Recently, we examined the wisdom and legality of
mandating retirement for older workers. The gist of that analysis
was "don't do it" except in limited circumstances
— and certainly don't do it without talking to your legal
counsel first, as such mandates directly implicate age
discrimination liabilities under the Age Discrimination in
Employment Act (ADEA) and ancillary state and local civil rights
laws.
But what about voluntary early retirement
incentive programs (ERIPs)? Can an employer implement a voluntary
incentive program to coax some of its more-senior employees into
hanging up their hats? The answer is "yes," but proceed
cautiously.
Why Implement an ERIP?
Employers use ERIPs for a variety of reasons, including
bottom-line cost cutting, encouraging healthy turnover, and
minimizing entrenchment, to name a few. Whatever the basis of an
employer's decision, it must consider certain basic business
and legal principles before implementing an ERIP, such as:
