The Older Workers Benefit Protection Act (OWBPA) amended the federal Age Discrimination in Employment Act (ADEA) to provide guidance on the ADEA requirement that the benefits employers offer to older workers must be equal to the benefits offered to younger workers.
The OWBPA prohibits age discrimination in the provision of fringe benefits, such as life insurance, health insurance, disability benefits, pensions, and retirement benefits. In most situations, this means that employers must provide the same benefits to older and younger workers. For benefits that cost more to provide as people age, however, employers can sometimes meet the nondiscrimination requirement by spending the same amount on the benefits provided to older and younger employees, even if this means older workers receive lesser benefits. Employers are also allowed, in some circumstances, to provide lesser benefits to older employees if those employees receive additional benefits from the employer or the government (called "offsets") to make up the difference.
An employer may offer a lesser benefit to older workers if it costs the same as the benefit offered to younger workers. However, this defense applies only to certain benefits and only if a number of conditions are met. An employer may use the equal cost defense only if all of the following are true:
In some cases, employers may offer older employees lesser benefits if those employees receive additional benefits from the employer or the government that make up the difference. The employer may use these additional benefits to offset the shortfall and bring the older workers' benefits up to the same level offered to younger employees. The rules for when an employer can use offsets are quite detailed, and they don't apply to all types of benefits. You can find out more at the EEOC's website, or in The Essential Guide to Federal Employment Laws, by Lisa Guerin and Amy DelPo (Nolo).
The OWBPA includes detailed rules for particular types of benefits, including employee contribution plans, long-term disability benefits, retiree health benefits, pensions, and early retirement incentive plans. These rules attempt to accommodate employers' benefit programs (and to avoid creating disincentives to employers who provide these benefits) while ensuring that older workers are not discriminated against. (You can find all of the details in the portion of the Equal Employment Opportunity Commission's Compliance Manual that addresses nondiscrimination in benefits.)