The Age Discrimination in Employment Act (ADEA) prohibits discrimination based on age and applies to employees and job applicants who are 40 years of age and older. One of the grounds for liability under the ADEA is called a “disparate impact” claim. This is where an employee demonstrates that a seemingly neutral decision by an employer has a disparate impact on older employees. As a defense to this type of claim, employers are permitted to argue that the differential treatment was due to reasonable factors other than age.
The Equal Employment Opportunity Commission (EEOC) recently issued new regulations which clarify the “reasonable factors other than age” defense under the ADEA. The new regulations, which go into effect today, provide employers with guidance on ensuring that their employment practices are in fact for reasons other than age. For example, the new regulations urge employers to take into consideration the following non-exhaustive list:
• The extent to which the factor is related to an employer’s stated business purpose;
• The extent to which an employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;
• The extent to which the employer limited a supervisor’s discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;
• The extent to which the employer assessed the adverse impact of its employment practice on older workers;
• The degree of harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm in light of the burden of undertaking such steps.
The above considerations provide guidance on what an employer must demonstrate to successfully utilize the “reasonable factors other than age” defense. The new rule prevents employers from routinely and mechanically utilizing the “reasonable factors other than age” defense in every decision it makes which disparately impact older employees. Instead, the new rule encourages employers to take into consideration whether their decision to implement a particular policy was truly due to factors other than age, and the possible harm the policy may have on older employees. We believe the EEOC’s clarification on the defense is one that keeps in mind the rights of older employees and the susceptibility to discrimination they frequently face at work.