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Is an employer’s early retirement incentive age discrimination?

On Behalf of | Jan 7, 2022 | Workplace Discrimination

There are times when companies in California go through tough financial times. This can happen for any number of reasons. It could be that products they rely on increased in price cutting into their profits, the economy as a whole may be poor and people simply are not purchasing as much, it could be that a new competitor is taking away business or many other reasons. In these situations, companies may turn to offering early retirement incentives to cut their workforce.

Early retirement incentive packages usually target older employees who are typically the highest paid employees. It is the best way for companies to save money and still keep a large enough workforce. This on its face may seem like age discrimination as they are intended to drive out older employees. However, early retirement incentives are allowed as long as they meet certain requirements.

In order to be valid the early retirement incentive must:

  • Be voluntary
  • Set a minimum age or years of service to be eligible
  • Offer the incentives for a limited period of time and only to a certain set of employees

The last three requirements are fairly straight forward, but there are times when these incentives do not seem entirely voluntary. If they are not voluntary, then they are not valid and could be determined to be discriminatory. There are a number of required factors to determine whether it is voluntary.

  • Employees must be given adequate time to consider the offer.
  • The offer must be complete with all relevant information for the employee to consider.
  • There cannot be any threats made to the employee and the employer cannot coerce the employee into taking the offer.
  • There also cannot be consequences for the employee if they do not accept the offer.
  • Employees also must be able to discuss the offer with counsel prior to signing it.

Early retirement incentives may be becoming more and more common in California, but that does not mean that every one of them is a legal offer. The benefits offered need to also be the same offered to younger employees in addition to meeting the other requirements above. If the early retirement incentive does not meet those requirements, it could in fact be age discrimination. The affected employees may be entitled to compensation as a result. Experienced attorneys understand the requirements and when they may not meet those. Consulting with experienced attorneys could be beneficial.

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