As the U.S. population ages, so does its workforce. According to the U.S. Dept. of Labor, one-third of the American workforce will be over the age of 55 in just three years. As a small business owner, chances are you have plans to retire some day. If you are not planning to sell the business or turn it over to family, you need to make a succession plan to ensure the transition goes smoothly and your company continues to flourish.
A recent article at Law.com provides these tips on how you can avoid an age discrimination claim when planning for your successor. They also apply when promoting or hiring executive management staff:
Watch what you say. If you are thinking you need to hire or promote younger and cheaper talent, keep those thoughts to yourself. Recent court cases have found in favor of employees who were able to provide examples of managers saying they wanted to rid the ranks of “white-haired” men or women.
Use caution when inquiring about retirement plans. Likewise, asking candidates about their retirement plans can be hazardous if the inquiry is “unnecessary or unreasonable.” While the courts have recognized the necessity for inquiries into succession candidates’ retirement plans as part of business succession planning, employers must be careful not to use ageist language when discussing succession planning.
Have a training program in place. Employers should develop succession training programs that broaden the skill-base of employees and make them eligible for a rise in the ranks.
Conduct annual performance reviews. Performance evaluations should be conducted at least annually to help management identify potential candidates for succession. You can query employees about their short- and long-terms goals as part of a performance review to gain a better understanding of if they fit into your company’s future plans.
If you conduct business succession planning as part of your company’s routine business practices, you stand a better chance of avoiding an age discrimination claim when it comes time to make management changes.
If you’re a small or mid-size business owner, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit. Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.