W e have prepared this Alert to advise you policies have a - - PDF document

Employment Law Alert

May 2005

Disparate Impact Claims Permitted Under the Age Discrimination in Employment Act

By Martha L. Lester, Esq., Miguel A. Pozo, Esq., and Stefanie P . Tavaglione, Esq.

W

e have prepared this Alert to advise you

• f a March 30, 2005, decision by the

United States Supreme Court that affects all employers. As a result of this decision by

• ur highest court, employees have another means

by which to bring age discrimination claims against their employers. Now, plaintiffs may bring “disparate impact” claims under the Age Discrimination in Employment Act (“ADEA”). This means that employees now may challenge facially neutral policies and practices that negatively result in disparate impact. This has long been the view of the Equal Opportunity Commission and the United States Department of Labor, both of which have supported relief under the ADEA for disparate treatment and disparate impact.

Background:

In 1967, Congress enacted the ADEA to end age discrimination against older employees and to encourage their employment. Since its inception, the ADEA has afforded employees a “disparate treatment” cause of action, i.e., where an employer intentionally discriminates or takes an adverse action against an employee based on age. However, until now, it has been unclear whether “disparate impact” claims are cognizable under the ADEA, i.e., whether an employee has a cause of action against an employer under the ADEA if the employer’s policies have a discriminatory effect or impact on the older employee, even though such adverse effect or impact was unintentional. Historically, the United States circuit courts have attempted to answer the question by comparing Congress’ intent in enacting both Title VII of the Civil Rights Act of 1964 (“Title VII”) and the ADEA. Title VII bans discrimination based on race, color, religion, sex, and national

• rigin, and its text and purpose is similar to the

anti-age discrimination provisions of the ADEA. Title VII disparate impact claims have long been

• recognized. However, to date, the circuit courts

have been divided as to the viability of disparate impact claims under the ADEA. The Third U.S. Circuit Court of Appeals (New Jersey’s circuit), formerly held in a 1995 decision that it was “doubtful that traditional disparate impact theory is a viable theory of liability under the ADEA.” In its recent decision, the United States Supreme Court finally has put an end to the debate among the circuit courts and thereby has changed the employment landscape.

The Supreme Court’s Decision:

In Smith v. City of Jackson, No. 03-1160, the Supreme Court considered whether the disparate impact theory of recovery first announced in Griggs

• v. Duke Power Co. is cognizable under the ADEA.

The Supreme Court answered this question in the

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affirmative and concluded that the ADEA protects employees from employer actions that may appear facially neutral, but have a disproportionately adverse impact on older workers. In Smith, a group of police and public safety

• fficers employed by the City of Jackson,

Mississippi, sued the city alleging that its performance pay plan discriminated against older

• employees. Under the plan, junior officers received

proportionately higher percentage pay increases compared to more senior officers. The older

• fficers argued that: (1) the city deliberately

discriminated against them based upon age (disparate treatment discrimination); and (2) they were “adversely affected” by the plan because of their age (disparate impact discrimination). In response, the city argued that it did not design the pay policy to discriminate based on age. Rather, the stated goal of the performance pay plan was to retain junior officers by making entry-level salaries competitive with those of other local police departments. After losing on claims of disparate treatment and disparate impact at the district court level, the Fifth U.S. Circuit Court of Appeals allowed the ADEA disparate treatment claim to move forward, but held that the disparate impact claims were

• unavailable. The senior officers appealed to the

United States Supreme Court. The United States Supreme Court held that disparate impact claims are, in fact, available to employees under the ADEA. Thus, the senior

• fficers did not have to prove deliberate

discrimination against them; rather, they had to prove only that the city’s performance pay plan disproportionately harmed them. However, based

• n the facts before it, the Supreme Court affirmed

the Fifth Circuit’s dismissal of the disparate impact claim, finding that the senior officers did not demonstrate that they suffered from a disparate impact because of the city’s pay plan. The Supreme Court accepted the city’s reliance on seniority and rank, as well as the city’s justification - that it was trying to retain officers by making junior officers’ salaries more competitive with comparable positions in the local market - as an acceptable “reasonable factor other than age.”

The Impact of Smith v. Jackson:

What does this mean to you as an employer? This ruling means that older employees now have an additional cause of action against their employers under the ADEA. They are no longer required to prove discriminatory intent. Employers, therefore, must be prudent in creating and drafting new policies and practices, and in evaluating existing policies to be certain that older employees are not adversely impacted, even though the policies and practices might not have been created or carried out with discriminatory intent. However, the Smith v. Jackson ruling also makes clear that older employees must meet a high threshold to prove a claim of disparate impact age discrimination under the ADEA. The Supreme Court noted that the scope of the disparate impact theory of liability is more narrow under the ADEA than that under Title VII. This is true because, unlike the protected classifications under Title VII (race, color, religion, sex, and national origin), the age of a worker “not uncommonly has relevance to an individual’s capacity to engage in certain types

• f employment. ...” Therefore, according to the

Supreme Court, an employer may justify policies that have a disproportionately adverse impact on

• lder employees, as long as the employer’s policies

and/or practices were created based upon

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reasonable factors other than age. It is therefore critical that, as an employer, you are able to support your decisions as grounded on reasonably sound, non-discriminatory factors. The law in the area of workplace discrimination continues to evolve. If you have any further questions about the issue discussed in this Alert, or whether any

• f your policies should be examined as a result of these

decisions, or any other employment practices or compliance issues, please do not hesitate to call Martha

• L. Lester, Chair of the Employment Law Practice

Group, or Miguel A. Pozo and Stefanie P . T avaglione, members of the Employment Law Practice Group, at (973) 597-2500.

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New Edition Coming Soon

The new edition of “The Practical Guide to Federal and New Jersey Employment Law: The Employers’ Resource,” Executive Editor, Martha L. Lester, includes:

Federal Law Updates Easy-to-Follow Index New In-Depth Chapters

The Guide, published in connection with the New Jersey Business & Industry Association, is the resource for New Jersey employers seeking to comply with applicable federal and state laws, regulations and procedures in the employment-related area. It provides management with critical information concerning existing laws, emerging trends, most frequently asked questions, and practical tips on managing the workforce and workplace. T

• obtain your copy of the new edition of, “A

Practical Guide to Federal New Jersey Employment Law: The Employer’s Resource,” please contact Karen Cerreto at 973.422.6466 or email kcerreto@lowenstein.com.