• High Court Shifts Burden to Employers in Certain Age Discrimination Cases
  • August 6, 2008
  • Law Firm: Miller & Martin PLLC - Chattanooga Office
  • The Supreme Court recently held that an employer defending an age discrimination claim on the basis of "reasonable factors other than age" (RFOA) has the burden to produce evidence of the defense and persuade the court or jury of its applicability.  In Meacham v. Knolls Atomic Power Laboratory, the employer alleged it had to lay off employees due to an involuntary reduction in force.  To determine which employees would be discharged, the employer asked its managers to score subordinates based on performance, flexibility, and critical skills.  As a result, 30 out of 31 people ages 40 and above were laid off.  The laid-off employees brought a disparate impact and disparate treatment action alleging that employer's method of determining layoffs had a discriminatory impact on employees protected under the Age Discrimination in Employment Act (ADEA).  The jury ruled in favor of the plaintiffs on the disparate impact claim and the employer appealed.

    Initially, the Court of Appeals for the Second Circuit agreed with the jury's verdict, but after an order by the Supreme Court of the United States to review the decision again in light of 2005 opinion issued while the employer's petition was pending, the Second Circuit reversed the jury's verdict because the employee failed to prove that the employer's system for determining layoffs was unreasonable.  The Supreme Court reversed the decision by the Second Circuit asserting that in the text of the ADEA, Congress intended both the RFOA and the bona fide occupational qualifications (BFOQ) issues to be affirmative defenses that fall on the employer to prove.

    Disparate impact cases under discrimination laws are typically governed by a three-step analysis:

    1. an employee must identify a specific employment practice and establish that its effect is discriminatory
    2. the employer must then offer a legitimate "business necessity" for the practice
    3. the burden then shifts back to the employee to show that the demonstrated business necessity either does not support the employment practice or that an equally effective alternate practice would have been less discriminatory

    The Court rejected the use of the second and third steps in ADEA actions because it would be wasteful and confusing to apply both a business necessity test and the RFOA defense.  Accordingly, the employee must establish that an employer's business practice had a disparate impact among older workers, and the employer must then prove that any disparate impact was based on reasonable factors other than age.

    This opinion inevitably makes it harder and costlier for employers to defend ADEA disparate impact actions.  The increased prospect of liability may force employers to consider and reconsider various plans designed to streamline their workforce in light of changing market conditions. Employers would be well served to ensure that lay-off decisions and other RIFs do not affect workers over 40 in a disproportionate manner.