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Age Discrimination in Employment Act (ADEA)

Why Employers Care

The Age Discrimination in Employment Act (ADEA), enacted in 1967, makes it illegal for employers to discriminate against older workers (age 40 and above) in hiring, promotion and benefits decisions. Until a controversial federal appellate court ruling in August 2000, ADEA had never been applied to retirees and their benefits. That ruling found that the practice of reducing employer-sponsored retiree health benefits upon Medicare eligibility constitutes age discrimination.

After years of court wrangling and legal maneuvers by AARP to prevent the U.S. Equal Employment Opportunity Commission (EEOC) from issuing a regulation on age discrimination and employer-sponsored retiree health benefits — a federal court held that the EEOC has the authority to enforce the ADEA.

In December 2007, the EEOC issued a final rule that legally permits employers to coordinate employer-sponsored retiree health benefits with Medicare. Previous court rulings have caused employers who coordinate employer-sponsored retiree health benefits with Medicare concern and uncertainty. The rule means that employers no longer have to be concerned about potential litigation when they coordinate employer-sponsored retiree health benefits with Medicare. Absent the EEOC rule, employer-sponsored retiree health costs would drastically increase, potentially resulting in the discontinuance of these important benefits.

In April 2012, the EEOC issued final regulations on the "reasonable factors other than age" defense involving Age Discrimination in Employment Act(ADEA) disparate impact claims. These regulations establish that when an employee challenges an employment practice that is facially neutral but has the effect of harming older workers (age 40 or older) more than younger workers, i.e., has a disparate impact, the employer can defend against the claim by proving that the practice is based on a "reasonable factor other than age."

What Can Employers Do?

As members of the National Business Group on Health, employers can voice their concerns while shaping and influencing public policy on ADEA regulations and legislation to the Business Group's public policy team and by responding to public policy opportunities to comment on proposed regulations, contact Congress and/or the Administration, testify, or participate in related activities.

Page last updated: September 13, 2012

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