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April/May
2005
 Sharply
Divided Supreme Court Makes It Easier for Older Workers to Sue Employers
By a 5-3 margin,
the U.S. Supreme Court has endorsed disparate-impact lawsuits under
the Age Discrimination in Employment Act (ADEA). The Court’s ruling
opens the door wide for lawsuits by older workers alleging that an employer’s
practice or policy adversely affects them, even though no harm was intended.
The ADEA makes it
unlawful to discriminate against employees who are 40 years of age or
older—a group that makes up almost one-half of U.S. workers.
While intentional
discrimination (disparate treatment) is clearly prohibited by the ADEA,
the federal courts have been divided as to whether a practice that has
a consequence of adversely affecting older workers, although lacking
discriminatory intent, is actionable.
The case, Smith
v. City of Jackson, Miss., arose when the City, desiring to remain
competitive with the average starting salary in the region for police
officers, granted officers with less than five years of tenure proportionately
greater raises than officers with greater seniority. Most older officers
had more than five years of service.
A group of older
officers sued the City, in part alleging that the City’s policy
adversely affected them. Both the district court and Fifth Circuit Court
of Appeals dismissed the claim. The Fifth Circuit held that disparate-impact
claims are categorically unavailable under the ADEA. The U.S. Supreme
Court granted certiorari to hear the case.
A majority of the
Justices held that the ADEA does authorize recovery in disparate-impact
cases. But in a cruel twist of fate, a unanimous Court affirmed the
lower court’s dismissal of the officers’ case.
The five-member
majority based their affirmation on what is known as the “RFOA,”
or “reasonable factor other than age,” provision of the
ADEA. That provision provides that it shall not be unlawful for an employer
“to take any action otherwise prohibited [by the ADEA] . . . where
the differentiation is based on reasonable factors other than age discrimination
. . . .” The application of the RFOA provision to disparate-impact
claims substantially softens the blow delivered by the recognition of
such claims.
The majority held
that “the disparate impact is attributable to the City’s
decision to give raises based on seniority and position. Reliance on
seniority and rank is unquestionably reasonable given the City’s
goal of raising employees’ salaries to match those in surrounding
communities.” Because the City’s decision was based on a
reasonable factor other than age, the officers’ claim failed.
(The outcome was unanimous because the three-member minority would have
affirmed the lower court’s decision that disparate-impact claims
are not actionable. Therefore, the eight participating Justices all
affirmed the judgment of the lower court dismissing the action, although
they did not agree on the reasoning. Chief Justice Rehnquist took no
part in the decision.)
Employer
Notes: The City of Jackson case makes it imperative
that every employer policy, practice, and action be carefully examined
for any possible adverse impact on employees 40 years of age and older.
While basing decisions on reasonable factors other than age will act
as a defense to a lawsuit, it will be the courts that ultimately decide
what is reasonable
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