HR Management & Compliance

Big No-No: Questioning Employees about Their Retirement Plans

Q We have an employee who is about to turn 65. He has been with the company about 10 years. He is very negative about the organization and has created the same negativity in his two direct reports. In all honesty, we would like him to retire because of the toxic attitude. May we ask him about his retirement plans?

A No—asking employees about their retirement plans is not a good idea. While South Dakota doesn’t have any state statute prohibiting discrimination on the basis of age, the federal Age Discrimination in Employment Act (ADEA) is certainly alive and well. In fact, the ADEA, signed into law by President Lyndon B. Johnson, has just celebrated the 50th anniversary of its enactment.

The ADEA’s purpose is to ensure that older workers receive equal and fair treatment in the workplace and that employment decisions aren’t made on the basis of someone’s age. The law covers applicants or employees who are 40 or older and applies to private employers with 20 or more employees, or the federal government or any local government. Under the law, there is no mandatory retirement age.

In the United States, although nearly 10,000 Baby Boomers (individuals born between 1946 and 1964) are leaving the workforce every day, they still make up America’s largest generation. The Millennial generation (those born between 1981 and 1996) is predicted to become America’s largest generation in 2019 as their numbers swell to 73 million. While Millennials make up the largest component of the U.S. workforce, Baby Boomers still account for a quarter (25 percent) of U.S. workers to date. So as the country faces a rapidly aging population, employers need to be more aware than ever about age discrimination and educate themselves on proper ways of dealing with employee (and applicant) issues to avoid running afoul of the law.

Be careful not to ask any employee (or applicant) about when or at what age he plans to retire. This will violate the ADEA. In addition, employers should know not to state that they want to hire younger employees for the job or that they believe someone is getting “too old” or is “slowing down.” Such remarks can also provide evidence of age discrimination. And while I indicated in the September 2017 South Dakota Employment Law Letter that a CEO’s statement that the company wanted a “new face” wasn’t enough in the 8th Circuit (of which South Dakota is a part) to establish direct evidence of age discrimination (the court stated the comment was “facially neutral”), organizations should still be very careful about the words they choose and the actions they take. (See “CEO’s ‘new face’ comment wasn’t a mask for age discrimination” on pg. 4 of that issue.)

You shouldn’t ask your employee about his retirement plans. This is true regardless of whether there’s any underlying performance or behavioral problem. Instead, address the behavior and negativity the employee is creating and how it affects his performance and the working environment for his subordinates, not to mention his department and the overall company. You can also point to any company policies on the point, such as respectful behavior in the workplace and potentially insubordination. The employee can possibly be disciplined for his behavior.

Any discussions with employees about their plans for staying with (or leaving) the company should be framed in a way to address future plans with the company or what the employee’s career plans are. It’s perfectly acceptable to ask for the employee’s one-year, two-year, or five-year career plan, goals, and objectives.

Bottom Line

Although there’s no South Dakota law prohibiting age discrimination, the federal ADEA is very much alive and kicking. Be careful to avoid discussions about retirement and other overt or even subtle statements that would indicate an employment decision is being made based on age. Instead, make decisions based on the individual’s qualifications for the job and his performance. With 25 percent of the U.S. workforce over the age of 54, you should be looking for ways to hold onto this group of experienced workers. However, when there’s a legitimate performance or behavioral concern, keep age out of it and address it according to your established company policies.

Jennifer Suich Frank is an attorney with Lynn, Jackson, Shultz & Lebrun, P.C. You may contact her by e-mail at jfrank@lynnjackson.com.

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