The EEOC has sued a national sporting goods retailer over an employee stock ownership plan that, according to the suit, made workers forfeit their shares at age 40 if they had not worked 1,000 hours in a year.
What happened
The agency announced the lawsuit on September 30. It says the retailer changed its employee stock ownership plan (ESOP) so that employees 40 and over who did not work 1,000 hours in a year were forced to give up their company shares. Employees under 40 could keep their shares even if they worked fewer than 1,000 hours. The suit also alleges the policy rested on age-based stereotypes, such as the assumption that younger workers work fewer hours to attend college or start families while older workers are less likely to contribute to company growth.
The EEOC filed the case in the U.S. District Court for the District of Nevada under the Age Discrimination in Employment Act, after first trying to reach a settlement through conciliation. The allegations have not been decided by a court.
Why it matters
The suit targets compensation design, not a hiring or firing decision. EEOC San Francisco District Director Christopher Green said, “Employers cannot give younger workers advantages in compensation over older workers based on misguided and outdated stereotypes.” An EEOC senior trial attorney added that the agency will keep enforcing the ADEA to protect older employees and job applicants.
Our read
Eligibility and vesting rules are usually written into plan documents and then configured in benefits and payroll systems, where an age threshold can sit unnoticed for years. An age cutoff stays visible only if someone checks it. HR and benefits teams can pull every rule that branches on age, hours or tenure across equity, retirement, bonus and benefits plans and ask counsel to confirm each one has a documented, age-neutral basis. We made a related point when we wrote that an insurance age cap is not a defense to age bias, and the same review fits the year-end inventory of HR systems many teams are planning.
