Within the Cross-hairs of Cost Savings

According to the U.S. Department of Labor, Bureau of Labor Statistics, the country fell into a recession in December 2007. Since that time, to survive the economic downturn, companies have laid workers off and the number of unemployed persons has risen by 7.4 million. Baby boomers were especially impacted because, by July 2009, there were two million unemployed workers age 55 plus. This was the highest unemployment rate for this age group since the Bureau of Labor Statistics began tabulating data by a worker's age. http://www.prweb.com/releases/2009/09/prweb2916684.htm

One year ago in September 2008, the economic meltdown and failure of the banking industry made credit almost impossible to obtain. Cash strapped companies examined their expenses and looked for cost savings where ever they could be found. A major expense to many companies is health care premiums, which in recent years, have been steadily escalating. Baby boomers were especially vulnerable to this cost saving because older workers generally incur higher medical costs than younger workers. Higher medical costs of older workers can be a significant burden on a company. In 2004, as illustrated in the below chart, the average hospital bill of a person in the 50 to 64 age group and 65 and above, was about 1.3 and 1.7 times that of the average hospital bill across all ages. For companies that offered medical benefits, the economic downturn could have been considered an opportunity to rid itself of workers with higher medical costs.




The temptation of employers to release older workers with higher medical expenses must be examined carefully. Workers older than 40 years of age are protected by the Age Discrimination in Employment Act (ADEA), legally acceptable reasons for a layoff or downsizing of a company are economic trouble, financial difficulties, and cost-cutting. In an article written by Aileen A. Marchese, Vice President and National Practice Leader of Employment Practices Liability (EPL) for the Financial Insurance Solutions, https://plusweb.org/files/Events/NeedtoKnowAboutEPLI&Layoffs-AileenMarchese.doc, Ms. Machese recommends that companies compare and analyze the data of workers targeted for a reduction in force to determine if protected classes of workers might be significantly impacted. Ms. Machese notes that, “This information can help companies evaluate whether they may be at risk for individual or class action/multi-party age, sex or race discrimination claims. Companies that offer reasonable severance packages and obtain appropriate releases are less likely to experience employment practice liability claims and can mitigate or completely eliminate claims. Therefore, employers who offer severance packages should require employees to sign releases and waiver of claims forms in exchange for severance benefits.”

Baby boomers faced with the possibility of being relased from employment due to a reduction in force should know the legal elements of ADEA and, if offered a severance package, should know that such releases must comply with the Older Worker Benefit Protection Act (OWBPA). To learn more about OWBPA and ADEA, refer to http://www.eeoc.gov/abouteeoc/35th/thelaw/owbpa.html and http://www.bankersonline.com/operations/gp_rif.html.

DISCLAIMER: This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content of this blog may not be construed as legal, medical, business, or personal advice.

Baby Boomers' Legal "Stew"

Between the years of 1946 and 1964 there were 76 million births and, according to the 2005 government census, there were an estimated 78.2 million baby boomers living in the United States. <http://www.census.gov/popest/national/>

The majority of these "Baby Boomers" are now approaching their "golden years" of retirement. In 2006, there were 7,918 turning 60 each day or 330 per hour. http://www.census.gov/ipc/www/usinterimproj/> With the "golden years" comes a variety of legal issues most in this generation have never dealt with before such as wills, living wills, probate issues, possible bankruptcy, retirement packages, inheritance, retirement home agreements, etc. In addition, legal challenges are not only applicable to the baby boomers, but those dealing with this age group. Approximately 76 million are currently employed and, with the recent economic downturn, more are staying in the workforce longer than anytime in U.S. history. These older workers are more expensive to employers who offer medical benefits and, because this age group is protected by Title VII, a growing number of employers face age discrimination cases. According to the Equal Employment Opportunity Commission, American employers have shelled out $66.8 million in monetary awards for age discrimination complaints.

The legal issues pertaining to baby boomers are as varied as the vegetables thrown into a pot when making a stew. For lawyers these issues can be interpreted as being huge business opportunities, but for those experiencing these challenges, it can be troubling. “Stewing” over these issues helps no one, thus the point of this blog is to share knowledge on these legal challenges pertaining to the baby boomers.

DISCLAIMER: The information contained throughout Baby Boomers’ Legal Stew Website is not a substitute for professional advice and does not constitute professional advice nor is conveyed or intended to convey professional advice.