Layoffs are sticky situations across the board. It's a stressful time for everyone involved. Many employees believe that organizations will terminate higher paid employees to help curb costs. That may be so, but, what if those higher paid employees are also employees over the age of 40? Is the business unwittingly setting itself up for a possible discrimination claim?

The Age Discrimination in Employment Act

The Age Discrimination in Employment Act (ADEA) prohibits discrimination against people who are age 40 or older, notes the Equal Employment Opportunity Commission (EEOC). A business may not discriminate with respect to age during any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff or any other term or condition of employment. Also, an employment policy or practice that applies to all employees and appears neutral on its face, regardless of age, can be illegal if it has a negative impact on applicants or employees aged 40 or older and is not based on a reasonable factor other than age.

Direct or Circumstantial Evidence

Generally, to prove age discrimination, an employee has the burden to prove that they would not have been laid off but for their age. That's a high burden unless the employee has direct or circumstantial evidence of discrimination. For example, if there was any communication of younger workers being preferred, if proven in an EEOC litigation, could serve as direct evidence of discrimination.

Disparate Impact

An employee may prove that an organization's actions have a disparate effect on older employees. A disparate impact lawsuit would be one where a neutral policy or practice has a negative impact on employees aged 40 or older. For example, employees could argue that a business's policy of using seniority in its consideration of employer-wide layoff would have a disproportionate impact on employees over the age of 40.

In Karlo v. Pittsburgh Glass Works, LLC, the Third Circuit held that this disparate effect could apply to subsets above the age of 40, meaning that the policy could have a negative impact on workers over 50, but not on those over 40. The court held that such disparate treatment violated the discrimination provisions of the ADEA. This judicial decision is in conflict with other circuit courts, and may go to the Supreme Court for final resolution.

Reasonable Factor Other Than Age

So what should an employer do if an employee asserts a disparate impact claim based on age? The employer can rely upon the Reasonable Factor Other Than Age (RFOA). In the 2012 regulations, the EEOC listed certain criteria that would satisfy the "reasonable" factor standard for RFOA, including:

  • 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.

Historically, discrimination asserting age was difficult for employees to prove, as they had to rely solely upon direct or circumstantial evidence. However, now the courts and the EEOC have broadened the ability to prove and defend discrimination with disparate impact and reasonable factor other than age. With the courts active in this area with redefining and expanding the rules, and with the EEOC working its way through 20,857 age discrimination charges from 2016 alone, businesses should examine their current employment policies and practices seeing if they unknowingly have a disparate effect on older employees.

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Tags: Compliance employment regulations Data Security EEOC