A recent case out of the Second Circuit is a valuable reminder that in dealing with an older workforce, an employer can justify its employment decisions based on factors that are closely linked to age and seniority. The decision issued as a Summary Order, which has no precedential effect under Second Circuit rules, but nevertheless provides useful guidance.
The pertinent facts are fairly simple. New York City's Human Resources Administration unilaterally reduced the overtime hours of a long-term employee after he appeared on a list of New York City's top 50 overtime earners (a politically unpopular distinction for any employee) and because the employee had become eligible for retirement. Of particular concern to the City was the fact that the employee's pension benefits would be based on his compensation for his last 12 months of work. Because of this contractual provision, the effect of the employee's typical heavy overtime use would be a significant increase in the value of his pension. Accordingly, the City acted to save money on the employee's pension.
Citing the US Supreme Court Hazen Paper case, the Second Circuit ratified the employer's decision to reduce the hours, even though it was based in large part on a factor with a significant age element. "An employment decision motivated by pension costs, even when strongly correlated with age, is not an ADEA violation."
In short, an employer can take an adverse employment action based on purely economic factors, as long as those factors are not a substitute for age discrimination. Important advice, given the nature of the US workforce.