EEOC Issues Final ADEA Regulation

The Equal Employment Opportunity Commission (EEOC) recently issued a final rule to amend its Age Discrimination in Employment Act (ADEA) regulation concerning "disparate-impact" claims (where the alleged discrimination is not intentional) and the reasonable factors other than age defense (RFOA). The final rule is effective April 30, 2012. The rule applies to private employers with 20 or more employees, state and local government employers, employment agencies, and labor organizations.

The new rule solidifies the EEOC's interpretation of Supreme Court precedent involving the ADEA. The new rule expressly provides that "whenever the 'reasonable factors other than age' defense is raised, the employer bears the burdens of production and persuasion to demonstrate the defense." The new rule also provides a non-mandatory list of "[c]onsiderations" that are relevant to whether a practice is based on a reasonable factor other than age that include, but are not limited to:

• 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.

Practical Guidance for Employers:

While age discrimination claims are nothing new to employers, this action by the EEOC is noteworthy because it emphasizes the numerous factors the EEOC and courts will be reviewing when a disparate impact age claim is made. Further, it underscores that the RFOA defense is very fact-specific; therefore, having a case dismissed on summary judgment based on the RFOA defense will likely be more difficult in the future.

• Employers need to focus on clearly defining and applying criteria well in advance of implementing a reduction in force.
• Employers need to train supervisors and reinforce the importance of fair, candid performance evaluations.
• Employers need to conduct a statistical analysis prior to implementing a reduction in force.