Age Discrimination Laws and Their Effectiveness

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Abstract

Legislation prohibiting age discrimination in the United States dates back to the decade of the 160s with the U.S. Congress passing the 167 Age Discrimination in Employment Act (ADEA). Since 167 there have been several amendments that have modified the original act. Enforcement of the ADEA currently resides with the Equal Employment Opportunity Commission (EEOC). Aside from the regulations issues by the EEOC, the effects of age discrimination legislation in practice are strongly influenced by the evolving case law. There does not appear to be a lot of research into the effectiveness of the ADEA. What evidence was found suggested a more positive assessment of age discrimination legislation in the United States than a negative assessment.

Age Discrimination Laws and Their Effectiveness

Legislation prohibiting age discrimination in the United States dates back to the decade of the 160s with the U.S. Congress passing the 167 Age Discrimination in Employment Act (ADEA). Studies have been done to address the effectiveness of age discrimination legislation but questions still remain. These questions are likely to become increasingly important as rapidly aging workforces in the United States and other industrialized countries threatened to vastly increase the social costs of any barriers to older workers employment (Neumark, 001).

Cheap University Papers on Age Discrimination Laws and Their Effectiveness

The goal of this paper is to first trace the history of the key Federal age discrimination legislation and evolving case law. It then moves on to review some of the existing research on age discrimination legislation that addresses the effectiveness of that legislation.

As stated in the introduction, the ADEA was enacted in 167. This law prohibited discrimination based on age, covering those aged 40-65, including discrimination based on age within this protected age range. As originally stated, the purpose of the Act was to "promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; to help employers and workers find ways of meeting problems arising from the impact of age on employment" (U.S. Code, Section 61).

The ADEA was followed by the 175 Age Discrimination Act, which prohibited age discrimination in all programs or activities receiving federal assistance, including state or local government units that receive federal funds (U.S. Code, Section 6101). Important amendments or changes to the ADEA occurred in 178, 17, and 186. The 178 amendments extended the age range for the protected group to between 40 and 70, hence rising the mandatory retirement age to 70 in the process. They also eliminated mandatory retirement for most federal employees. But the 178 amendments also granted some exemptions, delaying the implementing of the higher mandatory age until 18 for tenured employees of educational institutions, and continuing to allow mandatory retirement at ages 65-6 for individuals in "bona fide executive of high policy-making" positions with access to a sufficiently high pension benefit, and for employees with fewer than 0 employees (Equal Employment Opportunity Commission). The ADEA currently covers all private employers with 0 or more employees, state and local governments (including school districts), the federal government, employment agencies, and labor organizations (Spero, 16).

An important change occurred in 17, when the U.S. Equal Employment Opportunity Commission (EEOC) took over administrative responsibility for the ADEA from the Department of Labor and regarding federal employment from the U.S. Civil Service Commission. This was viewed as increasing the power of the ADEA because of the increased resources of the EEOC (EEOC).

The last direct amendments to the ADEA came in 186. These amendments eliminated the upper age range for defining the protected class, and hence resulting in the prohibition of mandatory retirement. This took away the leverage employers had to induce workers to retire. The focus then switched to some extent to financial inducements. These were addressed in the 10 Older Workers Benefits Protection Act (OWBPA), which provided some restrictions on financial inducements to retire (An Act).

Under the current ADEA prohibited actions include using an individual's age as a basis for refusal to hire an applicant, discharge of an employee, or the setting of other conditions of employment like compensation, or terms, conditions, or privileges of employment. The Act also regulates the behavior of employment agencies and labor unions. Among other things, these two types of agents, as well as employers, are prohibited from using any advertisement relating to employment indicating preferences, limitations, etc., based on age (EEOC).

As stated above, enforcement of the ADEA currently resides with the EEOC. Claims of age discrimination may come from individuals or from the EEOC. An individual wishing to pursue civil action on an age discrimination claim must first file a charge with the EEOC or, in states with parallel age discrimination statutes, first file a charge at the state level. The EEOC's or state agency's role upon receiving a charge is to "eliminate any alleged unlawful practice by informal methods of conciliation, conference, and persuasion" (EEOC).

