Synopsis: In an ADEA collective action alleging that a community college discriminated on the basis of age when it announced it would no longer employ any person receiving an annuity from the State Universities Retirement System (SURS), a federal district court in Illinois granted the college’s motion for summary judgment, holding that the decision to discontinue the employment of all SURS annuitants regardless of age did not amount to discrimination.

For employers considering mass employment actions that may impact a large number of older employees, this ruling provides insight into the factors that courts will examine in potential ADEA collective actions.

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Case Background

In November 2014, Oakton Community College (“Oakton”) announced that as of July 1, 2015, it would no longer employ any person receiving an annuity from the State Universities Retirement System (“SURS”). Affected SURS annuitants — all of whom worked at Oakton as part-time, or adjunct, faculty members prior to July 2015 — filed three separate lawsuits against Oakton. Following the Court’s consolidation of the lawsuits, in Filipek v. Oakton Community College, No. 16-CV-2902, 2018 U.S. Dist. LEXIS 31727 (N.D. Ill. Feb. 28, 2018), Plaintiffs alleged that Oakton’s decision not to employ SURS annuitants violated the Age Discrimination in Employment Act of 1967 (“ADEA”) and Illinois Human Rights Act (“IHRA”), among other claims. Id. at *2-3.

The Court granted Plaintiffs’ motion for certification of an ADEA collective action and Rule 23 class certification on the IHRA claims that consisted of “all part-time and adjunct faculty who were denied employment at Oakton Community College as the result of its policy not to employ or re-employ [SURS] and who are not ‘affected annuitants’ pursuant to 40 …” Id. at *3. Thereafter, Oakton (and the individual Defendants) moved for summary judgment.

The Court’s Decision

The Court granted Oakton’s motion for summary judgment as to all claims. First, regarding Plaintiffs’ disparate treatment claims, Oakton argued that summary judgment was warranted because no reasonable factfinder could conclude that age was a “but-for” cause of Oakton’s decision not to employ any SURS annuitants after July 1, 2015. Id. at *9-10. Plaintiffs contended that they presented evidence sufficient to make out a prima facie case of disparate treatment under the McDonnell Douglas framework, and that a grant of summary judgment was unwarranted because there were disputed factual issues regarding whether Oakton’s given reason for the decision not to employ any SURS annuitants was pretextual. Id. at *10. Noting that all SURS annuitants were fired, and that all employees — regardless of age — who remained employed by the college were not SURS annuitants, the Court held that Plaintiffs did not make out a prima facie case of discrimination under the McDonnell Douglas framework. Id. at *11.

Turning to Plaintiffs’ disparate impact claims, Oakton argued that Plaintiffs could not make out a prima facie case because they could not establish that Oakton’s decision to no longer employ SURS annuitants caused a significantly disproportionate adverse impact based on age, and that even if Plaintiffs could make out a prima facie case, summary judgment was warranted because its decision to discontinue the employment of all SURS annuitants was based on a reasonable factor other than age — namely, the desire to eliminate the risk of having to pay a penalty to SURS for employing an affected annuitant. Id. at *14-15. Plaintiffs identified a specific, facially neutral employment practice that they alleged adversely impacted them because of their age: i.e., Oakton’s decision not to employ any SURS annuitant after July 1, 2015. Id. at *15. The Court held this was likely sufficient to establish a prima facie case under a disparate impact theory. Id. However, the Court noted that none of the evidence cited by Plaintiffs undermined Oakton’s explanation that the only sure way to prevent mistaken employment of an affected annuitant and the resulting payment to SURS was to discontinue the employment of all SURS annuitants. Id. at *16. Acknowledging that there may have been other reasonable and more narrowly tailored ways for Oakton to address this problem, the Court nonetheless held that no reasonable jury could find that Oakton’s decision to no longer employ any SURS annuitants was unreasonable. Id.

Accordingly, the Court granted summary judgment for Oakton (and all other Defendants) on Plaintiffs’ disparate impact age discrimination claims under the ADEA and the IHRA. The Court also granted summary judgment for Defendants as to the remaining state law and other claims.

Implications For Employers

Employers who are considering whether to discontinue the employment of a large number of older employees must be cognizant that such personnel decisions could make them prime targets for ADEA collective actions and/or class actions under state workplace laws. In Filipek, the employer emerged victorious at the summary judgment stage because it discontinued the employment of all annuitants, and therefore, its employment decision did not amount to age discrimination. Nonetheless, employers should exercise extreme caution when considering mass lay-offs or employment discontinuances given how closely courts (and the plaintiffs’ class action bar) scrutinize such decisions.