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Under the federal Age Discrimination in Employment Act (ADEA), it is illegal to discriminate against an employee or job applicant because of their age in the terms or conditions of employment, including their salary, benefits, hours, vacations or promotions. State laws, which vary by state, also prohibit employers from discriminating against employees because of their age.
To be covered under the age discrimination laws, a person must be 40 years old or older. Sometimes employers reduce their work force by offering special incentives to employees who agree to take early retirement. This is not necessarily illegal unless it is being done for the purpose of eliminating the older employees from the work force. When an employer replaces older employees with younger ones is not necessarily "age discrimination," and therefore illegal. In order to prove a case of age discrimination, it must be shown that the employer's motive was discriminatory in nature.Therefore, when there is no discriminatory motive on the employer's part, it isn't illegal to replace older employees who are being paid higher wages with new younger employees who will work for less.