After filing a charge, there are a number of possible outcomes. Depending on the facts of the charge, the EEOC can investigate with different levels of priority. The charge may be dismissed if the EEOC does not think there was a violation of law. If a charge is dismissed, the complainant may still pursue a civil action in court. If the charge is not dismissed, the EEOC can seek a settlement with the agreement of both sides, or the charge may be mediated if both sides are interested. If conciliation or mediation is unsuccessful, the EEOC can decide to file suit. Or, if the EEOC chooses not to file suit, the complainant may still do so (EEOC).

According to the EEOC, possible remedies include back pay; hiring, promotion or reinstatement; front pay, or other actions that will "make the individual whole." It is possible that payment of attorneys' fees, expert witness fees, and court costs may be sought. Finally, compensatory or punitive damages may be sought where a finding supports a charge of intentional discrimination, or if the employer acted with "malice or reckless indifference," although punitive damages cannot be sought from state and local governments.

Aside from the regulations issued by the EEOC, the effects of age discrimination legislation in practice are strongly influenced by the evolving case law. This over time helps to establish the types of charges that will be found in violation of the ADEA, the types of cases that may be brought, and the burden of proof.

In ADEA cases, the plaintiff's ultimate burden is to prove that the action of the employer was taken on the basis of age, which does not require that age was the sole factor, but was the determining factor (EEOC). As in other areas of discrimination, this can be proven in one of two ways. The first is to prove "disparate treatment" which was established in International Board of Teamsters v. United States (177), which requires proof that an employer intentionally treated someone less favorably because of his or her age. Disparate treatment happens when employers treat applicants or employees differently because they are part of a protected class, which may be proven by either direct or circumstantial evidence (Direct Treatment, 18). In the absence of proof of discriminatory intent, the precedents established in McDonnell Douglas v. Green (17), and Texas Department of Community Affairs v. Burdine (181) are used to determine whether intentional discrimination has occurred. These two cases established evidence and burden of proof for intentional discrimination.

The second way is to prove "disparate impact. Disparate impact happens where an employer is not motivated by discriminatory intent but because of using an employment practice that appears neutral has an unjustified adverse impact on members of a protected group (Disparate Impact, 18). This was established in Griggs v. Duke Power Co. (171).

The case law surrounding the ADEA has had to wrestle with the unique problem of allowing employers to pay some attention to age. The ADEA only prohibits "arbitrary age discrimination." Specifically, the ADEA allows employers to take actions "where the differentiation is based on reasonable factors other than age…" (EEOC). One example of this is Mastie v. Great Lakes Steel Corp. (176). The court ruled that an employer could look at salary and fringe benefit costs in determining which workers to dismiss in a "reduction in force," as long as the decision is "predicated upon an individual as opposed to a general assessment" (Bolick, 187). Another case example focusing on the salary issue was Metz v. Transit Mix, Inc. (187). This case was cited in Aaron Taylor, Jr. v. Oakbourne Country Club and Michael Byrne (00). The court ruled in the Metz v. Transit Mix, Inc. case on the question of the "excessive salary" of an older worker, deciding that allowing the company to replace the employee based on the higher cost of employing him would violate the intent of the ADEA. The court raised two issues. First, the plaintiff's salary was based directly on years of service, and second, the defendant did not offer to reduce the salary paid to the plaintiff.

Another issue in ADEA case concerns pensions status. In Hazen Paper Co. v. Biggins, the U.S. Supreme Court noted that the ADEA was concerned with employment decisions based on age stereotyping, but allowed decisions to be based on factors like seniority that may be strongly correlated with age. It instructed the lower courts to look for evidence of whether age actually motivated the decision.

The effectiveness of age discrimination legislation in the United States does not appear to have been widely researched to date. The following research offers evidence on the effects of age discrimination legislation on labor market outcomes, research on the existence of evidence consistent with age discrimination in the post-ADEA era, and evidence bearing on some central critiques of the ADEA.

The direct evidence on age discrimination legislation tries to find out the direction and size of the effects of the legislation on labor market outcomes that ought to be affected. Neumark and Stock (17) studied the effects of age discrimination by taking advantage of the existence of anti-discrimination statutes in some states prior to the ADEA. Specifically, they looked at changes in employment rates of older protected workers relative to younger workers. Using Census data from 140, 150, 160, 170, and 180, and treating the federal law as binding or enforced only after 17 amendments, Neumark and Stock found that age discrimination laws boosted employment rates of protected workers under age 60 and over by a substantially higher six percent.

