Age Discrimination and Tuition Reimbursement Plans
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Age Discrimination and Tuition Reimbursement Plans

Too old to invest in?

When David Sanders told his boss that he planned to return to college and get his MBA under Raven Technologies’ tuition reimbursement program, his manager shook his head and said, “No way, Dave. You’re too old to invest in.”

Application denied

David couldn’t believe his ears. At first he didn’t think his boss was serious. But the look on Steve Seidel’s face said that he meant it.

Three years earlier, at age 53, David earned his bachelor’s degree under the company’s generous tuition refund program. Now he wanted to return to school for a graduate degree in business.

David went ahead and put in the request for tuition refund. When his request was formally denied he went back to his boss to complain. “Steve,” he said, “This isn’t right. My application was turned down, but I really don’t get why.”

“I told you why,” said Steve. “We have to be realistic. Do the math. You’re 56 years old, Dave. It’s going to take you four years at night to earn your MBA, right? And by then you’ll be almost ready to retire. Why would the company spend money on an education that it won’t
benefit from?”

It went to younger workers

David was angry because his employer turned down his request for tuition refund while agreeing to sponsor the education of several younger workers.

David’s work record was excellent, he was a highly-valued employee, and he was sure that an advanced degree would be good both for him and his employer. Besides, he figured, an employer isn’t allowed to discriminate against someone because of his age. So David sued Raven Technologies for age discrimination.

Did he win?

The decision

No. David lost his age discrimination suit employer against his employer.

But it was a close one. At first, a jury found in David’s favor for age discrimination. He was awarded $35,000 in damages. However, the trial judge set aside the award, agreeing with Raven Technologies’ claim that denial of a benefit such as educational assistance violated neither the state’s fair housing and employment act nor the public policy against age discrimination in employment.

The appeals went all the way to the California supreme court, which affirmed the trial judge’s decision, finding in favor of the employer.

Court defines discrimination

The high court said that the fair housing and employment act prohibits age discrimination in refusing to hire and in the discharge, reduction, demotion or suspension of an employee.

But the law doesn’t prohibit age bias in the terms and conditions of employment. Therefore the law doesn’t prohibit age bias in the furnishing of benefits.

Benefits are not an entitlement

The court also threw out David’s claim that the denial of educational benefits violated a fundamental public policy.

Obviously, this decision is good for employers. It means that management can make decisions about how to distribute benefits such as tuition reimbursement in sensible ways that will benefit the company.

In this case, the courts (finally) saw the wisdom. Tuition reimbursement isn’t an entitlement; it’s a benefit for employees and an investment for employers. If a company believes someone isn’t “worth the investment” it shouldn’t feel compelled to dispense the benefit.

Bottom line: there’s no rights under age laws that supports a claim for wrongful denial of educational benefits to workers over the age of 40 – despite the fact that no one’s ever too old to learn.

Cite: Esberg v. Union Oil Company of California, California Supreme Court, No. S096524, 6/24/02

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