On March 30, the EEOC published its final ruling related to the Age Discrimination in Employment Act (ADEA.) As you may know, ADEA was enacted to protect workers aged 40 and over from discrimination, in any aspect of employment, based on their age. The rule is applicable to: private employers with 20+ employees, state and local government employers, employment agencies, and labor organizations. The rule relates only to the “disparate impact” aspect of ADEA and the related defense known as “reasonable factor other than age”(RFOA) and does not apply to federal governmental agencies (although ADEA does.)
The rule is in response to two Supreme Court decisions (one in 2005 and one in 2008) in which it criticized part of the EEOC’s existing ADEA regulations. The Court upheld EEOC’s longstanding position that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, even if the harm was not intentional. Such an unintentional, yet harmful, effect is known as disparate impact.
The Court disagreed, however, with the part of the regulations which said that, if an employee proved in court that an employment practice disproportionately harmed older workers, the employer had to justify it as a “business necessity.” It said that, in an ADEA disparate impact case, the employer does not have to prove business necessity; it need only prove that the practice was based on an RFOA. The Court also noted that the RFOA defense is easier to prove than the business necessity defense but did not otherwise explain RFOA. The final rule accomplishes two things:
• It makes the existing regulation consistent with the Supreme Court’s holding that the defense to an ADEA disparate impact claim is RFOA, and not business necessity; and
• It explains the meaning of the RFOA defense to employees, employers and others.
According to the EEOC, an employment practice is based on an RFOA if it is reasonably designed and administered to achieve a legitimate business purpose in light of the circumstances, including its potential harm to older workers. Some items that may be considered to assess reasonableness include:
• The extent to which the factor is related to the employer’s stated business purpose;
• The extent to which the 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 supervisors’ 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; and
• The degree of the 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.