Appropriate succession planning without violating the ADEA

Succession planning is an important part of the continued success of Maryland businesses. Planning how knowledge will be transferred when people leave the company is a vital part of such a plan, because a good plan can help minimize future costs during the transition period.

The Age Discrimination and Employment Act of 1967 proscribes discriminatory employment actions based on age for employees who are aged 40 or older. Businesses should thus take this act into account when they are conducting succession planning to make certain they do not run afoul of its provisions. If they violate it, they may open themselves up to litigation.

Proper succession planning should never include stereotypical assumptions based on an employee’s age. Companies should avoid such things as retirement as a solution to poor performance. They should also avoid planning for a position’s succession when they do not know when the employee holding it plans to retire. If layoffs become necessary, businesses should take care to not just choose older employees to lay off. Annual performance reviews should be conducted with all employees, regardless of their ages. During these reviews, incorporating succession planning as a general matter is appropriate.

Good business planning can be vital to the ongoing success of a company. While succession planning is an important aspect of the company’s overall plan, care must be taken to avoid asking questions or acting in such a way that the ADEA is violated. Business owners may do well to consult with their attorneys about the best way to go about succession planning without running afoul of the law. Legal counsel may help to review the company’s process and advise the client on needed changes.

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