Employees older than 40 years are protected from arbitrary layoffs by The Federal Age Discrimination Act. The act also regulates things like job assignments, training and promotions. The act applies to every company with more than 20 employees. Therefore, a permanent layoff or re-assignment of these employees must be well considered to avoid possible legal implications.

Older employees, with their market and product knowledge, can be the most valuable asset the company owns. Targeting older employees strictly for cost reduction could prove to be a costly decision. One must not look only at cost and benefits in evaluating people.

But if you have a well-documented case of a person not performing his or her duties, one can make a case for job termination. If that is the case, however, they probably should have been terminated before the cost reductions became necessary. This is now where senior management’s total review of the organization and the functions of the key employees will become important. Many times this review will identify an older manager who is no longer doing a real job for the company.

This might be the manager who has turned over his work to a subordinate and has failed to use his experience to identify other options. Basically, he appears to be doing his job, but the reality is that one of the subordinates is really carrying the load. Surprisingly, senior management may be unaware of this situation, but other employees are usually quite aware. This is where your careful interview will be useful. More on this later.

According to a recent article in The Wall Street Journal, the EEOC typically issues “merit findings” on about 20% of complaints. That means a negotiated settlement. In the last year, the EEOC obtained over $100 million in settlements. Another 60% are given a “right-to-sue” stamp, and the plaintiffs are free to file civil action. That will also most likely mean a settlement. Only 20% of the cases are dismissed. Not very good odds.

Obviously, the best approach is to constantly engage your senior staff so you know who is not carrying his or her load. Then a well-documented performance report will provide a more appropriate ground for a termination.