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Age discrimination, or ageism, in the workplace involves treating an applicant or employee unfavorably because of their age. The Age Discrimination in Employment Act (ADEA) forbids age discrimination against people aged 40 or older in all aspects of employment, including hiring, firing, pay, job assignments, promotions, layoffs, training and benefits. While the ADEA does not apply to workers under the age of 40, some states have laws to protect younger workers from age discrimination.
This article discusses the growing issue of age discrimination, the cost of claims and ways organizations can prevent ageism.
The Growing Issue of Age Discrimination
The number of workers over the age of 50 has increased by 80% over the past 25 years, according to the U.S. Bureau of Labor Statistics. In fact, workers aged 55 and older are expected to represent 25% of the nation’s workforce by 2024. As more people live longer and healthier lives, many have plans to work well past the age of 65.
With the workforce continuing to grow older, data suggests there may be more instances of age discrimination. Over 75% of older Americans have experienced or seen age discrimination in the workplace, according to an AARP study, and age discrimination cases make up about 21% of claims filed each year with the Equal Employment Opportunity Commission (EEOC).
The Cost of Age Discrimination Claims
Age discrimination claims can be costly for employers. The 2019 Hiscox Ageism in the Workplace Study found that between 2010 and 2018, employers paid over $810 million to settle age discrimination charges with the EEOC. That number doesn’t include litigation costs.
Employers also lose valuable employees to ageism. The same Hiscox study revealed that 43% of workers had left a company due to either experiencing or witnessing age discrimination. As experienced employees are pushed out or leave jobs due to a hostile work environment, companies lose employees who possess valuable knowledge and experience while incurring the cost of recruiting and training new talent. Age discrimination may also cause companies to suffer from a decline in employee motivation, resulting in decreased productivity and reduced work quality.
The economy also suffers when age discrimination occurs. AARP found that age discrimination against people 50 and older cost the economy $850 billion in 2018, based on the effects of lost jobs for older workers on the gross domestic product, wages and salaries. They predict this gap could rise to $3.9 trillion in 2050.
How to Prevent Age Discrimination
In addition to the cost of reduced worker productivity and loss of experience, age discrimination can lead to legal, regulatory and settlement fees. Since these costs can be detrimental to a business, organizational leaders should act to prevent age discrimination in the workplace. The following are suggestions for combatting ageism:
- Assess organizational culture, practices and policies. By evaluating current culture, practices and policies, organizations can eliminate outdated assumptions about older workers and foster a multigenerational culture that rejects age stereotypes and embraces employees of varying backgrounds.
- Examine recruitment practices. Recruiters and interviewers should be trained to avoid ageist assumptions, such as the belief that an older candidate will not remain on the job for long. Applications should also eliminate age-related information—such as date of birth or when a person graduated—and interview panels should include people of all ages.
- Include age in diversity and inclusion efforts. As with existing diversity and inclusion initiatives, workforce training is critical to educating employees about ageism in the workplace. Since age discrimination often goes unreported, spreading awareness may increase the likelihood that employees who witness instances of ageism will report it.
- Respond to claims immediately. Ageism complaints should be handled swiftly and seriously. Investigations should include interviews with all parties connected to the complaint and a review of other relevant evidence.
- Purchase employment practices liability (EPL) insurance. EPL insurance provides coverage for employers when employees allege discrimination based on age and can limit employer liability if an age discrimination claim is filed.
As the workforce continues to age, business leaders should be proactive in recognizing and preventing age discrimination in the workplace. For more risk management guidance, contact us today