A recent federal court decision opened the door for employers to recruit and hire candidates who are either recent graduates or have limited work experience without risking liability for certain claims of age discrimination.

On January 23, 2019, the U.S. Court of Appeals for the Seventh Circuit ruled en banc,1 in Kleber v. CareFusion Corporation,2 that the Age Discrimination in Employment Act (ADEA) does not authorize claims brought under a disparate impact3 theory by job applicants who are not current employees. The split panel (8-4) held that the plain language of the statute made clear that while Congress intended to protect employees from the disparate impact of age discrimination, Congress did not intend for those protections to extend to external job applicants. The court noted that throughout the disparate impact language in the ADEA, Congress used the terms “employee” and “status as an employee” to describe the conduct proscribed by the act. The court contrasted the definition of an applicant as “one who applies,” with the definition of an employee as “one employed by another,” to find that the ADEA’s disparate impact protections applied only to current employees.

The Kleber Case and the Court’s Rationale

The case arose after a 58-year-old attorney applied for an in-house position that required applicants to have “3 to 7 years (no more than 7 years) of relevant legal experience.” That applicant, Kleber, did not get an interview, and the company ultimately hired a 29-year-old applicant who met but did not exceed the job requirements. Kleber sued the employer, alleging both disparate impact and disparate treatment claims. The district court dismissed the disparate impact claim, relying on Seventh Circuit precedent holding that the text of the ADEA did not authorize external job applicants to pursue such claims. Kleber then voluntarily dismissed his disparate treatment claim and appealed the dismissal of his disparate impact claim. On appeal, a divided panel initially reversed the district court’s ruling. However, after an en banc review by the entire appellate court, the Seventh Circuit affirmed the lower court’s ruling.

Importantly, while the full court ruled that the ADEA did not apply to external candidates for claims of disparate impact, the court left intact its prior rulings that claims for disparate treatment by outside job applicants remain viable. The court reached this conclusion by comparing the language of the disparate treatment provision found in Section 4(a)(1) of the act, with the disparate impact provision found in Section 4(a)(2). The text of Section 4(a)(1) makes it unlawful for an employer “to fail or refuse to hire or discharge any individual or otherwise discriminate against him . . . because of such individual’s age.” In comparison, the text of Section 4(a)(2) makes it unlawful for an employer to take action that “would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as employee because of such individual’s age.” (emphasis added). The court found it conspicuous that the language in the disparate treatment provision covering applicants was absent from the disparate impact provision and thus reasoned that Congress intended for the side-by-side provisions to carry different meanings.

The Seventh Circuit also rejected Kleber’s argument that the use of the term “individual” in the disparate impact provision should be read broadly to include job applicants. The court determined that the statute must be read as a whole and that it could not ignore the entirety of Section 4(a)(2), which proscribed certain conduct based on an individual’s “status as an employee.” The court similarly rejected Kleber’s argument that the U.S. Supreme Court’s 1971 ruling in Griggs v. Duke Power Co., 401 U.S. 424, was controlling and should be applied to find in his favor. In Griggs, the Supreme Court held that disparate impact claims of discrimination asserted by internal candidates were viable theories under Title VII. The court recognized Griggs as precedent but distinguished it on the basis that Congress amended Title VII the following year by adding language to expressly provide protections for “applicants for employment.” The Seventh Circuit noted that no such change had been made to the ADEA and further distinguished Griggs because Kleber, unlike the Griggs plaintiffs, was not an internal candidate. Thus, the court determined Griggs did not apply to save Kleber’s claim.

Although the court ultimately ruled against Kleber, disparate impact claims can continue to be asserted by older employees who encounter age-based discrimination in the workplace (such as sometimes arise in reductions in force), and disparate treatment claims can be asserted by employees as well as by external candidates.

Takeaways for Employers

While the EEOC’s position is that the ADEA applies to applicants and employees, this ruling offers employers in the Seventh Circuit some measure of confidence to begin or continue to recruit and hire candidates with limited work experience. The ruling may also provide a potential defense to claims similar to those made in recent lawsuits and other complaints alleging social media ads that target certain age groups are discriminatory. Employers should be aware that this ruling applies only to claims asserted in the Seventh Circuit by external candidates alleging ADEA claims under a disparate impact theory. Employers with questions or concerns about this opinion, or their recruiting practices, should consult with experienced employment counsel.