Age Discrimination Lawsuits Based on Disparate Impact

An employer can make job decisions based on "reasonable factors other than age."

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Most discrimination lawsuits allege that an employer made a decision because of an employee's protected characteristic, such as race, disability, or age. For example, an employee might claim that he was fired once he turned 70, or that she was not promoted because her manager thought she didn't have the energy and vigor required for the position due to her age. 

However, some discrimination lawsuits are based not on the employer's intent to discriminate, but on the unintended discriminatory consequences of an employer's policies or practices. These cases, called "disparate impact" cases, claim that an employer's facially neutral policies or practices have a disproportionately negative effect on a protected class. In age discrimination cases, these "disparate impact" claims often involve layoffs, if a significant number of the employees who lose their jobs are older than 40. An employer can defend itself against this type of claim by proving that its decision was based on a "reasonable factor other than age."

Reasonable Factor Other Than Age (RFOA)

An employer can escape liability for age discrimination if it can prove that the policy or practice that created the disparate impact was based on a reasonable factor other than age (RFOA). This defense is available only in disparate impact cases. If the employee can show that the employer discriminated intentionally, the employer can't make this claim. 

In 2008, the Supreme Court decided that the RFOA is an affirmative defense, which means the employer must prove it at trial. But this left open the question of exactly what qualifies as an RFOA, including which factors are "reasonable" for an employer to consider when making job decisions and how much responsibility an employer has to try to reduce the negative impact on older workers.

In 2012, these questions were answered when the Equal Employment Opportunity Commission (EEOC) issued final regulations on the RFOA defense. The regulations define an RFOA as a "non-age" factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its obligations under the ADEA. 

The employer must show both that the employment practice it used was reasonably designed to achieve a legitimate business purpose and that the employer applied the factor in a way that reasonably achieves that purpose. In other words, an employer won't succeed in arguing that it made layoff decisions based on performance evaluations if some younger employees with poor evaluations were kept, while some older employees with stellar records were laid off. Similarly, an employer who claims it is trying to save money by laying off its most senior workers will lose if employees can show that some older workers who were new to the company were let go. 

What Courts Should Consider

In deciding whether an employer has successfully proven the RFOA defense, a court must consider all of the relevant facts and circumstances. Among the things a court can consider when deciding whether an employer's practice or policy counts as an RFOA are:

  • The factor’s relationship to the employer's stated business purpose. An employer that claims it is laying off an entire department of mostly older workers in order to save money won't fare well in court if the employer pays more to outsource that work than it did to have it done in-house. 
  • The extent to which the employer defined the factor accurately and applied it fairly and accurately, including whether managers and supervisors received training as to how to apply the factor in making decisions and avoid discrimination. For example, if an employer's stated criteria for layoffs was technical expertise, it would need to define this term. It might also need to explain to managers that they shouldn't use age as a proxy for technological savvy. 
  • Whether (and how much) the employer limited supervisors' discretion to evaluate employees subjectively, particularly if the factor is known to be subject to negative stereotypes based on age. For instance, a company that decided to save money by laying off some manufacturing employees and cross-training the rest on each step of the manufacturing process might tell managers to select employees to retain on the basis of "flexibility" and "willingness to learn new things." The problem is that these qualities are often used as euphemisms for youth. The company should instead explain just what managers should look for, such as "willingness to complete a two-month training program," or "demonstrated facility with BuildIt software." 
  • Whether the employer assessed the adverse impact of its practice on older employees. An employer should at least consider how the criteria will affect older workers. 
  • How much the practice harmed older workers (in severity and number) and whether the employer took steps to reduce that harm, given the burden involved in taking such steps. If the employer's criteria results in a group of employees to be laid off who are all at least 60 years old, for example, that indicates a serious problem with the layoff program, particularly if the employer's remaining workers are significantly younger. 

Next Steps

If you have lost your job or been subjected to another negative employment action, and you believe it was based on your age, you should talk to an experienced employment lawyer right away. A lawyer can help you evaluate the strength of your claims and negotiate with your employer. If you decide to proceed with a lawsuit, a lawyer can help you file a charge of discrimination with the EEOC, which you must do before going to court. And, if you can't settle your claims, a lawyer can represent you in court. 

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