This is why it's hard to trust our government today

[kcjenkins]

The Equal Employment Opportunity Commission is reportedly pressing PricewaterhouseCoopers and other major accounting firms to drop their longstanding mandatory retirement age policies, and the American Institute of CPAs is asking them to stop. EEOC’s Chicago office is asking PwC to eliminate its mandatory retirement age of 60 for partners and principals. A 1967 law, the Age Discrimination in Employment Act, prohibits mandatory retirement ages for employees at most types of businesses, but partnerships such as accounting firms are typically exempted on the theory that business owners can’t discriminate against themselves.

A mandatory retirement age policy has been in place at PwC’s pre-merger predecessor firms Price Waterhouse and Coopers & Lybrand since the 1960s, according to the WSJ, but the EEOC did not begin prodding PwC to change the policy until 2010. The firm asked the EEOC to clarify its concerns in January of this year, and the agency responded by merely describing a six-part test from a 2003 decision by the Supreme Court in a case known as Clackamas Gastroenterology v. Wells to determine who qualifies as an employee in a partnership.

PwC’s attorneys were already well aware of the Clackamas test and asked the EEOC for the opportunity to work out a proposal to address the agency’s concerns. But the EEOC reportedly broke off negotiations with the firm and is considering the possibility of suing PwC to change its mandatory retirement policy.

The EEOC is reportedly looking at Deloitte and KPMG as well, and that is raising worries in the CPA profession that it may begin pressuring the accounting profession at large to drop mandatory retirement age policies, which have traditionally enabled younger members of the firms to advance in their careers and eventually make partner.

In a letter to members of the EEOC, the AICPA has expressed concern that a significant expansion of the Age Discrimination in Employment Act would be detrimental to the accounting profession and respectfully requested that the EEOC decline to continue on this path.

In a June 25 letter from AICPA president and CEO Barry C. Melancon, the Institute wrote, “We do not dispute that hundreds of thousands of non-partner employees are appropriately covered by the ADEA. However, we believe that accounting firm partners (those who own and control a portion of each firm) are not covered by the ADEA, and we do not believe they should be under consideration, as the possible action contends. Our position is consistent with—and relies upon—longstanding EEOC policy that presumes that partners are not ‘employees’ for purposes of anti-discrimination laws. A change that treats accounting firm partners as ‘employees’ would upend the long-established expectations and business reliance interests of the accounting profession.”

“Accounting firms have structured their partners’ compensation, capital contributions, buyouts, pensions, agreed-upon retirement dates, deferred compensation, voting rights, benefits, governance, and termination policies in reliance on the specific understandings evidenced by partnership agreements,” Melancon pointed out. “In particular, retirement policy provisions allow for the predictable progression of lesser tenured individuals into the partnership, and facilitate the orderly transition of a firm’s clients from senior partners to junior partners.”

“As the EEOC considers whether to expand the ADEA’s scope, we hope you will maintain the flexibility that allows CPAs to organize themselves and plan their succession as they see fit within the bounds of the existing law,” the AICPA letter concluded.

http://www.accountingtoday.com/news/Concern-Mounts-Mandatory-Retirement-Age-Policies-Accounting-Firms-67290-1.html?ET=webcpa:e7322:61496a:&st=email

While I think there are good arguments that 60 may be to low, that's not really the issue that bothers me. It's that the EEOC is ignoring the laws it was created to enforce, refusing to discuss the legal issues, and using the threat of very costly legal battles to try to bully their targets into doing what the law clearly does not require.

[taxxcpa]

While there are pros and cons to mandatory retirement ages, it seems that a good alternative might be to permit partners to cease being partners at a certain age but remain as employees.

I don't think a partner is an employee, so rules applied to employees should not apply to partners. What's next? Mandatory retirement ages for sole proprietors?

It might be argued that a partner in a Big national CPA firm or law firm is more like an employee than a partner in a business established by the owners themselves.

[Gail in Virginia]

I suspect that this is just another way to get the partners to pay into social security longer and collect benefits later.

[GeneInAlabama]

I'm 77. I hope they don't decide to make sole Proprietors retire at a certain age. If I retire, there won't be anyone to continue my business. It will go kaput. Personally, I feel that no one should be forced to retire as long as they are able to perform their job efficiently, unless there has to be a layoff, then those who are of retirement age should be the ones to go first.

