The Rise in Post-Retirement Age Employment
By promoting a culture of diversity and respect for all individuals, regardless of age, financial leaders and their HR managers can eliminate or drastically reduce the risk of age discrimination and the associated employer liability.
As the baby boomer generation near or surpass the typical retirement age, what is considered "typical" is being redefined. This shift is bringing employer liability regarding age discrimination to the forefront. According to the Equal Employment Opportunity Commission (EEOC), "the law prohibits discrimination in any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, benefits, and any other term or condition of employment."
For example, assuming that someone who is more tenured will not be able to perform in a new role, and acting on that assumption by firing them or not considering them for the job or promotion constitutes discrimination.
Reasons for Delayed Retirement
Some are delaying retirement because they love their jobs, others because they need the money. Others have retired from their first jobs but are now pursuing a new career, interesting work or simply an opportunity to engage with others on a full-time or part-time basis. There are myriad reasons behind this delay trend. However, with longer life spans, an American who retires at 65 could be retired for well over 20 years.
This longevity requires people to have larger retirement savings — and many do not. According to Money, 56 percent of Americans have less than $10,000 in retirement savings. In addition, unless there is a clear plan for what to do in retirement, the retirement lifestyle may not be what was once envisioned.
Baby Boomer Statistics
According to Employee Benefit News (EBT), according to the U.S. jobs report, 19 percent of Americans aged 65 or older were working part-time or full-time in 2017. This proportion is the highest it has been in 55 years, EBT notes, since retirees began getting access to better health care and then to Social Security. Furthermore, 32 percent of Americans aged 65 to 69 and 19 percent of those aged 70 to 74 were employed during the second quarter of 2017.
Regardless of the reasons for not retiring, employers — and the financial leaders that manage them — need to remember that they cannot consider age as a factor in regards to employing or terminating an employee. This is critical because, according to AARP, hiring managers often believe that "older applicants were more likely to be burned-out, resistant to new technologies, absent due to illness, poor at working with younger supervisors and reluctant to travel." According to the EEOC, any policy that adversely impacts applicants or existing employees over 40 is illegal. Telling recruiters to only talk to young college graduates at a job fair that is open to all is an example of a policy that could result in a discrimination lawsuit.
Financial Consequences of Age Discrimination
In 2014, CBS reports how a 66-year old man won a $26 million age discrimination judgment. Terms such as "old coot" and "old goat" had been bandied about. According to Forbes, 20,857 age discrimination claims were filed with the EEOC in 2016. This is lower than during the recession but still high. Obviously, the financial consequences for employers can be very high in the event a suit goes to trial; however, defending against age discrimination suits can be costly.
Furthermore, such suits can damage organizational reputations. According to Harvard Business Review, a firm with 10,000 employees may spend up to $7.6 million in extra wages to compensate for a poor reputation. In addition, an age-hostile environment lowers the morale of current tenured employees, reducing creativity and productivity and leading to potentially higher indirect costs.
How to Promote Zero Tolerance
To counter this, finance leaders and their HR managers need to ensure there is a zero-tolerance policy regarding age discrimination in the workplace. Organizations must train hiring managers on what can and cannot be said when interviewing and on how to remain professional yet friendly with their staff. In addition, businesses must include the appropriate language in their handbooks. Finally, finance leaders must help foster a culture in which more tenured individuals feel supported, and individuals who make ageist comments and jokes are quickly censured and disciplined.
Benefits of More Tenured Workers
According to AARP, virtually none of the stereotypes ascribed to older workers apply. These employees can actually have much better job performance than their early or midcareer counterparts. High tenured workers obtain high marks in leadership, detail orientation and strong networks. They also have greater workplace wisdom as a result of their broader experience. Thus, these more tenured workers can not only drive a higher performance level for themselves, but they can help their co-workers and others do the same.
Good health can also ensure that tenured employees have the energy and stamina required of their positions. According to AARP, physical exercise can slow down or halt the cognitive decline that begins in one's 20s.
By promoting a culture of diversity and respect for all individuals, regardless of age, financial leaders and their HR managers can eliminate or drastically reduce the risk of age discrimination and the associated employer liability. Implementing a zero-tolerance policy while championing the skills and abilities of more tenured workers is critical to this promotion. Furthermore, offering health incentives can help organizations benefit from the skill set of more tenured workers for years to come.