Mandatory Retirement — Is It Legal?

The short answer to the question of whether you can force retirement is simple: No. Mandatory retirement based on age, while a practice of employers in the past, was prohibited by the federal Age Discrimination in Employment Act (ADEA) in 1967. ADEA, which applies to private employers with 20 or more employees, makes discrimination illegal against employees 40 or more years of age. Attorney Bennet L. Epstein summarized the issue in a recent post at The National Law Review website.

Mandatory retirement is discrimination because it is equivalent to an involuntary termination. That holds true even when the employer has a retirement policy that the employee agreed to at hiring.

The ADEA has two exceptions. Although employers cannot adopt a mandatory retirement age, they may consider age in these circumstances:

• If the employer can establish that age is a “bona fide occupational qualification” (BFOQ), a mandatory retirement age is allowed. To prove a BFOQ, the employer must prove an objective safety issue such as in law enforcement or firefighting work.

• Another exception applies to certain employees in a “bona fide executive or high policymaking position.” An employer may require such executives to retire at age 65 if the executive has been in the position for at least two years before retirement and is entitled to a pension or retirement benefit of at least $44,000 per year. The situation is more complex when it involves an equity partner — a position with ownership of the company and not technically an employee. The ADEA only protects employees. Some federal courts have extended ADEA protection to partners in companies with a large partnership and partners with minimal authority and autonomy, stating that they found little to distinguish a partner in a large partnership from an ordinary employee.

Consult your employment attorney to help evaluate your retirement policies and practices to determine their legality. As always, we are happy to help.