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ADEA Regulations Proposed to Clarify Employers’ Obligations in Disparate Impact Cases

The Equal Employment Opportunity Commission has recently published proposed regulations explaining the “reasonable factors other than age” defense available to employers charged with disparate impact age discrimination claims.  If the proposed rule becomes final, it will greatly impact the development of workplace policies and workforce reductions.  If workplace reductions are in your future, you need to follow the progress of these regulations. 

In 2005, the U.S. Supreme Court, in Smith v. City of Jackson, held that the Age Discrimination in Employment Act (“ADEA”) allows employees to bring a disparate impact age discrimination claim.  This was a major shift in the law.  As a result, age claims not based on any individualized, intentional age discrimination, but rather on an age-neutral employment practice which has a disproportionate impact on employees 40 and over can now prevail.  One positive outcome for employers, however, was that the Court allowed employers to avoid liability if the employment practice was based on “reasonable factors other than age.”

While the Court did not fully define the extent of the “reasonable factors other than age” test, the Court did clarify that this test was not as stringent as the “business necessity” test used in disparate impact claims under Title VII.  In those claims, employers with a practice that has a disparate impact on a protected class can only avoid liability if they can show there was no less discriminatory alternative.  The “reasonable factors other than age” test allows employers that have  a reasonable basis for creating the policy at issue to prevail, even though other alternatives with less impact on employees over 40 were available. 

Following the Supreme Court’s decision, federal courts (and employers) continue to struggle to fully define the “reasonable factors other than age” test.  The EEOC’s proposed regulation seeks to provide specific guidance.  For example, since the goal of the ADEA is to protect the employment opportunities of older persons, the proposed regulation defines a “reasonable factor” as one used by an employer exercising reasonable care to avoid limiting the employment opportunities of older persons.

With regard to the reasonableness of non-age factors, the proposed rule gives a non-exhaustive list of considerations such as whether the practice is a common business practice, whether the factors are objective, whether supervisors were trained to avoid age-related stereotypes in applying the factors, and whether the employer took steps to ameliorate unnecessary and avoidable harm to those 40 and older.

One important consideration is that employers facing a disparate impact claim will not be able to plead ignorance, claiming they did not know the practice in question had a disparate impact.  Thus, the proposed rule essentially imposes an obligation to assess the impact that an employment practice would have on employees age 40 and over.

In short, the proposed rule requires employers to (1) be aware of the possibility and the extent that an employment practice may disproportionately affect older workers, (2) verify employment practices are based on reasonable non-age factors, and (3) implement safeguards to ensure those factors are applied properly. 

Brody and Associates regularly advises employers in matters in all state, Federal and local courts.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.