Defending age claims is now more arduous for employers
Published: May 7,2012
Although many of us don’t consider 40 “old,” the law does. With Idaho unemployment currently hovering just below eight percent and layoffs continuing throughout the state at many major employers—for instance, Idaho National Laboratory recently announced an additional 35 to 40 job cuts—the Age Discrimination in Employment Act (ADEA) of 1967 gives employers yet one more thing to consider if downsizing is in your company’s future.
The ADEA prohibits discrimination on the basis of age and covers employees who are 40 years of age and older, protecting workers from adverse employment actions on account of age. However, the ADEA also provides that employers may make an employment decision based on “reasonable factors other than age” (RFOA).
On March 30, 2012, the U.S. Equal Employment Opportunity Commission (EEOC) published a final rule, and addressed the RFOA defense in disparate impact claims under the ADEA. Industry’s hope that a final rule will provide clarity to employers engaged in reductions-in-force or setting workforce job qualifications was not realized. Under the final rule, the EEOC makes it more challenging for employers to implement facially neutral employment policies that should otherwise be lawful because they are based legitimate, non-age factors.
What does this mean for you, the employer? So long as an employer’s practices are based on reasonable factors other than age, neither the language of the ADEA nor Supreme Court precedent requires an employer to mitigate the potential harm of a practice or consider alternative practices to prevail on a RFOA defense. But the final rule deviates from the statute and case law by suggesting that an employer should be liable for a facially neutral practice if it “negligently” or “unreasonably failed to mitigate” the disparate impact on older workers associated with its employment practice.
These “considerations” turn the RFOA analysis into something the Supreme Court has said has no place in the ADEA. To date, the law had provided that employers may lawfully implement a facially neutral employment practice, even one that has a disparate impact on older workers, so long as it is based on reasonable, non-age factors. Yet, the EEOC’s revised rule suggests that employers can only prevail on a RFOA defense if they demonstrate that they reasonably mitigated the potential impact of their practices and trained supervisors to avoid age-based considerations and stereotypes. By including within the definition of “reasonable” whether the employer applied a policy in an age-neutral fashion effectively requires the employer to consider age in deciding whether the non-age factor is reasonable. This minimizes the size and strength of a RFOA defense.
When an employer is defending a facially neutral employment practice—i.e., a practice based on reasons other than age—it makes no sense to require the employer to come forward with evidence that it considered age and age-based stereotypes in implementing the practice.
While I believe the EEOC’s regulations are inconsistent with the ordinary language of the ADEA and case law, these regulations have the force and effect of law and employers should nevertheless be mindful of the regulations when implementing policies and practices that could have a negative effect on older workers.
How do you protect yourself as an employer from this recent guidance from the EEOC when making employment decisions? Recommended best practices include:
• Document the business needs and goals that serve as the basis for an employment practice or policy that may adversely impact older workers. For example, if an employer is modifying its attendance policy to curb unreliable attendance or excessive absenteeism, analyze and document how the revised policy will achieve the intended results.
• Retain evidence that drives any decision that may affect employees in a protected class, age or otherwise. For example, if employee performance is a key factor in a workforce reduction selection process, retention of accurate performance records will be critical.
• In workforce reductions, ensure that individual managers or supervisors understand the non-age factors on which they should make recommendations or selections; objective criteria are always better than subjective criteria. Senior management or an objective third-party should scrutinize decisions for any veiled age bias.
• Use statistical analysis to ascertain the risk of a disparate impact on older workers. Importantly, this analysis should be conducted and reviewed before an employment practice or decision goes into effect, not after litigation begins.
As the workforce landscape and economy continue to change, understanding grounds for employee dismissal and downsizing grows increasingly important. No employer wants to release reliable, dedicated workers, which is all the more reason to best understand the rules surrounding downsizing, should you have to.
Anne B. Wilde is an employment and ERISA employee benefits attorney. She is the principal of The HR & Benefits Advisor, PLLC, which advises employers and plan sponsors. Anne can be reached at anne@TheHRandBenefitsAdvisor.com or www.TheHRandBenefitsAdvisor.com.