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March 30, 2005
ADEA allows disparate impact claims - sort of
The US Supreme Court has endorsed using disparate impact theory in ADEA cases, but now we have to go back and relearn all the pre-1991 cases. Smith v. City of Jackson (US Supreme Court 03/30/2005).
Older cops sued the City claiming that a new pay plan gave them lower raises than younger cops got. Reason? The City granted proportionately more money to officers with less than five years' service in an attempt to bring starting salaries up to the regional average. The 5th Circuit said the plaintiffs must lose because the ADEA categorically disallows disparate impact claims. The US Supreme Court affirmed the judgment for the City on totally different grounds: the ADEA does allow disparate impact claims, but the plaintiffs lost on the merits.
Disparate impact theory got its wings in Griggs v. Duke Power, 401 US 424 (1971), a Title VII case. Those wings got clipped in Wards Cove v. Atonio, 490 US 642 (1989). Wards Cove says that plaintiffs are "responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities." Congress then adopted the Civil Rights Act of 1991 which codified disparate impact theory and made things a bit easier for plaintiffs - at least in Title VII cases. But Congress never amended the ADEA the way it amended Title VII.
The ADEA and Title VII are identical in one respect.
ADEA Section 4(a)(2) is the same as Title VII Section 703(a)(2) except for substituting "age" for "race, color, religion, sex, or national origin." From that similarity in statutory text the Court concluded that the ADEA does permit employees to use the disparate impact theory.
But there are two huge differences between Title VII and the ADEA.
Unlike Title VII, the ADEA significantly narrows its coverage via the "RFOA" provision which permits any "otherwise prohibited" action "where the differentiation is based on reasonable factors other than age."
Applying the RFOA provision, the Court said "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." Thus, the City's decision was based on a "reasonable factor other than age." There may have been other reasonable ways, including ways that did not have a disparate impact on older workers, but unlike the business necessity test, "the reasonableness inquiry includes no such requirement."
Law teachers will be pleased to learn that pre-1991 cases are now relevant to ADEA disparate impact analysis. Why? The 1991 Civil Rights Act overruled those cases for Title VII litigation, but not as they relate to the ADEA.
For ADEA cases, the Court will apply its pre-1991 interpretation of Title VII's identical language, most notably the interpretation in Wards Cove v. Atonio, 490 US 642 (1989). Wards Cove says that plaintiffs are "responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities," and the employees in this case have failed to do so. They did "little more than point out that the pay plan at issue is relatively less generous to older workers than to younger workers. They have not identified any specific test, requirement, or practice within the pay plan that has an adverse impact on older workers."
My view: (1) Employees can use disparate impact theory, but must sharpen their analysis and proof to fit the Court's pre-1991 cases interpreting Title VII. (2) Employers will easily win many cases under the RFOA provision because it only needs to be "reasonable" rather than a matter of "business necessity." Almost by definition, distinctions based on length of service or on rank will be reasonable.
Posted March 30, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
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