Benefits and Compensation

Business Necessity No, RFOA Yes (Age Discrimination)

EEOC released its Final Rule on Disparate Impact and “Reasonable Factors Other Than Age” Under the Age Discrimination in Employment Act of 1967 in March and it became effective April 30. EEOC also published an informative Q&A on which this article is based.

ADEA and Disparate Impact

ADEA prohibits two types of discrimination against workers because of their older age with respect to any aspect of employment:

  • Disparate treatment” (intentional discrimination against older workers)
  • Disparate impact” (practices that, although facially neutral with regard to age, have the effect of harming older workers more than younger workers unless the employer can show that the practice is based on an RFOA.)

The rule applies only to practices that:

  • are neutral on their face
  • might harm older workers more than younger workers, and
  • apply to groups of people

For instance, it applies to tests used to screen employees or to some procedures used to identify persons to be laid off in a broad reduction-in-force (“RIF”).

When does an employer have to show that its practice was based on an RFOA?

An employer would be required to prove the defense only after an employee has identified a specific employment policy or practice, and established that the practice harmed older workers substantially more than younger workers.


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What determines whether an employment practice is based on a Reasonable Factor Other than Age?

An employment practice is based on an RFOA when it was reasonably designed and administered to achieve a legitimate business purpose in light of the circumstances, including its potential harm to older workers.

Example:

If a police department decided to require applicants for patrol positions to pass a physical fitness test to be sure that the officers were physically able to pursue and apprehend suspects, it should know that such a test might exclude older workers more than younger ones.

Nevertheless, the department’s actions would likely be based on an RFOA if it reasonably believed that the test measured the speed and strength appropriate to the job, and if it did not know (or should not have known) of steps that it could have taken to reduce harm to older workers without unduly burdening the department.

The rule includes a list of five considerations that are relevant to assessing “reasonableness”:

Consideration #1—Related to Stated Business Purpose

A factor that bears little relationship to the central aspects of the business is less likely to be an RFOA.


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Consideration #2—Defined Factor Accurately and Applied It Fairly

This considers not only the extent to which the employer defined the factor accurately and applied the factor fairly and accurately, but also considers the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination.

Example: A nursing home decided to reduce costs by terminating its highest paid and least productive employees. To ensure that supervisors accurately assessed productivity and did not base evaluations on stereotypes, the employer instructed supervisors to evaluate productivity in light of objective factors such as the number of patients served, errors attributed to the employee, and patient outcomes.

Even if this practice did have a disparate impact on older employees, the employer could show that the practice was based on an RFOA because it was reasonably designed and administered to serve the goal of accurately assessing productivity while decreasing the potential impact on older workers.

However, say the same employer did not provide any guidance about how to assess productivity. In that case, the design and administration of the practice was not reasonable because it decreased the likelihood that the employer’s stated goal would be achieved and increased the likelihood that older workers would be disadvantaged.

Moreover, accuracy could have been improved and unfair harm decreased by taking a few steps, such as those discussed above.

In tomorrow’s Advisor, considerations three, four, and five, plus some great news—your job descriptions are written and updated.