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Employment Law Blog
James Tarquin, P.A
As part of our commitment to assist and educate employees in fighting back against the abusive employment practices of employers, we offer a broad range of information about employment law issues in our employment blog.

Can Employers Fire Older Workers In Order To Lower Their Health Care Costs?

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Having litigated age discrimination cases in Florida state and federal courts for nearly twenty years, our Marion County, Florida age discrimination attorneys have learned that many employers seek to lower their health care costs by getting rid of older workers. In doing so, employers disingenuously claim that the decision to terminate an older employee was motivated solely by health care costs and not the employee’s age. Thus, according to such employers, an employee’s age is analytically distinct from health care costs. The decision by the U.S. Eighth Circuit Court of Appeals in Tramp v. Associated Underwriters, Inc., 768 F.3d 795 (8th Cir. 2014) illustrates that an employee’s age is not always analytically distinct from health care costs, especially when an employer refers to age in the context of seek to lower its health care costs.

Employer “Lost Oldest And Sickest Employees”

In that case, Marjorie Tramp (Tramp) brought an employment discrimination lawsuit against her former employer, Associated Underwriters, Inc. (Associated Underwriters), pursuant to the Age Discrimination in Employment Act (ADEA). Tramp claimed that Associated Underwriters terminated her employment because of her age in violation of the ADEA.

In the summer of 2008, seven months before Tramp’s termination, it became apparent to Associated Underwriters’ management that the company’s health care premiums were affected by the age demographics of its employees. Correspondence between an owner of Associated Underwriters, Gurbacki, and the health care insurance provider for Associated Underwriters revealed communications concerning rate discussions specifically as they related to the health and age of the employees at Associated Underwriters.

For example, Gurbacki asked the health care insurance provider to “relook” at their rates, specifically noting that two employees over the age of 50 had left the company. Later, Gurbacki updated the age demographic information by stating: “We have now lost [two employees] as well,” at least one of whom was likewise an older employee. On another occasion, Gurbacki wrote: “We have lost several of the older, sicker employees and should have some consideration on this. If you have provided us with your final rates then that is what we will use in our decision.” Then, in August 2008, another owner of Associated Underwriters, Hallgren, met with Tramp and others and suggested that they use Medicare instead of the company’s health care plan.

Employer Wants Reduction In Insurance Premiums

In October 2009, Associated Underwriters underwent a reduction-in-force (RIF) and Gurbacki made the decision to lay off four employees, including Tramp. Gurbacki stated that he chose to include Tramp in the RIF because of her alleged historically poor job performance. Associated Underwriters did not replace Tramp following her termination, but rather divided her job duties between four remaining employees.

Nearly five months after Tramp’s termination, there was additional correspondence from Associated Underwriters to its health care insurance provider regarding high health insurance renewal rates. In July 2009, Gurbacki wrote: “Since last year we have lost our oldest and sickest employees . . . [Tramp] is no longer here . . . Please let me know if this is the best we can do . . . [W]e were expecting a rate decrease from the group becoming younger and healthier not an increase.” Tramp claimed that Associated Underwriters’ expected reduction in health care premiums demonstrated that she was fired not for poor performance but rather because of her age. 

Employer Links Insurance Premiums To Age

The trial court dismissed Tramp’s age discrimination claim. The trial court found that the evidence established that Associated Underwriters’ decision was motivated purely by health care costs, which it characterized as correlated with age, but analytically distinct. The trial court also found characterized Gurbacki’s choice of words—questioning whether “this is the best we can do” after pointing out that they had lost their “oldest and sickest employees,” as crude and perhaps insensitive, but not evidence of age discrimination. On appeal, the Eighth Circuit reversed the trial court’s decision and reinstated Tramp’s age discrimination claim.

In reversing the trial court, the Eighth Circuit found that Gubacki’s correspondence with the health care insurance provider regarding Associated Underwriters’ desire for a reduction in premiums, while simultaneously pointing out that the company had “lost [its] oldest and sickest employees,” could reasonably be interpreted as “a manifestation of discriminatory intent in the process used by Associated Underwriters to be rid of its older [ ] employees in general.” Indeed, Gurbacki’s remarks reflected that Associated Underwriters did not perceive health care insurance premiums as “divorced from age.” In other words, the appellate court reasoned, “one could deduce from Associated Underwriters’ own inquiries that it believed that as the age of employees increased so did health care premiums.” Thus, the Eighth Circuit concluded, because the evidence was “open to interpretation” about “what Associated Underwriters supposed about age in making its employment decisions,” Tramp was entitled to bring her age discrimination claim before a jury for resolution.

Free Consultation With Ocala Discrimination Lawyers

Based in Ocala, Florida and representing employees throughout Central Florida, we have been in the trenches fighting for victims of employment discrimination for nearly twenty years. If you have been subjected to age discrimination or have questions about your rights under age discrimination laws, please contact our office for a free consultation with our Marion County, Florida age discrimination lawyers. Our employment and labor law attorneys take employment discrimination cases on a contingency fee basis. This means that there are no attorney’s fees incurred unless there is a recovery and our attorney’s fees come solely from the monetary award that you recover.

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