[Guest Taxed]

Gene I would not worry about sole-props or self employed being forced to retire at any age by EEOC or any other Govt. regulation. If that were to be proposed, I think you will agree will be a revolution!

[mcb39]

I'm 77. I hope they don't decide to make sole Proprietors retire at a certain age. If I retire, there won't be anyone to continue my business. It will go kaput. Personally, I feel that no one should be forced to retire as long as they are able to perform their job efficiently, unless there has to be a layoff, then those who are of retirement age should be the ones to go first.

I agree wholeheartedly. As a sole proprietor, I am not taking a job away from anyone and have nobody to pick up the reins.

[Richcpaman]

I wonder if the EEOC has gone after Air Traffic Controllers.

They *have* to retire at 56. They can work elsewhere at the FAA, but they can not work the screens.

That is a mandatory layoff age.

But they are going after Accounting Principals.

Glad to know that the Government is consistent.

Rich

[GeneInAlabama]

Some jobs should have a mandatory retirement age. If I were in a house that was burning down, I wouldn't want an 80 year old fire fighter trying to drag me out. I realize this is an exaggeration, but you get the point. A line has to be drawn somewhere, but it should be job specific and should apply only where safety is involved.

[Jack from Ohio]

I do not think the Government should tell anyone when to retire. In the situation of a firefighter, if a man meets the physical and stamina requirements, what difference does his age make? Life and father time will take care of that. Now if the Fire Department does not have standards, that is a local issue.

The Government should stay out of businesses.

[Guest Taxed]

>>>In the situation of a firefighter, if a man meets the physical and stamina requirements, what difference does his age make?<<<

I agree that age should not be the only deciding factor. When I fly I would rather see a silver haired, experienced pilot in control. Think of the United crash in Iowa and the US Air crash in NY. The pilots were very experienced and at the top of their game except they were close to mandatory retirement age! Then think of the ATR crash in Buffalo NY where pilot inexperience was the cause.

[kcjenkins]

It is not the governments place to tell partnerships how to structure their partnership agreements. Any more than they should be able to tell you how to decorate your home! Only when public safety is a serious factor should they be able to set the rules.

But the thing no one is mentioning is the thing that bothered me the most when I read the article. That was the part about how the EEOC reacted to the company's objections. First citing a rule that the company was well aware of, and in compliance with, then refusing to even discuss it once that was pointed out to them. Just threatening legal action, which is clearly a bald-faced attempt at using the power of the government's deep pockets to cost them millions to fight for their rights.

[jainen]

>>Only when public safety is a serious factor should they be able to set the rules.<<

I believe the government has an obligation to enforce civil rights. The Supreme Court has interpreted the Constitution to include age discrimination in that regard. It does not apply to the privacy of your own home. But if you want to run a business in the public marketplace, you have to comply with the law.

[Catherine]

The government has an obligation to enforce *equal* rights. Justice is blindfolded for a reason. As soon as one group gets "special" privileges (not rights, privileges; they are different), we no longer have equal rights -- and in a couple of tiny, near-invisible steps, we then have preferential treatment that infringes the rights of some persons in favor of the privileges of others. That devolves to tyranny, ultimately.

The founders wanted the federal government small to keep it out of the lives of the people in order to prevent it slow it down from eventually becoming a tool of oppression of the many, in favor of the special interests of the few (rich, lords, corporations, unions, pacs, industries, whatever).

Rights vs privileges: http://www.constitutionpreservation.org/sites/default/files/files-misc/chapter_two.pdf

[kcjenkins]

>>Only when public safety is a serious factor should they be able to set the rules.<<

I believe the government has an obligation to enforce civil rights. The Supreme Court has interpreted the Constitution to include age discrimination in that regard. It does not apply to the privacy of your own home. But if you want to run a business in the public marketplace, you have to comply with the law.

But that is EXACTLY my point, Jainen. They ARE complying with the law, but the EEOC is ignoring that 'small detail' to try and use the power of threats of expensive and protracted litigation to induce them to do something the LAW does not require. That is what I find outrageous.