An additional important part of the ADEA is its ban of mandatory retirement. Neumark and Stock attempt to apply the same strategy to estimating the effects of the prohibition of mandatory retirement. However, because they did not focus on the very oldest workers, and because few states banned mandatory retirement prior to the federal legislation, they have very limited information on the basis of which to estimate the effects of banning mandatory retirement. They do not find statistically significant evidence that banning mandatory retirement boosted employment of older workers. This may be because the data is not informative, or it may be because employers are able to induce retirement at given ages even without mandatory retirement.

Ynon Gablinger, in an article titled, The Impact of Anti-Discrimination Legislation A Survey (00) discussed a similar study done by Scott Adams in 000. Adams used variation in state antidiscrimination laws from 164 to 167, when a number of states enacted anti-discrimination laws. Using the same data, Adams found that age discrimination laws boosted employment of protected workers aged 60 and over by a percent very close to the Neumark and Stock estimates.

A recent study of faculty retirement by Ashenfelter and Card (000) provides perhaps the best evidence to date on the effects of eliminating mandatory retirement, although the evidence is limited to a single, narrow occupation, university professors. The authors do a before and after comparison based on the elimination of mandatory retirement for professors under federal law. The findings, as both the state and federal "uncapping" of mandatory retirement appear to lead to large drops in retirement at ages 70 and 71, and occurring concurrently is large increases in the proportion of 70 year old faculty that are teaching two years later. In addition, however, professors are typically on defined contribution pension plans, which sharply limit the ability of the employer to create financial inducements to retire at particular ages.

Another avenue of research that can be viewed as assessing the effectiveness of the ADEA consists of attempts to test for evidence consistent with age discrimination in the period following the ADEA. The continued existence of evidence following the ADEA does not necessarily imply failure of the law. Anti-discrimination legislation presumably never aims to eliminate all discrimination, but just root out and deter much of it and the worst and costly cases; as an example of this, anti-discrimination laws have typically not applied to the smallest employers (Neumark 001).

Hirsch, et al. (000) presented evidence that for older workers, the likelihood of being hired by a new employer varies according to several factors the compensation level, mix of wages and benefits, skill requirements, working conditions, and hours of work associated with the new employer and job. For example, a firm whose wages are highly correlated with firm specific experience will hire fewer older workers. Firms with these types of compensation structures usually require that skills be developed internally on the job. Moreover, these types of firms tend to encourage earlier exits of older workers through their payments of pension benefits. Occupations that require extensive computer use also tend to hire fewer older workers possibly due to perceptions that older persons have difficulty adapting to new technologies. Finally, jobs that require night and evening shifts hire fewer older workers.

The evidence regarding direct effects of the ADEA points to some positive impacts on older individuals and workers. This evidence bears on one of the simpler but potentially important critiques of the ADEA. In particular, Posner (15) argues that The ADEA acts to reduce hiring of older workers for two reasons. First, according to Posner, the costs of hiring these workers are increased as a result of their new legal rights under ADEA. Second, because damages in hiring discrimination cases are likely to be small, legal action is unlikely to be effective in increasing hiring of older workers. The evidence on the effects of the ADEA on employment and hiring of older individuals does not point to increased hiring; rather, if anything, it points to slightly reduced hiring, consistent with Posner's critique. Overall, though, the evidence points to increased employment of older individuals. This suggests that while the ADEA may have proven somewhat ineffective in addressing the behavior that was most often cited in justifying it, namely hiring discrimination, it nonetheless had positive impacts on older individuals in light of which it must be evaluated.

In conclusion, the United States has a history of legislation prohibiting age discrimination covering more than 0 years. Over that time, there have been cases that have helped shape how the Age Discrimination in Employment Act is put into practice and establish the types of charges that will be found in violation of the ADEA, the types of cases that may be brought, and the burden of proof. There does not appear to be a lot of research into the effectiveness of the ADEA. What evidence I did find suggests a more positive assessment of age discrimination legislation in the United States than a negative assessment.

References

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