A Federal Appeals Court has ruled that subgroups of older employees (e.g. employees in their 50’s) can claim that an employment action illegally impacts them based on age even if the overall effect on employees in the protected age group (40-and-over) is fair and neutral.
This decision radically diverges from other federal court rulings and may set the stage for resolution by the US Supreme Court.
Age is More Than a Number
In 2008, automotive glass manufacturer Pittsburgh Glass Works, LLC undertook workforce reductions in response to declines in the American automobile industry. One stage of the process resulted in one hundred salaried employees losing their jobs. A number of those employees over the age of 50 (“the 50’s”) objected to what they felt was an unfair impact on their age group and sued in federal court under the Age Discrimination in Employment Act (ADEA).
Among other claims, the 50’s asserted the theory of disparate impact – a claim that a facially neutral policy or decision unfairly burdened those within a legally protected group more than those outside the group. If the disproportionate burden is proved, the burden falls to the employer to show that the policy or decision was nevertheless a legitimate business decision. Otherwise, the action will be considered illegally discriminatory. In other words, this type of claim addresses practices that are “fair in form, but discriminatory in operation.”
Layoffs and staff reductions are often targeted with this sort of claim. If a disproportionate number of protected workers (e.g. minority employees or older workers) are affected, the employees might claim adverse impact. The employer in turn will then be called upon to show that their methodology for choosing the affected employees, such as seniority or job performance, was a legitimate basis for decision-making.
Discrimination is Old Fashioned
In this case, the employer did not appear to have bona fide criteria for their decision. Nevertheless, the lower court dismissed the case on a motion for early decision, predictably concluding that despite the adverse effect on the 50’s, the impact on the actual class of employees protected under the ADEA (those 40 and older) was neutral. As such, there was no adverse impact upon a legally protected group.
The 50’s appealed to the Third Circuit Court of Appeals, who reversed and allowed the 50’s to proceed to a full trial. They noted that the “plain language” of the ADEA provides that employees are protected from adverse employment actions because of their age, not because they belong to a group of people 40 and over. If someone is adversely affected because they are 50, that is age discrimination regardless of how well a 40-year-old might have been treated.
The court explained that unlike other protected classes such as race or gender, age is a “continuous” variable. People in their 50’s and 60’s who endure obvious age-based discrimination therefore are not likely to feel comforted by hearing that people far younger (but still in the protected age group) have been treated favorably.
In fact, the Third Circuit suggested that adopting the position of the other appeals courts would harm “those most in need of the statute’s protection” by allowing employers to “average out” the harms suffered by their oldest employees by according favorable treatment toward employees in their 40’s. The Third Circuit therefore rejected the reasoning of the other federal courts, which they deemed unpersuasive and incorrectly concerned with proliferation of additional employer liability.
Bottom Line
The Federal Eighth Circuit Court of Appeals, which hears cases arising in Minnesota, is one of those other federal courts that has come down differently on this issue. As a result, this case is troubling since it could inspire adversely affected employees to pursue claims seeking to persuade the Eighth Circuit to change their position on this issue.
To guard against that possibility, it would be wise for Minnesota employers engaged in staff reductions to consider expanding their adverse impact analysis to incorporate age-related subgroups as well as the comprehensive 40-and-over protected class.