Is It OK — or Even Legal — to Fire Longtime Employees?

Photo (cc) by hnnbz

You’ve got to hand it to Gene Marks, a consultant and author, for saying what everyone else has been thinking: that replacing loyal employees with younger, cheaper workers is the way American business gets done. In fact, says Marks in his provocative Fortune column: “It’s the right thing to do.”

But is he urging employers to break the law? Some experts think so, but I caution you: Employment law is tricky.

Slate columnist Helaine Olen called the story to my attention (OK, all social media’s attention) this weekend by saying, “Does @FortuneMagazine know that firing someone to hire a ‘younger’ employee is age discrimination?”

I contacted Marks to ask for further clarification of his comments. I haven’t heard back yet.

Here’s the scene-setter:

“Frank has been with us for more than 20 years,” writes a (hopefully) fictitious writer in Fortune’s “Practically Speaking” column, answered by Marks. “He works in the warehouse and has done a good job for us. I like him. But, to be honest, for the work he performs I could easily replace him someone younger and … cheaper. Would it be wrong to let him go?”

After pointing out all the reasons older workers are expensive, Marks eases the conscience of the writer behind Frank’s firing squad in his piece, headlined “Why you’re not a jerk for firing a longtime employee.”

“No you’re not an awful person,” he writes. “Your job is to make the decisions. The hard decisions that are necessary to grow your business and ensure it as a going concern for years to come.”

What the law says

Here’s the thing: It’s illegal to fire someone because they are older. We all know it happens all the time, but it’s against the law. Has been since at least 1967, when Congress passed the Age Discrimination in Employment Act of 1967 (ADEA). It applies to companies with more than 20 workers and to employees who are 40 or older.

The U.S. Equal Opportunity Commission gets about 20,000 complaints alleging age discrimination every year. Here’s an example of what happens when an employer decides to ignore the age discrimination law: Shoe retailer DSW agreed to pay $900,000 in 2014 after it was sued by the EEOC, which alleged the retailer picked older workers to fire during a reduction in force, and even fired managers who balked at firing older workers. (The firm denies the allegations.)

Age discrimination cases can be hard to win, and they are even harder to win since a 2009 U.S. Supreme Court ruling (known by lawyers as the “Gross case”) created a really high bar for accusers to clear: They must prove not only that age was a factor in termination, but that it was the most important factor. This is expressed by the phrase, “but for” as in, “but for the person’s age, he or she wouldn’t have been hired/fired/interviewed,” etc.

I’m not a lawyer, and I’m certainly not an employment lawyer, but it’s easy to imagine Frank’s imaginary employer trying to beat back a discrimination case by arguing that age wasn’t the principal reason for his firing — it was all about the money. It’s not illegal to replace someone with a cheaper employee, right?

Maybe, maybe not.

It depends

For a little more clarity, I turned to Daniel Schwartz, an employment lawyer in Connecticut. As is often the case in law, his answer was: “It depends.” He felt so moved by my question, he actually wrote a blog post with his answer. You should read the whole thing,

I’ll summarize here: Frank’s boss would probably be in big trouble because there’s already a paper trail explicitly mentioning age. But I’ll let Schwartz take it from here:

There have already been cases that talk about similar scenarios. In one case, a supervisor told an employee that he was “looking for younger single people” and that, as a consequence, the employee “wouldn’t be happy [at the company] in the future.” In other cases, comments about replacing workers with “younger, cheaper” ones can also be used to support an age discrimination claim.

Even without the comment, a replacement by an employer of an employee with someone significantly younger can give rise to an inference of age discrimination.

So, case closed?

Well, maybe in this instance, since the employer already has this “younger” notion embedded in its decision-making process.

But suppose the employer is looking to cut costs and wants to replace higher salaried workers with cheaper ones: Can it do that?

Well, after the court’s decision in Gross (which I discussed way back here ): Maybe. The court there held that age must be the decisive factor in the employer’s decision and that “but for” the employee’s age, the employer would not have made the same decision.

Thus, an employer who believes it can get the same work done by someone at a lower salary may sometimes survive an age discrimination claim — so long as age doesn’t factor into the decision.

What’s sad about this analysis is that, of course, clever employers can build a case against the older workers they want to replace with cheaper, younger workers and simply be smart enough to never mention age.

Very, very few employers would be as stupid as Frank’s employer here, and put that “I could easily replace him someone younger and … cheaper” in writing anywhere. So only the stupid companies that commit age discrimination get caught, right?

Schwartz disagrees with that sentiment, too. Not long ago, the New York Times wrote a long piece lamenting the state of age discrimination protection.

Schwartz wrote a rebuttal. He pointed out that there wasn’t a dramatic drop in age discrimination cases filed with the EEOC, or in EEOC monetary benefits returned to workers, after 2009. In fact, last year, nearly $100 million in “monetary benefits,” the highest amount ever, flowed to workers who alleged to the EEOC they faced age discrimination. It’s more than benefits won on race discrimination allegations to the agency. (It’s about seven times the benefits won in pregnancy discrimination cases, a topic for another time.)

The EEOC age discrimination award total includes settlements, merit resolutions and other EEOC determinations … but does not include amounts won in litigation. And it does not include settlements offered by employers to workers who merely threaten to file an EEOC complaint.

So what does this mean for you? If you are over 40 and get fired and replaced by a younger, cheaper worker, it really is a good idea to talk to an employment lawyer.

What’s your experience with age as a factor in the workplace? Share with us in comments below or on our Facebook page

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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