The law is applicable to employers with 20 or more employees including state and local governments.
ADEA was amended by Older Workers Benefit Protection Act of 1990 (OWBPA) to prohibit employers from depriving the older workers from benefits (EEOC, n.d.). The cost of providing benefits to older workers was greater than the cost of providing the same benefits to younger workers. This works as a disincentive to employers to hire older workers. It has however been permitted that an employer can reduce the benefits based on age as long as the cost of providing the benefits is the same as the cost of providing the benefit to the younger workers.
There has been a sharp increase in the number of age-discrimination complaints filed with the EEOC and has been largely attributed to the weak economy and an aging workforce. Today there are more older employees to discriminate against and more economic incentives to do so (Puri, 2003). According to EEOC age discrimination claims were up by 29% in 2008 which is almost double the increase in age discrimination claims (Ghilaarducci, 2009).
When it comes to cutting costs, older workers are the targets of layoffs. When companies are forced to reorganize, the older workers are perceived as incapable of keeping up with new technologies. The employers get the support of the law and hence use business strategies as a cover to purge older workers (Puri, 2003). However, an aging workforce can be invaluable asset and organizations using age discrimination as a measure of cost savings are actually spending more than what they would in retaining older employees.
The organizations have a perception that older workers do not and cannot perform as well as the younger workers and they cannot or will not change to the market requirements (Cappelli, 2009). It is just a belief that the older workers cannot perform as well as the younger workers. Older workers cannot adapt to change, are not tech savvy and cannot keep with the changing