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A Well-Intentioned Law May Keep Older Americans Unemployed

Many older Americans who have seen their savings hit hard during the past year are now postponing their retirement plans. A recent study revealed that 44 percent of workers aged 50 and over intend to extend their working years as a result of the recession.

If they can, that is.

Older employees, in general, have fared better in recent layoffs than their younger counterparts. In October, only 6.8 percent of those over 45 were unemployed, compared to 10.8 percent for 25- to 34-year-olds.

However, for those over 45 who are out of work, the road to reemployment will likely be longer and steeper. A 2004 study that looked at long-term unemployment in the wake of the 2001 recession found that those who were unemployed and over 45 were more likely to spend at least six months out of work. In 2003, people over 45 made up only 26 percent of the total number of unemployed, but accounted for 35 percent of the long-term unemployed. By contrast, while 16- to 24-year-olds made up 31 percent of the unemployed, they represented only 19 percent of those who had been seeking a job for six months or more.

Older workers not only face longer periods without jobs; the jobs they take often do not make use of their accumulated knowledge. Middle-aged job seekers often refrain from marketing their experience. One Web site suggests that older jobseekers should “cut out phrases like ‘30 years of experience in the field’ that clearly indicate how long you’ve been in the work-force.” Judging from the difficulties older workers encounter anyway, this advice does not appear to do much good.

Legally, employers are prohibited from discriminating against job-seekers over age 40. This, ironically, probably is one reason older workers have more trouble landing new jobs. A candidate who is not hired is much less likely to file a discrimination claim, and has a much smaller chance of winning, than an applicant who is hired but whose relationship with the boss later goes sour. So employers, who can find many reasons not to interview or hire an older candidate, seem to do just that.

The Age Discrimination in Employment Act, passed in 1967, bans discrimination in hiring, promotion and discharge against older workers except in cases involving narrowly defined “bona fide occupational qualifications” that make it necessary to hire a person of a particular age.

But because proving discrimination in hiring is very difficult, an older applicant who fails to land an interview or a job is unlikely to file a complaint with the federal and state agencies that enforce the law. Such a complaint is required before a private individual can file a lawsuit for alleged discrimination.

Prohibiting discrimination in hiring, therefore, has little practical effect. Claims of improper termination, on the other hand, are far more likely to be made and to be upheld.

Hiring a new worker is always a risk. If the person turns out to be a poor fit, then the resources the employer put into the hiring and training process will have been wasted. With an older employee, there is the added risk that, if terminated, that person might bring an unfounded complaint. Since many companies are already wary of hiring older individuals who may soon retire, this added obstacle can mean an older worker who loses a job may never again find full-time employment in his or her field.

More than four decades after it was enacted, the ADEA has failed to end age discrimination in hiring. Though the law is well-intentioned and the goal is laudable, this would be an excellent time to try some new strategies that might actually help older workers to get back to work.

One approach might be to provide a certain interval, say one year from the date of hiring, in which an employee’s discharge would be presumed not to be the result of age discrimination. This would provide a probationary period or, as lawyers like to call it, a “safe harbor,” in which employers could try out an older applicant without fear of sparking a frivolous discrimination charge. An employee should be able to rebut the presumption that termination is innocent, but should be required to produce evidence of the employer’s specific discriminatory intent.

Another avenue could be to allow prospective employees to waive their rights to bring a complaint or lawsuit under the ADEA. As the law stands currently, individuals can waive their rights only as part of a settlement of an ADEA administrative or court claim or in connection with an exit incentive program or other employment termination program. It is not possible to waive the right to file claims over future incidents. However, such a waiver, if permitted, could give older job applicants the opportunity to assuage employers’ fears of future lawsuits. I do not particularly like this approach, since it would give carte blanche to employers who want to discriminate, but a worker whose unemployment benefits are about to run out might prefer that I not stand on principle at his expense.

The law’s rules against mandatory retirement, which is now permitted only for certain executives and for workers whose jobs affect public safety, could be relaxed to permit an employer and a new employee to agree in advance that the job will last only for a specified time. This would enable companies that are waiting for younger employees to gain experience to hire someone older to fill the gap, without the risk that the older employee might then decide not to retire, preventing younger workers from advancing.

Our society needs the things competent, experienced older employees bring to the work force. Unfortunately, the law that is supposed to help these workers is getting in the way instead. We can fix this, and we should.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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