HR Question:

Our company has mandatory retirement requiring our employees to retire at age 67. We don’t discriminate…everyone is required to retire. I had someone “push back” when I started discussing their retirement saying I was being discriminatory. I told them everyone is asked to leave at age 67. Is that a problem?

HR Answer:

Well… it has the potential to be a problem. The Age Discrimination in Employment Act (ADEA) typically prohibits what they call “involuntary retirement” or in this case “mandatory retirement.” Requiring retirement is viewed as an involuntary termination and can lead to charges of age discrimination. As with most areas of human resources, there are exceptions. We will highlight a few exceptions below and share some points to consider moving forward.

Is Age a Bona Fide Occupational Qualification?

There are general exceptions if you can prove age is a Bona Fide Occupational Qualification (BFOQ) necessary to perform the duties of the position. To do this, employers are required to first show that the duties are necessary for the job. Secondarily, employers must show that the individual’s age prohibits them from performing the qualifications safely and/or efficiently. Usually, the issue of safety is paramount in this decision-making.

BFOQ is typically hard to prove. The majority of roles that have been able to meet this qualification and require mandatory retirement include roles in public safety or public transportation. For example, the Federal Aviation Administration currently mandates that commercial airline pilots employed by airlines certified under 14 CFR Part 121 cannot employ pilots after they reach the age of 65.

Is the employee a “Bona Fide Executive” or “High Policy Maker”?

The ADEA specifically defines an allowance for mandatory retirement for those deemed a “Bona Fide Executive” or “High Policy Maker.” These two defensible reasons can be a little easier to prove and are clearly defined by the Equal Employment Opportunity Commission (EEOC).

A “Bona Fide Executive” as defined by the EEOC is someone who:

• Manages the company or organization or a subdivision of the company or organization;
• Directs the work of at least two other employees;
• Has the authority to hire or terminate other employees or has significant influence in such decisions;
• Has and uses discretionary authorities; and
• Spends no more than 20 percent of his or her work time on activities unrelated to the activities required herein (40 percent for retail or service companies).

The EEOC defines a “High Policy Maker” as someone who is a top-level employee (and not a Bona Fide Executive) who plays a significant role in developing and implementing corporate policy.

If you can show that the individual fits one of those categories, you could consider mandatory retirement for the individual. We also recommend that you consult your legal counsel in your decision-making process.

Consider the Benefits of a Multigenerational Workforce

Overall, it is important to analyze and challenge the idea of mandatory retirement for employees, even if the reasons you are considering it are defensible. Age is simply that – an age. Today, we have five generations in the workforce working side by side. Each generation brings a unique perspective and value to the work. Consider what this multigenerational approach can bring to your workplace.

From a litigation risk perspective, it is also important to note that there continues to be an increase in age-related discrimination claims. In a recent Kiplinger article, it is reported that 78% of older workers reported seeing or experiencing age discrimination on the job.

Employers need to value the work of all employees, and age should not be a defining factor in most instances of retention. Be sure you are doing the right thing, for the right reasons, when considering any policy that is based on age.

Thank you to Patti Dunham, MBA, MA, SPHR, SHRM-SCP for updating this HR Question of the Week.

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