Most employers are familiar with the Age Discrimination in Employment Act (ADEA), which prohibits employment discrimination against individuals 40 or over. But ADEA protections should not leave employers with the inability to make reasonable business decisions. Are you familiar with the exceptions? In other words, when can you take an otherwise ADEA-prohibited action? In a BLR boot camp titled “HR’s Age Bias Prevention Workshop: Smart Policy Practices Under New EEOC Rules and Realities,” Wendy Hyland and Brian J. Kurtz outlined some age discrimination basics and explained what reasonable factors other than age (RFOA) are permissible in employment decisions.
Age Discrimination and RFOA: What Does It Mean for You ?
If you have 20 or more employees, the Age Discrimination in Employment Act (ADEA) applies to you. It prohibits employment discrimination against individuals 40 or over. Under the law, a plaintiff can proceed under the theory of disparate treatment and/or disparate impact (see next section for definitions). However, Kurtz explained during the webinar that "it’s not unlawful for an employer to take what would otherwise be a prohibited action, quote, where the differentiation is based on reasonable factors other than age. And, while that may look on paper like it’s a relatively simple thing to apply, there’s been at least two Supreme Court cases, there’s been other litigation, and now we have a very new EEOC rulemaking, all designed to tell us what this means."
So what does this mean for you?
- Can you lay off employees based on high salary?
- Can you promote employees based on their "potential upward mobility"?
- Can you hire only inexperienced employees? (Firms often do this when they target only recent graduates as new hires.)
- Can you increase the salaries only of employees with less than 5 years of service? (A company might consider this as a retention tool if they find that new hire retention is low.)
Are these legitimate business decisions in light of the theory of disparate treatment or disparate impact? To answer this, we have to first define these terms.
ADEA Theories of Liability: Disparate Treatment and Disparate Impact
"There’s two basic theories of proceeding against an employer under the ADEA. Disparate treatment is the most common," Kurtz explained. "[It] says ’you decided to do something adverse to me because of . . . my age. Your intent was to discriminate against me.’"
The key here, under disparate treatment, is that the employer’s decision reveals an intent to differentiate on the basis of the employee’s age. (This theory also exists under Title VII, but in those cases the alleged discrimination is on one of the classes protected under that law, such as race, religion, etc.)
The employer’s defense to an ADEA disparate treatment claim is that its decision was not motivated by the employee’s age, but instead by a legitimate business reason.
Disparate impact, on the other hand, occurs when the employer maintains a policy that is age-neutral on its face, but nevertheless impacts older workers more harshly. The intent may have been innocent, but the result causes a disparate impact to this group. (Again, this also applies under Title VII.)
The employer’s defense to an ADEA disparate impact claim is that the differentiation used is attributable to a reasonable factor other than age, RFOA. RFOA is an affirmative defense, and the employer bears the burden of persuasion. The focus of the defense is that the factor relied upon by the employer was "reasonable."
By understanding the theories of disparate treatment and disparate impact, employers can be better prepared to make sound business decisions without running afoul of the ADEA, thus lessening the chance of an age discrimination lawsuit.
For more information on age discrimination and RFOA, order the boot camp recording. To register for a future boot camp or webinar, visit http://catalog.blr.com/audio.
Attorney Wendy Hyland with Fisher & Phillips LLP (www.laborlawyers.com) represents employers in all aspects of employment law, including the ADA, FMLA, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and related tort and contract claims. Ms. Hyland also works with clients on effective policies, investigations, and training.
Attorney Brian J. Kurtz is a partner in the Chicago office of Ford & Harrison, LLP. Focusing his practice on traditional labor law and employment litigation, Mr. Kurtz has successfully guided clients through collective bargaining negotiations, unfair labor practice cases before the National Labor Relations Board, union organizing campaigns, strikes and picketing, and arbitration hearings.