Heather Bussing is a returning contributor to our HRExaminer Editorial Advisory Board. Heather has practiced employment and business law for over 20 years. She has represented employers, unions and employees in every aspect of employment and labor law including contract negotiations, discrimination and wage hour issues. While the courtroom is a place she’s very familiar with, her preferred approach to employment law is to prevent problems through early intervention and good policies and agreements. Full bio…
Financial Elder Abuse Laws- Paving the Road to Hell
“The road to hell is paved with good intentions.” As legitimate concerns for our aging population make their way into law, some of those laws could affect the way your company does business and the rules that apply to your older workers.
All 50 states have elder abuse laws. All started out to protect older people who are neglected or exploited by caregivers. Institutional or caregiver abuse requires showing that the victim had diminished capacity due to a physical or mental impairment and that the defendant intended the harm.
With the prevalence of financial scams against the elderly, many states have enlarged the definition of elder abuse to include “financial elder abuse.” This is generally when someone takes advantage of an older person’s vulnerability or dependent condition to deprive them of their assets. In some states, elder abuse laws apply to people 60 years or older; in others, it’s 65 or older. Both criminal and civil penalties can apply to all forms of elder abuse.
California has the broadest elder abuse laws of any state. In California, financial elder abuse laws apply to anyone 65 or older regardless of whether they have any diminished physical or mental capacity. Financial elder abuse is defined as: when any person or entity “takes, secrets, appropriates, obtains or retains real or personal property of an elder for a wrongful use or with intent to defraud.” It also includes “assisting” in the taking of any property of someone 65 or older. The definition of “wrongful use” is: if the person “knew or should have known that this conduct is likely to be harmful to the elder.” Cal. Welfare & Institutions Code §15610.30.
This language is so broad that is applies to virtually every business transaction with someone who is 65 years or older. In other words, if you give the wrong change at the cash register and the elder can prove he is 65 and you know how to give correct change, and you shorted him one dollar, you could be guilty of financial elder abuse.
In the employment relationship, broad financial elder abuse laws like California’s would apply to every payment of wages, employment decisions that would affect wages, seniority (no pun intended), bonuses, lay-off and recall determinations and, of course, termination. (Most benefit and union issues would be pre-empted by federal law.)
There is no required showing of discrimination based on age or even an actual intent to harm. There is no required showing that the employee could not make her own decisions or choices.
The ONLY requirements are: 1) that the person is an “elder;” 2) he has been deprived of something/anything; and 3) you “should have known” it was “likely” to cause “harm.”
The potential liability is huge. In addition to any actual economic damages, the elder is entitled to attorneys’ fees if he prevails. If the action is frivolous or the elder does not prevail, he is not required to pay the other side’s attorney’s fees. This is called a one-way fee statute.
Both Title VII and most state discrimination laws have one-way fee statutes that allow only the plaintiffs to recover fees if they prevail. Because discrimination is against public policy, the legislature has tried to make it easier for victims of discrimination to seek redress, when they might not otherwise be able to afford it (especially if they have been fired). But in any discrimination claim, the employee has to be able to prove that the employer intentionally discriminated based on the protected factor and that the discrimination caused the adverse employment action.
That is not the case with financial elder abuse. If a 65 year old can show that a $10 mistake was made in her paycheck, she can potentially recover thousands of dollars in attorneys’ fees with absolutely no risk of paying the other side’s fees. This makes lawyers file lots of lawsuits. And the fee provision is what drives the litigation, not the merits of the claim or the behavior of either of the parties. It becomes all about the lawyers.
The language of the California financial elder abuse statute is so broad that it preempts basic contract law for agreements entered with elders. So if you have negotiated an attorneys’ fee clause in your contract with someone 65 or older, understand that it was probably just converted to a one-way clause benefitting only the elder because all they have to do is attach an financial elder abuse cause of action to their contract claim.
Further, under traditional contract law, the plaintiff is almost never permitted to recover punitive or exemplary damages, unless there is fraud. Damages for breach of contract are limited to either the party’s actual economic losses or the “benefit of the bargain” if they were deprived of an opportunity and can prove it probably would have panned out. Under the California law, if the plaintiff can show “by clear and convincing evidence” that the defendant was guilty of “recklessness, oppression, fraud or malice,” the plaintiff can also recover punitive damages. Cal. Welfare & Institutions Code §15657.5.
Usually, civil cases are decided under the standard of the “preponderance of the evidence” or more likely than not. Quantified, this means that the jury is 51% sure that the defendant did it. Criminal cases are decided under the “beyond a reasonable doubt” standard, which no self-respecting attorney will quantify, but it means pretty damn sure. “Clear and convincing” is somewhere in between and is a higher standard.
But the kicker is the inclusion of “reckless.” Normally a plaintiff does not get punitive damages because someone was “reckless.” Reckless is a stupid mistake, maybe even a really stupid mistake. It is not intentional conduct that constitutes “malice, fraud or oppression,” which are the traditional standards for punitive damages.
And if that wasn’t scary enough, many state elder abuse laws incorporate the remedies for unfair business practice laws that allow for double or triple damages.
What to Do
Get familiar with your state’s laws concerning financial elder abuse. Here is a compilation of state laws with links to the current statute. (It is primarily focused on neglect and caregiver abuse rather than financial abuse so don’t stop there.)
Find out if your state is considering enacting broad financial elder abuse laws such as California’s. If so, you or your company may want to point out some of these problems.
Don’t decide to refuse to do business with older people because it’s too easy for them to sue you. That will get you an age discrimination or unfair business practice lawsuit, which is somewhat harder to prove, but is still an expensive pain in the backside. And it’s illegal.
If you are faced with a frivolous elder abuse claim, your company will need to carefully consider the costs and benefits of fighting it. Some companies may choose to settle early if they don’t have the resources to launch a full-scale defense because the risks are so high. It is too early to know what insurers will do because the laws are a blend of negligence, which is insured, and intentional conduct, which is not. Anticipate a fight with the insurers too if you have errors & omissions coverage or a policy that covers employment practices.
If your company does have the resources to challenge these laws, it will be a service to everyone to get these issues sorted out.
It is likely that these laws will eventually be scaled back because the language is so broad and vague and they are contrary to hundreds of years of tort and contract law. Also some elements may be unconstitutional based on equal protection principles, such as the one-way fee statute, which gives older people exemption from attorneys’ fees clauses.
But don’t hold your breath. Older people are a powerful political force and lawsuits take years to wind their way to a published appellate decision.