EEOC Proposes Rules Interpreting “Reasonable Factor Other than Age” Defense
In mid-February 2010, the U.S. Equal Employment Opportunity Commission issued its proposed rules on the "reasonable factor other than age" defense for employers in federal Age Discrimination in Employment Act ("ADEA") cases. 75 Fed. Register 7212 (Feb. 18, 2010). The public now has until April 19, 2010, to provide its comments in reaction to the proposed rule.
The "reasonable factor other than age" ("RFOA") defense was first recognized by the U.S. Supreme Court in Smith v. City of Jackson, 544 U.S. 228 (2005), when it ruled that the disparate impact theory of employment discrimination is available to claimants under the ADEA. In that case, the Supreme Court held that an employer may be liable for age discrimination if it implements a facially neutral policy or practice that has a disparate impact on persons in the protected age group. In support of this conclusion, the Supreme Court reasoned that the availability of the RFOA language in the ADEA, 29 U.S.C. § 623(f)(1), implied that the disparate impact approach was available. Three years later, the Supreme Court ruled that an employer has the burden of persuasion on the RFOA defense.
The EEOC's proposed rule, if adopted, and if followed by the courts, would substantially limit the availability of the RFOA defense to employers. For instance, to be "reasonable," a factor would have to be "objectively reasonable when viewed from the position of a reasonable employer (i.e., a prudent employer mindful of its responsibilities under the ADEA) under like circumstances." According to the EEOC, to establish the RFOA defense, an employer would be required to show "that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer." In other words, among other things, the employer would be required to prove that it used the factor to achieve a reasonable objective, and logically and fairly administered the factor so as to accomplish that objective and avoid age discrimination. The proposed rule would give the EEOC, plaintiffs and the courts numerous opportunities to pick at and second-guess an employer's stated basis for using a particular factor.
The proposed rule provides that relevant factors when assessing such reasonableness will include:
The EEOC's proposed rule also specifies that factors relevant to determining whether a factor is for a reason "other than age" include:
There are at least two significant features of this proposed rule. First, it conflicts with binding legal precedent from the Supreme Court. For example, the EEOC's proposed rule provides that - if an employer whose practices have a discriminatory impact on the protected age group had other less discriminatory options available - the availability of such alternatives would be a factor weighing against the "reasonableness" of the employer's practices. However, the Supreme Court, in City of Jackson, rejected this thinking:
Second, in disparate treatment discrimination cases, employers' highly subjective and discretionary judgments about employees (such as "a personality conflict," "a bad fit," "she's better with people," etc.) have often been found legal. Moreover, in age discrimination cases, even employer decisions based on factors that correlate with age (laying off the employees with the highest pay, for instance) have been upheld. As the EEOC's proposed rule suggests, however, in order to defend themselves against disparate impact claims, employers should be using policies and practices that are objectively-proven to 1) be best-suited for their desired business objectives and 2) have the least discriminatory impact on protected groups.
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©2010 Sherman & Howard L.L.C. March 5, 2010