Capping Salaries Won’t Violate Age-Bias Law — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Capping Salaries Won’t Violate Age-Bias Law

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in Discrimination and Harassment,Human Resources

Q. I have a question about capping employees’ salaries when they reach the top of the pay scale. I’m concerned because the only employees affected are those with many years of service and who happen to be over age 40. Have we made a legal error? Some of the affected employees are angry and have mentioned discrimination based on the residual effect of the cap. —M.M., California

A. The U.S. Supreme Court recently ruled that employees can sue for unintentional age bias under the Age Discrimination in Employment Act (ADEA). However, that court ruling also made it much easier for employers to defend against unintentional age-bias claims. To successfully defend such claims, you need only show that the challenged practice is supported by a "reasonable factor other than age," or RFOA.

Your practice of capping salaries for employees who reach the top of their pay scale is common, especially in union companies. If faced with a charge of age discrimination, you wouldn't have any problem establishing an RFOA.

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