On April 30, 2012, a new rule related to the Age Discrimination in Employment Act (ADEA) will go into effect. The rule addresses the scope of the "reasonable factors other than age" defense to disparate impact claims brought under the ADEA.
The ADEA, which applies to employers with 20 or more employees, prohibits age discrimination against older job applicants and employees. More specifically, the ADEA prohibits two types of age discrimination. First, it prohibits intentional discrimination by employers against individuals who are age 40 or over (known as "disparate treatment"). Historically, most ADEA claims have been disparate treatment claims. Second, the ADEA prohibits employment policies and practices that are facially neutral with respect to age, but have a disproportionately negative impact on employees or applicants who are age 40 or older (known as "disparate impact").
One of the defenses that employers can raise when faced with an ADEA claim is known as the "reasonable factors other than age" (RFOA) defense. As the name suggests, employers raising this defense must argue that allegedly discriminatory actions taken against employees were based not on age discrimination, but rather on other reasonable factors besides age. The EEOC's new rule addresses how the RFOA defense applies in cases brought under a disparate impact theory of age discrimination.
The New Rule
The EEOC's new regulation (29 C.F.R. Sec. 1625.7) states that "any employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a reasonable factor other than age.'" The rule goes on to state that employers raising an RFOA defense bear the burdens of both production and persuasion to prove the defense. It is worth noting that the language of the regulation creates a presumption that any employment practice that negatively impacts older workers more than younger workers (whether intentional or not) is discriminatory, unless the employer can prove otherwise.
According to the new rule, a reasonable factor other than age is defined as a "non-age factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances." What this means, precisely, isn't entirely clear. As with most regulations, there are plenty of gray areas. What we do know is that each case will be reviewed on an individual basis, and will likely involve fact-intensive inquiries into the specific circumstances of a given situation.
To establish an RFOA defense, employers must show that the employment practice in question was both reasonably designed to further or achieve a legitimate business purpose, and administered in a way that reasonably achieved that purpose in light of the facts and circumstances that were known, or should have been known, to the employer.
The new regulation includes a non-exclusive list of factors deemed relevant to determining whether a particular employment practice was based on reasonable factors other than age. The list includes the following considerations:
- 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.
The EEOC has published a list of Questions & Answers about the new rule, which includes several examples of how the rule might apply in particular situations. One illustration describes a police department that decides to require applicants for patrol positions to pass a physical fitness test to ensure that the officers were physically capable of pursuing and apprehending suspects. The EEOC explains that the police department should know that its test might exclude older workers more than younger ones. Its action, however, would likely be based on an RFOA, as long as the department reasonably believed the test measured the speed and strength necessary for the job, and as long as it did not know, or should not have known, about any steps that could have been taken to reduce the harm to older workers without unduly burdening the department.
Impact of the New Rule on Employers
This new ADEA regulation will likely make it more difficult for employers to establish an RFOA defense in disparate impact cases. It will probably have the most significant impact on employers that have layoffs or that engage in workplace reorganizations. It creates new burdens for employers who need to make employment decisions in real-time, but without running afoul of federal employment laws. And we can expect that it will result in an increase in the number of disparate impact cases filed by employees.