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December 2006 Archives

By Walter Olson

This article was originally published in Times of London Online, 10-18-06

So now Britain has its own law banning employers from considering workers' age in most job situations. If your experience follows ours in America, the results will include a range of unintended consequences, some of which will worsen the plight of the workers the law was meant to help.

Age-bias law in the US dates back to 1967 and was much stiffened in 1978. One should note that it differs from the UK version in several important ways. For example, our law awards richer damages to plaintiffs, and comes closer to banning automatic retire-at-65 policies. On the other hand, it makes no attempt, as British law does, to protect youthful workers from bias: it's "one-way" in favor of the older worker.

Some high points of our experience:

Despite much talk of persuading employers to change their attitudes on hiring, most actual litigation consists of challenges to dismissals, with age often the ticket that gets a worker into court after a dispute arises on other grounds.

One early response: "age-balancing" of mass layoffs. Thus at BP's American subsidiary Amoco, a downsizing scheme specified that "employees between 40 and 65 years of age were to 'retain their proportionate share of the jobs'".

Large employers began pruning their payrolls via surprise "early out" offers with a so-called window period—eligible employees who didn�t grab a buyout promptly would lose the chance. These offers abound with perverse incentives and bizarre features that reflect legal rather than business realities. Thus Stanford University's faculty buyout plan was "designed so that those valued least by their departments get the most when they leave," to quote Scientific American. Very fair, that!

White, middle-aged male managers emerge (irony alert) as the chief monetary beneficiaries of bias law. Not only are they suing over the richest jobs to start with, but they stay out of work for a good while. They are well spoken, and judges identify with them. Per one law journal, US companies see age cases as "the most dangerous types of discrimination cases to take to trial".

Bosses must watch their tongues. Kodak lost a million-dollar verdict after a manager said a salesman was "not keeping up with the times". At job interviews, stay away from small talk.

Lawful practice is often determined by courts after the fact, especially on complex matters such as employee benefits administration, and even well advised employers run afoul. Major law firms—some famed for their employment law defense departments—have themselves dropped big verdicts in their capacity as employers. At the same time, trend-chasing sectors of the US economy like entertainment and fashion continue fairly blatantly to ignore the law.

Be sceptical when claims are made that a law like this will boost elderly employment. Between 1984 and 1994, as age-bias suits boomed here, labor force participation for the key target group, men aged 55-64, slid from 68.5 to 65.5 percent; it has since recovered, but only back to the old level.

Some believe the climate for older jobseekers has in fact gotten worse. Once managers learn to avoid verbal slips, it's actually quite hard for a lone rejected applicant to prove an age-bias case. And there�s scant pressure on employers to "hire by numbers", since no one seriously argues that a set share of new lifeguards, bicycle messengers or MTV hosts should sport silver hair. At the same time, if you do give sixtyish applicants a try and they don�t work out, they may bring suit or require an expensive buyout.

Yes, age-bias law in the US probably counts as politically unassailable. But that doesn't mean it has worked well.

Walter Olson edits and and is a senior fellow at the Manhattan Institute. For more on age-bias law in the US, see his book The Excuse Factory (Free Press, 1997).



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.