An Alternative to Voluntary Retirement Programs

I am pleased to share my latest post to The SHRM Blog.

Under federal and state laws (most or all), employers can have voluntary retirement programs. Of course, there is much litigation on whether and when an employee’s decision to retire is truly voluntary.

However, even if there is no pressure placed on an employee, think about the message that the program sends and/or likely will be heard as sending: we want to get rid of mature employees. This places “age in the air” and can be used to argue age bias when an older employee later is discharged or laid off (even where there is no bias).

Here’s the argument: you tried to incent me to leave; when that failed, you removed me involuntarily. And, how will a jury react?

Jurors have only one common denominator: everyone on the jury hopes they have gift of longevity; that is, that they, too, get older. So there may be sympathy and empathy for the mature worker.

There is an alternative, and safer, approach: a voluntary severance program that is offered to all or groups of employees regardless of age. Older employees with more seniority usually will be eligible for more by virtue of their seniority but the program is not aimed at them.

But what if someone applies and you want to say “No?” No material worries (absent saying “No” in a discriminatory way).

If a voluntary severance plan is properly drafted and distributed in accordance with ERISA, an employer should be able not only to exclude from consideration certain groups, positions etc., but also to reserve the absolute right to say “No” to any particular employee in a non-excluded position who applies for an exit package if the employer’s concludes that the employee’s departure is not in the employer’s best interests.

So this year, the 50th Anniversary of the ADEA, I encourage you to think beyond whether a voluntary retirement program is lawful. I ask you to think about the message it sends.

It is not only a legal issue. It is also a cultural one. What message do you want to send to workers with the experience you need to compete?

This blog is not legal advice, should not be construed as applying to specific factual situations or as establishing an attorney-client relationship.

 

Jonathan A. Segal

About Jonathan A. Segal

Jonathan’s preventive and corrective approach to employment/HR issues includes counseling, policies, training, agreements and audits. Areas of substantive focus include, for example: gender equality, wage and hour compliance, social media and employee engagement. When Jonathan isn’t counseling employers or dedicating his time to SHRM and the HR community, he can be found volunteering his time and efforts to animal rescue. Jonathan is also mad about Mad Men, writing and speaking on the employment issues arising out of the MadMen Era! Follow Jonathan on Twitter @Jonathan_HR_Law.