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Amendment of the Age Discrimination In Employment Act of 1967

Legislation signed by President Reagan on October 31, 1986, largely eliminates the age 70 cap on the group of workers protected by the Age Discrimination in Employment Act ("ADEA"). As you know, the ADEA previously protected workers between 40 and 70. With this new legislation, effective January 1, 1987, all workers over age 40 are protected by the ADEA.

Generally speaking, the law continues all the former prohibitions and defenses of the ADEA. In addition, effective January 1, 1987, and with certain limited exceptions, it will be unlawful under the ADEA to discriminate against employees over age 70 in any aspect of employment.

The amendment also requires employers to continue group health coverage for employees or employees' spouses age 70 and over where such coverage is available for younger employees or younger spouses.

Another consequence of the law is to make it unlawful for most employers to mandatorily retire employees of any age. However, the amendments continue to allow compulsory retirement of employees over 65 who have held executive or high policy-making positions for at least two years immediately prior to retirement, if such employees are immediately entitled to nonforfeitable annual retirement benefits of at least $44,000.

In addition, three groups of employees are temporarily exempted from the protections afforded by the amended ADEA.

Employees covered by collective bargaining agreements. Where a provision in a collective bargaining agreement conflicts with the new amendments, the amendments will not apply until the agreement terminates or until January 1, 1990, whichever occurs first. To qualify, the agreement must have been in effect on June 30, 1986 and must terminate after January 1, 1987.

Law enforcement officers and firefighters. Until January 1, 1994, the amendment permits states and their political subdivisions to have hiring and/or mandatory retirement ages for law enforcement officers and fire-fighters. Law enforcement officers who have been transferred to supervisory or administrative positions and security officers in penal institutions are included within this exception. In order to qualify under this exemption, the employer's hiring and/or mandatory retirement ages must be no lower than those which it had in effect on March 3,1983. Further, the hiring and retirement ages must be part of a bona fide plan, that is, one that is not merely a subterfuge to evade the amendments.

Tenured faculty. Until January 1, 1994, institutions of higher education may compel retirement at age 70 of any employee who is serving under a contract of unlimited tenure.

In a related development, the 1986 Budget Reconciliation Act amends the ADEA, the Internal Revenue Code and the Employee Retirement Income Security Act ("ERISA") to broaden the pension plan rights of older workers. Under the new law, a pension plan can no longer freeze benefits on the basis of age upon the attainment of normal retirement age. Nor can a plan exclude employees from participation based on a maximum age provision. The new law applies to plan years beginning after December 31, 1987 with a deferred effective date for some collectively bargained plans.

Page 20 / Illinois Municipal Review / December 1986


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