California May Clarify Murky Age-Bias Law

In what could signal a precedent-setting legal shift for courts and statehouses coast to coast, three bills now percolating in the California Legislature are taking aim at age discrimination in the workplace.

At issue is whether corporations can lay off workers over age 40 in favor of younger, lower-salaried ones. Now, after three decades of ebb and flow on the issue, California legislators are trying to stabilize state law and clarify age discrimination once and for all. Whichever bill wends its way to passage is likely to become the model for legislation in dozens of states.

"States across the country are watching the California case closely because [the state] is attempting to remedy what has become a cloudy and contentious situation," says Laurie McCann, lawyer for the American Association of Retired Persons (AARP) in Washington. "Whatever California does to clarify the intent of these laws will certainly be cited in cases everywhere."

Back in 1967, the issue seemed clear as states and the federal government prohibited such discrimination. But clouds began to gather in 1993, when the United States Supreme Court held that businesses could lay off older workers, so long as they were motivated solely by the cost of such employees rather than by factors related to age. Citing similar logic, several other regional federal courts have since whittled away at basic protections for over-40 workers as written in the 1967 law.

On your Marks...

California's current legislative odyssey began when former aerospace accountant Michael Marks sued his employer, Loral Corp., when the company downsized and transferred several younger workers but not Mr. Marks.

The jury ruled against Marks, and an appellate court upheld the jury's ruling. When the case made its way to the state Supreme Court, only two of seven justices voted to let the decision stand, but the remaining five were split on whether to review the lower court ruling or decertify it (disallowing its citation in other cases as legal precedent). Therefore, a rare technicality let the ruling stand.

"The Marks decision is an insult to all of California's workers," says Democratic assemblywoman Martha Escutia, whose bill to prohibit such discrimination was heard March 3 in the California Legislature. "It throws the state's age-discrimination laws on their head."

Leading the charge

Noting that 15,000 claims of age discrimination have been filed in the past five years, and that by the year 2000 more than half the work force will be 40 or older, Ms. Escutia says that without action, a broad class of potential victims will go unprotected.

"This legislation is needed to make sure that the quest to maximize profits does not unfairly burden our valuable, higher-paid workers at the very time they are most depended upon by their parents and their children for financial assistance," she says.

Her bill would reject the Marks decision and "declare ... the use of salary to differentiate between employees ... to constitute age discrimination if use of this criterion disproportionately affects older workers as a group."

An upper house bill submitted by Independent Sen. Quentin Kopp attempts a narrower fix. Companies could not use the economic rationale to defend their firing of an older employee unless the company first offered the employee the option of staying on at a lower salary.

A third bill, introduced Feb. 20 by Sen. John Vasconcellos, is attempting to find middle ground between the other two.

"All these bills are very important for the simple reason that companies would love to cut back not only age-discrimination laws but those based on gender and race as well," says Joseph Posner, an Encino-based attorney who represents workers.

Opponents of the bills, which include the California Chamber of Commerce, manufacturers, and other employers' councils, say the legislation is an unnecessary response to a narrow ruling.

"Marks v. Loral was based on a very specific set of facts ... [it] does not warrant legislation," says Julianne Broyles, the chamber's director of insurance and employee relations. "Federal appellate courts have concluded that differentiation based on salary is as reasonable a factor as is imaginable in a market economy."