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July 18, 2005
"Reverse" age discrimination unlawful in Minnesota
Federal law does not prohibit employers from preferring older workers over younger ones. State law can, and Minnesota law does prohibit older worker preferences.
A collective bargaining agreement required 1 out of every 5 electrical workers in a unionized shop to be 50 years of age or over. The employer let go two over-50 employees as part of a reduction in force. The union filed a grievance, which went to arbitration.
The arbitration panel ruled that the employer violated the agreement by not maintaining the 1-to-5 ratio, and awarded lost wages to the two employees.
The 8th Circuit held (2-1) that the arbitration award could not be enforced because it violated public policy - a rare outcome. The public policy was found in the Minnesota Human Rights Act. That statute, says the court, "prohibits using a person's age as a basis for a decision if the person is over the age of majority." Ace Electrical Contractors v. IBEW (8th Cir 07/14/2005).
The dissent would have upheld the arbitration award under the usual highly deferential rules for reviewing such awards, noting that "the law of Minnesota simply does not provide the clarity necessary to invoke the public policy exception.
My view:
- A reminder that federal and state law can be quite different on important questions of employment discrimination law.
- This case is an unusual example of a court refusing to uphold an arbitration award, on the ground that the award violated public policy.
Posted July 18, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
June 06, 2005
Refusing to Retire: What Can Be Done
Judge Richard Posner, who would prefer to repeal the Age Discrimination in Employment Act (ADEA), is proposing that old folks take a test. You have to read the whole thing on The Becker-Posner Blog [here], but here's an extract:
I wish to make a suggestion that would achieve the principal benefits of mandatory retirement without the principal costs. It is simply this: beginning at age 70, require every life-tenured professor and every life-tenured judge to take a test of mental acuity every five years. (I use these simply as examples of "light" jobs from which the occupant is unlikely to be forced to retire by the demands that the job places on him.) The test results would be available to the members of the professor's department or the judge's court but to no others. The results would not be a basis for a determination of incapacity; they would not even be admissible in a competence hearing. The expectation rather is that a poor test result would persuade the individual, perhaps by persuading his colleagues who would in turn persuade him, or persuade members of his family to persuade him, to retire voluntarily.
My view: I'd be more interested if Judge Posner would give a better explanation of why the test should not be given to all judges and profs.
Posted June 06, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
May 03, 2005
Legalese torpedoes waiver of ADEA claims
When IBM terminated folks in a RIF, they asked Dale Thomforde to sign a form called "General Release and Covenant Not to Sue." Although the form was drafted as a general release of all claims, Thomforde noticed some language in the form about suing IBM under the ADEA. He asked his supervisor if that language would allow him to sue IBM if the case was limited to the ADEA. The supervisor asked the legal department and then told Thomforde that the company's attorney was "not comfortable providing an interpretation for you and suggested you consult with your own attorney."
IBM's drafters set the form up as both a release of all claims and a covenant not to sue. They created an exception to the covenant (but not to the release) for ADEA suits. Why? To allow a suit challenging the validity of the waiver, but not to allow suits on the merits of the ADEA.
The Older Workers Benefits Protection Act (OWBPA) requires waivers of ADEA rights to be "written in a manner calculated to be understood by such individual, or by the average individual eligible to participate."
In Thomforde v. IBM (8th Cir 05/03/2005) the 3rd Circuit said the difference between a release and a covenant not to sue "may not be readily apparent to a lay reader." (Chuckle. A lot of lawyers are equally clueless. That's no criticism of lawyers, just something IBM might have thought of when they were drafting.) "Once IBM chose to use the legal terms of art ..., IBM had a duty to carefully explain the provisions." The form also used the terms release and covenant in a way that suggested they were interchangeable.
So, combining the "lack of clarity" in the form plus IBM's not telling Thomforde what it meant by the language - presto - not "written in a manner calculated to be understood." The release did not satisfy the OWBPA requirements, so it was not a bar to an ADEA suit on the merits.
My view: I must confess; when I first read the document I was not sure what it was intending to say about ADEA claims, and it appeared to be internally inconsistent. So I was not surprised by the court's decision.
A case involving a similar agreement is pending in the 9th Circuit. Syverson v. IBM (ND Calif 05/04/2004), appeal docketed, No. 04-16449 (9th Cir 07/26/2004). Knowing the 9th, I expect the same result.
Posted May 03, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
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.
February 01, 2005
Does disparate impact theory apply in age discrimination cases?
In Smith v. Jackson, Mississippi the US Supreme Court will decide whether the disparate impact theory of proof can be applied in a case arising under the Age Discrimination in Employment Act (ADEA).
