The Age Discrimination in Employment Act is a federal act enacted by congress which prohibits age discrimination in the workplace. The Act was enacted in 1967 with the original stated aim of increasing the opportunities for americans over 50 years to seek fair employment, but eventually extended to include fair employment for all age demographics.
Under the act, it is a violation of federal law to hire, fire, or mistreat an employee based on his or her age. The ADEA is a federal law which may be given tighter restrictions under state employment laws, but not looser ones.
The Age Discrimination in Employment Act in its finality prevents an employer from refusing to hire or firing an employee over forty years of age on the basis of his or her age. In addition to refusing to hire or firing based on age, it is also a violation of federal law for an employer to deny an employee the benefits given to other employees based on his or her age alone.
It is a topic of great controversy in employment law regarding the health benefits of older employees. Many prospective employers would seek to limit the health/life insurance of an older employee based on actuary tables and risk assessment. In many employer’s eyes, an older employee is a more at-risk employee which may represent a potential loss in the future. Nevertheless, the practice of denial of benefits for older employees is illegal under the ADEA.
Its important to note that, though denial of benefits is illegal under the ADEA, it may cost an older employee more to insure him or herself based on said actuary tables for risk assessment. As the company is charged more in a group rate to insure an at-risk employee, the employee himself may have to assume the same financial risk when taking on a company benefits plan.
To be subject to the jurisdiction of the ADEA, an employer must have a relevant business that affects local or national commerce and have more than twenty employees on roster.
It is assumed that companies with less than twenty total employees are run subjectively and do not present a significant enough opportunity for age discrimination. Tighter restrictions on the number of employees may be imposed on the state, but the federal limit is 20.