You can offer better benefits to older workers, Supreme Court rules

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in Discrimination and Harassment,Employee Benefits Program,Human Resources

If your organization wants to cut employee benefit costs, the U.S. Supreme Court just flashed the green light on one tactic: You can offer more generous benefits to older employees than to younger ones without violating the Age Discrimination in Employment Act (ADEA).

The ruling preserves your right to offer severance packages, retiree health benefits or other perks to employees who reach a certain age, say 50 or 60. The court said employees in their 40s who aren't old enough to claim such benefits can't sue for "reverse" age discrimination.

Recent case: A group of 200 General Dynamic employees in their 40s sued the company, citing reverse age discrimination because they couldn't receive retiree medical benefits that were available to employees age 50 and older. A lower court sided with the employees, but the Supreme Court overturned that ruling Feb. 24, effectively choking off such "youth-based" claims in the future. (General Dynamics Land Systems Inc. v. Cline, 02-1080)

The debate surrounded interpretation of the ADEA, which outlaws discrimination against employees age 40 and older "because of the individual's age."

In most cases, people file ADEA lawsuits when they feel a younger person has received preferential treatment. This case dealt with the reverse: Should 40-something employees be able to sue if an older employee is favored? In a 6-3 decision, the Supreme Court said "No"; the ADEA is intended to protect older workers, not younger ones, even if the older workers were treated better.

Note: Check your state law on this topic. Some states ban age bias against employees of all ages, not just those over 40.

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