for: a jury of their peers. On occasion, the EEOC may issue a letter soon after the charge is filed. However, it does not have to provide one until the case has been in-house for at least 180 days while EEOC officials investigate "reasonable cause" to suspect the employer has violated the ADEA. In at least one state, Ohio, a complainant can bypass agency consideration and file directly in court, however.

When the EEOC finds reasonable cause, it may go on to federal court on behalf of the complainant, who may choose to also be represented by private counsel. But with only 200 attorneys for the whole country, the EEOC initiates relatively few cases. For example, in 2007, a year when EEOC investigators found reasonable cause in 625 age discrimination cases, the agency's general counsel filed 32 lawsuits, the majority alleging discriminatory discharge. Overall, in 2006, for all types of discrimination, the EEOC filed 383 suits. Of these, 339 ended in consent decrees or settlements and 11 were resolved by voluntary dismissal; of the 33 cases actually resolved by court orders, the EEOC prevailed nine times.

Questionable Victories

When the EEOC finds "no reasonable cause," as it did 10,002 times in 2007, employers feel vindicated. That number represents 62 percent of the age discrimination cases resolved that year. But plaintiffs' lawyers soldier on, undaunted. "Some employers think they're home free, but they're not," says Janet Hill of Hill & Associates in Atlanta, former president of the National Employment Lawyers Association of San Francisco. EEOC lawyers are "hugely overworked, and they don't have the personnel to do complete investigations. The fact that they don't find cause indicates little about the merits of the cases."

Age Discrimination in Employment Act Charges Resolved in 2007

During an EEOC investigation, the employer's response to the charge is not shared with the complainant. Unless attorneys for both sides talk or unless a lawsuit is filed, the complainant's lawyer may not know the strength of the employer's defense. Usually, it's during the discovery phase of a suit that the complainant's lawyer knows for sure whether he has a case worth pursuing.

"If I gave up on every case where the EEOC or a state EEO agency didn't find reasonable cause, I wouldn't have a career in employment law," says Rik Siro, principal at Siro Law in Kansas City, Mo. Siro recently won a $2.7 million court verdict for a client who was denied a reasonable cause finding by the Missouri Commission on Human Rights. "Ninety-nine percent of the time when I take a case, there was no reasonable cause." In 2007, the EEOC found reasonable cause in 3.9 percent of the age discrimination cases investigated.

"Employers always try to make a big deal about reasonable cause findings, but judges usually refuse to admit the result into evidence because juries might think the EEOC [officials] investigate more than they actually do," says Dennis Egan, of The Popham Law Firm PC in Kansas City, Mo. Egan, who has been a lawyer for 30 years, has represented plaintiffs in 92 jury trials, winning 72. He says the EEOC failed to find reasonable cause in all of those cases.

But winning a jury trial is one thing; surviving preliminary steps leading to the trial is another. More than 70 percent of federal cases, including those under the ADEA, never get to a jury; they're dismissed by judges granting motions in favor of the employer. "Most court cases settle," says Condon McGlothlen, a partner at Seyfarth Shaw in Chicago. "Of those that don't, employers usually prevail by winning a motion for a summary judgment. At that point in the process, the judge is presented extensive documentation from both sides and is required to apply it in the most favorable light from the plaintiff's perspective."

In 2007, through settlements and conciliations, the EEOC collected $66.8 million, an average of $4,140 for every claim filed. In addition, the negative publicity that companies suffer after agreeing to high-priced settlements -- rather than litigating -- serve as not-so-subtle signals to employers of what happens when the EEOC puts them under its microscope.

Sources of Complaints

Complaints of age discrimination generally involve hiring, treatment at work, or termination and dismissal. Dismissal cases account for more than half the cases filed and represent the ones most likely to move beyond the agency to court.

"These cases account for 99 percent of the litigation because that's where the money is," Gordon says. "People who don't get hired usually don't bring lawsuits because in those cases all the employer has to show is a more qualified hire. And people who are still working tend to keep their problems to themselves."

Lisa Whitmore, SPHR, director of HR for Johnson Controls in Waukesha, Wis., an automotive products company with 140,000 employees, agrees. "Our cases almost always are termination cases," she says.

Predominantly, age discrimination cases are based on disparate treatment -- requiring the complainant to demonstrate how the employer or its agents acted or failed to act because of age bias or stereotyping, says Dianna Johnston, an EEOC assistant legal counsel in Washington, D.C. The employer must show that reasons for the actions -- right or wrong -- were not tainted by discrimination. Typical termination cases might encompass scenarios such as the following:

  • The person supported a mainframe computer that's being phased out and replaced with a system that he's unable to operate.
  • The pace of work has increased, and the person is unable or unwilling to keep up.
  • The person is not excited about her job; she has lost her spark and is not performing as well as in the past.

Disparate Impact

Beginning in 2005, the U.S. Supreme Court in Smith v. City of Jackson established that the ADEA included a right to sue under a theory of disparate impact. In such cases -- and usually when reductions in force occur -- if the complainant can demonstrate that a disproportionate number of older workers were laid off, the employer is required to demonstrate that the decisions were made for legitimate, nondiscriminatory business reasons.

So far, employers have been successful in defending all disparate impact cases that have gone to trial. "If your business reason is not outright discriminatory, you'll be OK," McGlothlen says. "Since the City of Jackson case, virtually every federal court has bought the defendant's story."

But court decisions don't tell the whole story. At least some cases -- class actions involving hundreds of employees -- have settled without employers admitting liability. One age discrimination case involving 1,697 former employees laid off by Sprint Nextel settled in 2005 for $57 million, with attorneys for the plaintiffs walking off with a cool $19.4 million in legal fees. "When companies are having trouble hewing to the nutty imperative of Wall Street, they have to slash and burn," says Egan, one of the plaintiffs' lawyers. "If you leave management undirected to decide who should stay or go, they'll drift into saying, 'I'm going to keep the person who is blessed with plenty of runway ahead of them.' "

The Economy's Effect

With the economy in turmoil, employment lawyers on both sides report that the EEOC's prophecy of an increase in age discrimination cases may still come true. "There's a lag between the start of an economic downturn and the legal consequences," McGlothlen says. "We're seeing a steady stream of EEOC charges and lawsuits alleging age discrimination and expect to see more."

The prospect of more claims -- no matter the merit -- discourages HR professionals. "The entire organization has to be engaged in pulling together documentation, meeting with counsel, interviewing witnesses, answering interrogatories; it's an enormous burden," McChriston says. "In the end, we win, but when you factor in the lost time and expense, what did we win?"

The author, a contributing editor of HR Magazine, is a lawyer and a professor of management studies at Marist College in Poughkeepsie, N.Y.

Web Extras

SHRM article: Skirt the Maze of Class Actions (Legal Report) 

SHRM article: Eleven Tips for Effectively Handling and Responding to a Charge of Discrimination (Legal Report)

SHRM article: Keep Pace with Older Workers (HR Magazine)

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