Asking an Employee About Retirement

As the COVID-19 pandemic (hopefully and finally) nears the point of people returning to their pre-pandemic lives, many employers are taking the opportunity to re-evaluate their staffing needs. This is especially true in office-based settings, where employers have almost universally dealt with employees working remotely during the pandemic. Although some employers are committed to returning their workforce to the office as quickly as safely possible, others are embracing the opportunity to continue remote work in the future. In addition to potentially increasing employee morale and retention rates, working remotely can also decrease the amount of necessary office space. From a business perspective, some companies are emerging from the pandemic with an enhanced opportunity to operate efficiently in terms of a more targeted workforce.

An issue that often arises across a broad spectrum of businesses is how an employer should deal with an employee nearing retirement age. When that issue overlaps with an employee who desires to work remotely, it can create a new twist on the traditional nearing retirement situation. Consider the following hypothetical:

ABC Corporation employs 150 people in an office environment in the Midwest. Since March 2020, ABC has permitted almost all of its employees to work remotely. Although ABC realizes that some remote work will continue in the future, ABC still wants its employees to be in the office at least three to four days per week.

In the course of planning its return to the office, ABC has received pushback from employees who want to continue remote work indefinitely. The most vocal is a 64-year-old white male who has openly asked if full-time remote work can be permanently available. This 64-year-old has a vacation home two hours from ABC’s office at which he has remotely worked in the past year. ABC has also heard rumblings that Mr. 64 is considering retirement and that ABC’s position on remote work may be a factor in his decision.

ABC is not excited about losing Mr. 64, who remains a productive and valued employee. However, ABC wants to know which employees are fully committed for purposes of future business planning and really wants to know how long Mr. 64 plans to work. Mr. 64’s job duties are at a high level, and if ABC is going to need to replace him in the relatively near future, the successorship process will take time and ABC would like as much notice as possible.

In this situation, employers regularly wonder (or should wonder) how hard they can push Mr. 64 for this information. In considering its options, the employer needs to be primarily cognizant of the federal Age Discrimination in Employment Act (“ADEA”) as well as parallel state laws. The ADEA was enacted in 1967 and is the federal law prohibiting age discrimination. The law applies to private employers with 20 or more employees, state and local governments, employment agencies, labor organizations, and the federal government. Although there are many layers to the ADEA, the basic rule is that it is unlawful to discriminate against a person 40 years of age or older because of age with respect to any term or condition of employment. This includes decisions to hire, fire, promote, and lay off employees, as well as compensation, benefits, job assignments, and training issues. The ADEA also prohibits harassing workers who are 40 years of age or older. So, how far can ABC go in seeking to find out if Mr. 64 is actually committed to a retirement schedule or, in the alternative, plans to work indefinitely and can be included in ABC’s business planning? Although there are various shades of gray in this analysis, some things are certainly true.

First, ABC cannot just throw up its hands and decide that it needs to proactively terminate Mr. 64 so it can focus on future planning with younger employees. That would be an obvious violation of the ADEA. The good news, however, is that the ADEA does not tie the employer’s hands from discussing the situation with Mr. 64 so long as such conversation is done in the right way. This is the tricky part, and some of the more noteworthy lawsuits arise from employers being too aggressive or persistent in their inquiry. Some general points to remember include:

ABC has a legitimate business interest in knowing if Mr. 64 is planning to retire and to obtain information for succession planning.
ABC’s conversation with Mr. 64 should be as positive and non-confrontational as possible. ABC needs to make sure Mr. 64 understands that ABC is simply asking the question and is not in any way pressuring Mr. 64 to retire.
ABC should not mention age in its discussion with Mr. 64. Instead, ABC could focus on the fact that Mr. 64 has been working remotely since COVID-19 and ABC has heard that he is at least considering retirement.
ABC needs to avoid being too persistent in addressing this with Mr. 64. A conversation within the above parameters is generally permissible. Where an employer can get in trouble is if they are too aggressive in that conversation or persistently ask the question. At some point, doing so might constitute harassment of Mr. 64 or reasonably lead him to believe that ABC wants him to leave.
ABC absolutely needs to avoid making any negative age-related comments, such as “we need new ideas” or “the old ways are not the new ways.”
If possible, and this may not be possible unless done legitimately, ABC could make similar inquiries to other employees under 40 to gauge their future commitment to the company. Although Mr. 64’s reason for possibly leaving may not apply to other employees, others may be considering leaving if remote work is not offered or for other reasons.

If ABC conducts its inquiry with Mr. 64 within these parameters and avoids doing it repeatedly if his answer is anything other than he plans to retire by a certain date, then ABC should hopefully determine Mr. 64’s current retirement plan. Although ABC may still want more detailed information, employers often have to do their best with the limited information from that initial conversation.

One additional issue often arises in this situation. If Mr. 64 responds that he plans to continue working for many years or is unsure about his retirement plan, then ABC has little choice but to accept that information at face value and proceed accordingly. If Mr. 64 states that he is planning to retire in the next year or two, then ABC can engage in a succession conversation with Mr. 64 to make that process as seamless as possible. However, what happens if Mr. 64 inquires if the company has some sort of severance program available? If that occurs, then ABC could determine if it is interested in “sweetening the pot” as an incentive to help Mr. 64 move to retirement. If any type of severance or retirement payment is going to be made, ABC would need to document that agreement in writing and include a waiver of any potential employment-related or age-discrimination claims by Mr. 64.

The ADEA and its related federal law, the Older Workers Benefit Protection Act (“OWBPA”), specify the language necessary to be included in any such agreement to make sure it is enforceable. Although an employer would be wise to involve legal counsel in this entire process, both before and after discussing retirement plans with Mr. 64, use of counsel is imperative when preparing any sort of severance or retirement agreement.

For more information, contact Bill Barath or the Ice Miller Labor and Employment attorney with whom you most frequently work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.