Company-wide mandatory retirement age policies violate the federal Age Discrimination in Employment Act (“ADEA”), except in very limited circumstances. The ADEA, which applies to employers with 20 or more employees, protects employees age 40 and older from discrimination based on their age. As a result of a change in the law in 1986, all employees over 40 years old are generally covered by the ADEA. Since then, companies are no longer able to enforce a mandatory retirement age for all employees.
There is one exception under the ADEA (outside of bona fide occupational qualification reasons for retirement) and that exception is for company employees in a bona fide executive or higher policy-making position. Specifically, an employer may require an executive-level employee to retire at age 65 or older if the following two conditions are met:
The employee has worked in this bona fide executive position for at least two years prior to the retirement date.
The individual is immediately awarded annual nonforfeitable retirement benefits with a combined value of $44,000 or more.
If you have implemented or plan to implement a mandatory retirement age policy for your employees, be sure to consider all of the legal limitations and requirements and seek legal advice.
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