Plaintiffs were City police officers and dispatchers over the age of 40 who claimed that the City's performance pay plan granted substantially larger pay increases to employees under age 40. Under the pay plan, employees with five or fewer years of tenure received proportionately greater raises when compared to their former pay than those with more than five years of tenure. Plaintiffs offered statistical proof that average pay increases differed by age and older employees received smaller raises than younger employees. The trial court held that the disparate impact theory could not be used in an ADEA case; the 5th Circuit affirmed [Full text pdf]. The US Supreme Court is reviewing the 5th Circuit decision [Briefs], and heard oral arguments [Transcript pdf] on November 3, 2004.
Circuit courts are split on this issue. Those allowing use of the disparate impact theory are the 2nd, 8th, and 9th. Those not allowing the disparate impact theory are the 1st, 5th, 7th, 10th, and 11th.
It all started with Griggs v. Duke Power, 401 US 424 (1971). The employer required a high school diploma for entry into certain jobs. This requirement disqualified Blacks at a much higher rate than Whites. The US Supreme Court held that once the plaintiffs proved this "disparate impact," then the burden shifted to the employer to justify the practice by showing job relatedness or business necessity.
Griggs was a Title VII case. Smith is an ADEA case. The statutes are similar in one major respect: the primary prohibitory language is virtually identical. Of course, the plaintiffs latch onto that, plus an EEOC regulation that recognizes disparate impact.
On the other hand, the ADEA contains a clause that is similar to the Equal Pay Act (EPA). The ADEA has a specific exception for "where the differentiation is based on reasonable factors other than age" (RFOA), similar to the EPA's exception for "any factor other than sex." The Supreme Court has said there can be no disparate impact claims brought under the EPA, and that was in large part because of the "any factor other than sex" language. This favors the employer's position, and is the backbone of many lower court decisions.
An interesting twist is whether the Older Workers Benefit Protection Act (OWBPA) should be read as making the RFOA an affirmative defense rather than a redefinition of liability. NELA makes a great argument along this line in its amicus brief [brief pdf].
Finally, there is the fact that the Civil Rights Act of 1991 amended Title VII to make clear that disparate impact claims could be brought under Title VII, but made no such amendment to the ADEA. I think that will be irrelevant because the Court should not interpret Congress' non-action as evidence of Congressional intent.
Posted February 01, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
Does disparate impact theory apply in age discrimination cases?
In Smith v. Jackson, Mississippi the US Supreme Court will decide whether the disparate impact theory of proof can be applied in a case arising under the Age Discrimination in Employment Act (ADEA).
Plaintiffs were City police officers and dispatchers over the age of 40 who claimed that the City's performance pay plan granted substantially larger pay increases to employees under age 40. Under the pay plan, employees with five or fewer years of tenure received proportionately greater raises when compared to their former pay than those with more than five years of tenure. Plaintiffs offered statistical proof that average pay increases differed by age and older employees received smaller raises than younger employees. The trial court held that the disparate impact theory could not be used in an ADEA case; the 5th Circuit affirmed [Full text pdf]. The US Supreme Court is reviewing the 5th Circuit decision [Briefs], and heard oral arguments [Transcript pdf] on November 3, 2004.
Circuit courts are split on this issue. Those allowing use of the disparate impact theory are the 2nd, 8th, and 9th. Those not allowing the disparate impact theory are the 1st, 5th, 7th, 10th, and 11th.
It all started with Griggs v. Duke Power, 401 US 424 (1971). The employer required a high school diploma for entry into certain jobs. This requirement disqualified Blacks at a much higher rate than Whites. The US Supreme Court held that once the plaintiffs proved this "disparate impact," then the burden shifted to the employer to justify the practice by showing job relatedness or business necessity.
Griggs was a Title VII case. Smith is an ADEA case. The statutes are similar in one major respect: the primary prohibitory language is virtually identical. Of course, the plaintiffs latch onto that, plus an EEOC regulation that recognizes disparate impact.
On the other hand, the ADEA contains a clause that is similar to the Equal Pay Act (EPA). The ADEA has a specific exception for "where the differentiation is based on reasonable factors other than age" (RFOA), similar to the EPA's exception for "any factor other than sex." The Supreme Court has said there can be no disparate impact claims brought under the EPA, and that was in large part because of the "any factor other than sex" language. This favors the employer's position, and is the backbone of many lower court decisions.
An interesting twist is whether the Older Workers Benefit Protection Act (OWBPA) should be read as making the RFOA an affirmative defense rather than a redefinition of liability. NELA makes a great argument along this line in its amicus brief [brief pdf].
Finally, there is the fact that the Civil Rights Act of 1991 amended Title VII to make clear that disparate impact claims could be brought under Title VII, but made no such amendment to the ADEA. I think that will be irrelevant because the Court should not interpret Congress' non-action as evidence of Congressional intent.
Posted February 01, 2005 by Ross Runkel, Editor at LawMemo, publisher of Employment Law Memo. Try it.
