Supreme Courts Finds Disparate Impact Claims Available Under ADEA

The U.S. Supreme Court last week issued an opinion allowing "disparate impact" claims to be filed under the Age Discrimination in Employment Act (ADEA).  The Court's decision resolves a disagreement among appellate courts regarding whether such claims can be brought under the ADEA.

Disparate impact claims argue that an employer's practice, that appears neutral on its face, falls more harshly on one group than another.  An example would be a requirement that all applicants for jobs hold high school diplomas.  A disproportionate number of minorities would be affected (impacted) by the rule, although the rule itself seems neutral.

No Requirement of Intent to Discriminate

A plaintiff is not required to prove intentional discrimination to prevail on a disparate impact claim. Although the Court has long held that disparate impact claims are available under Title VII, it had not specifically addressed this issue under the ADEA until now.

In Smith v. City of Jackson, MS (Mar. 30, 2005), the Court concluded that disparate impact claims are available under the ADEA.  In doing so, the Court relied primarily on the language itself of the ADEA, which is nearly identical to Title VII, and the Department of Labor and EEOC?s interpretations that the ADEA permits disparate impact claims.

Employer Defense:  Reasonable Factor Other than Age

The Court noted, however, that the scope of a disparate impact claim under the ADEA is narrower than such a claim under Title VII.  The Court observed that the ADEA specifically permits decisions that are based on reasonable factors other than age.  Plus, the Court observed that Congress did not amend the language of the ADEA when it amended Title VII in 1991 to expand the coverage of a Title VII disparate impact claim.

While finding that disparate impact claims are now available under the ADEA, the Court dismissed the plaintiffs' claims in Smith based on the specific facts of their case. The plaintiffs there were police officers who worked for the city of Jackson, Mississippi, and they claimed that salary increases received in 1991 violated the ADEA because they were less generous to officers over the age of 40 than to younger officers. The Court applied the analysis used in Title VII disparate impact claims that were decided before the 1991 revisions to that law and held that the plaintiffs' claims in this case failed because they did not identify any specific test, requirement, or practice within the pay plan that had an adverse impact on older workers. The Court noted that the employee is responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities. Accordingly, because the plaintiffs failed to identify a specific practice that had a disparate impact on workers over age 40, the Court dismissed the claim.

What this Means for Employers

This decision is a mixed bag for employers because it expands the scope of ADEA coverage for workers.  Statistics show that soon nearly half the employed workforce will be age 40 or older.  This means that every employment decision you make - whether a discharge, layoff or reduction in force - will be scrutinized for potential disparate impact.

The good news is that the scope of disparate impact claims under the ADEA is not as broad as those filed under Title VII.  Plaintiffs in ADEA disparate impact cases must identify a specific employment practice that disproportionately impacted them.  Then, employers will be able to show that the decision was based on a reasonable factor other than age to avoid liability.

If you have any questions about the impact of this decision on your business, call one of the attorneys in Phelps Jenkins experienced in employment matters.