Can an Employer Force You to Retire Due to Your Age?

The U.S. government has very strict policies that prevent employers from discriminating against workers based on age. These policies protect employees aged 40 and over from forced retirement due to age plus retaliation for not accepting early retirement incentives.

In 1983, the U.S. government decided to gradually increase the retirement age for receiving full benefits from 65 to 67 years of age. The earliest workers can request Social Security benefits is 62 years old. However, those applying for Social Security early may receive lower monthly payouts. Does this regulation mean workers have to retire at 62, 65 or 67?

Fortunately, workers typically can determine when to retire, but not always.?

Companies Cannot Force Retirement Due to Age

In simple terms, most companies cannot force their employees into retirement due to their age. The Age Discrimination in Employment Act of 1967 (ADEA) protects most workers aged 40 and over from forms of discrimination in the workplace. This act protects workers from forced retirement due to age and contribution time and prohibits companies from ageist discriminatory practices regarding workplace issues, such as promotions, salaries and benefits.

Despite this regulation, the senior advocate group, AARP, reports that two out of three seniors aged 45 to 74 have been directly or indirectly impacted by age discrimination in the workplace. This discrimination affects terminations, salaries and benefits, and is also extremely difficult for seniors to seek new job opportunities. Jessica Hernandez , Executive Resume Writer, notes , "It’s no secret that ageism is rampant in the hiring process."

The Few Exceptions to the Rule

As with most federal regulations, there are a few exceptions when it comes to forcing employees into retirement due to age, including:

• Occupational Qualification: Organizations may be able to force seniors into retirement if they can prove that these employees must have a certain physical or mental aptitude to complete the job safely and effectively. The government grants this exemption on a limited basis. Examples include military members, firefighters, bus drivers, and police officers.
• Executive or High Policymaker: In some cases, companies may be exempt from the ADEA regulations regarding high-level executives and policymakers. People in these roles must be in a position to make important decisions for the company.
• Company Size: The ADEA regulations do not apply to private companies with under 20 employees.

Are You Required to Tell Your Employer About Retirement Plans?

Employees are not legally required to announce their retirement plans to their employers. However, company policies may dictate steps an employee should take when retiring. In many cases, failure to follow these steps could result in lost benefits, such as pensions, vacation time and bonuses.

Seniors considering retirement should review company policies and determine exactly how much notice they must provide, such as two weeks or 30 days. Adhering to this policy not only gives the company time to find a suitable replacement for the position but ensures that retiring seniors receive the full benefits they deserve.

How Companies Can Incentivize Retirement

While the ADEA may protect older workers from forced retirement due to age, companies can still offer incentives that encourage seniors to retire. A common incentive for early retirement is an upgraded severance package. For example, a company may provide older employees additional benefits, such as higher severance pay or extended healthcare benefits, if they agree to retire earlier than planned.

These early retirement incentives are perfectly legal in many cases. However, there is a fine line between incentives and forced retirement. While employers have every right to provide incentives to encourage their older workers to retire, they cannot force employees to accept these offers or punish them for not. For instance, an employer cannot reduce an employee’s salary or work hours or change their position or work location in retaliation for not accepting an early retirement offer.

Other Signs Your Employer May Want You to Retire

While these stringent regulations help protect seniors in the workplace from age discrimination, some employers try to use other means to force their older workers out. Several signs that seniors should look for in the workplace to determine if their employer is trying to push them out the door include:

• Change in Job Title: Any change in job title, especially if the new job title appears as a demotion, should be a cause for concern. The company may be trying to push seniors into retirement by making their job redundant.
• Lack of Career Growth: Career growth opportunities, such as promotions and training that come to a halt could be a sign that the employee has reached their max potential or that the company is no longer investing in them.
• Lack of On-the-Job Support: There may also be cause for concern if the company suddenly stops offering on-the-job support. This factor is especially true if younger workers appear to receive this support.
• Reassigned Job Duties: Any time the company starts taking work away from an employee, it could be a sign they want them to leave. For senior employees, it may be a sign that the company is training other workers to replace them.
• Change in Work Hours: A sudden shift in an employee’s regular work schedule, such as a reduction in work or a shift or location change.
• , could indicate the employer is trying to force the worker into retirement.
• No Long-Term Project Assignments: Employees suddenly removed from long-term projects should talk to their employers. The employer may have concerns about the employee retiring rather than trying to force the employee out.
• Age-Related Comments: While employers shouldn’t comment about a worker's age, it does happen. Employees who hear comments about being too old to get the job done or increased retirement talk should probably take it as a sign that their employer wants them to retire.

Retiring on Your Terms

The good news is that the Age Discrimination in Employment Act of 1967 protects most employees from forced retirement. This factor lets seniors set their terms about when and how they retire. However, seniors should review company policies and understand Social Security rules before making a final retirement decision.

Fortunately, company policies should be readily available to all employees to review. The Social Security Administration can provide all workers with an estimated benefits report to determine how much a person can expect to earn at different retirement ages.

Top Takeaways

• Most employers cannot force employees into retirement due to age.
• However, companies can offer incentives for early retirement.
• In most cases, workers retain full rights in determining what age to retire.

(Reporting by NPD)