The Ohio Court of Claims in Richard Warden v. Ohio Department of Natural Resources held that, at least for public employers, a policy against re-hiring retired employees had a discriminatory impact on age.

Richard Warden worked for the Ohio Department of Natural Resources in the Mineral Resources Management (MRM) Division for over 30 years before accepting a buyout and retiring. At the time, he was 51 years old. Following his retirement, he was awarded four one-year contracts for part-time work performing the same type of work that he performed before he retired. In 2010, MRM posted a full-time position performing work similar to the work Warden performed on a part-time contract basis, and Warden (who was 54 at the time) applied for the position. Warden was interviewed and received the highest overall score in the interview process. Warden was not hired, however, because it was discovered that MRM had a policy prohibiting re-hiring retirees to full-time positions. Retirees were limited to temporary project-driven contracts for less than 1000 hours, as Warden had been employed in the past. A 39 year old was selected for the position.

Warden sued alleging age discrimination under Ohio’s discrimination statute. Because Warden applied for state employment, the Ohio Court of Claims heard his case. (The Ohio Court of Claims does not hear cases involving private sector employment. ) The Court rejected his disparate treatment claim—alleging that the decision was actually motivated by Warden’s age—because a facially neutral policy restricting rehiring former employees motivated the decision, not Warden’s age. MRM presented evidence that the policy was motivated by a desire to avoid “double-dipping”—where employees retire and collect retirement benefits and are re-hired in the same or similar position.

The Court examined the policy under a disparate impact discrimination theory—alleging that the facially neutral policy has a harsher effect on older workers. The Court reasoned that, because only individuals over the age of 40 were eligible to retire under the early retirement policy, the no re-hire policy had a disparate impact on age. MRM argued that the negative public perception of double-dipping and public trust justified the policy. Yet there was evidence presented that, in some cases, double-dipping saved money because of increased productivity and decreased training costs, in addition to retirees sometimes accepting lower salaries after their retirement. Evidence was also presented that exceptions had been made to the policy in the past with no negative publicity. The Court concluded that MRM failed to show that the decision was based on a reasonable factor other than age.

This decision is limited to public employers, so, if you are a private sector employer, why should you care? Well, the rationale is equally applicable to these types of policies in the private sector. As always, employers should be careful in adopting policies that will, by their definition, affect only employees age 40 and over. There is always a risk that the policy will be viewed as having an adverse impact on older workers.