A Look Ahead: Preview of U.S. Supreme Court Term 2004-2005
December 29, 2004
The U.S. Supreme Court began hearing oral arguments for the 2004-2005 term in September 2004. The 2004-2005 docket is brimming with more than 50 high profile cases. This article highlights a case that presents an issue of particular interest to employers and employment attorneys – whether the Age Discrimination in Employment Act bars neutral policies that impact older employees more significantly than younger employees.
Does a Tenure Based Program Constitute Age Discrimination?
Disparate Impact Claims and the ADEA
Azel Smith, et al. v. City of Jackson, Mississippi, et al.
Background
The plaintiffs are a group of police officers, employed by the City of Jackson, all over the age of 40. In October 1998, the city adopted a plan that would result in salary increases for all city employees. The plan was later revised in March 1999, to grant raises to all police officers and dispatchers. However, this revision specifically provided that officers and dispatchers with tenure of five years or less received proportionally larger raises than employees with tenures of more than five years.
The plaintiff officers claim that even though the salary increase policy does not directly rely on age, it nonetheless effectively favors younger employees. They argue that because most officers and dispatchers with five years of tenure or less are under the age of 40, the pay plan has a disparate impact on employees over the age of 40. In contrast, the city argues that it had a legitimate, non-discriminatory reason for adopting the revised pay plan: to bring starting salaries for police officers up to the regional average, to develop a more generous pay scale, and to consider tenure as a factor in the pay scale. The city also argues that only intentional age discrimination violates the ADEA. Because disparate impact claims arise from facially neutral employment policies and practices that have a greater impact on a particular group, and do not involve intentional discrimination, the city argues that the mere fact that a non-age based policy may impact employees over 40 more heavily than employees under 40 does not create an ADEA violation.
Procedural History
The Southern District of Mississippi granted the city’s motion for summary judgment. The officers appealed. The Fifth Circuit held that the finding of summary judgment on the disparate treatment claim was premature in light of ongoing discovery disputes. The Court, however, found summary judgment proper with respect to the disparate impact claim, as it was not persuaded that a claim of age discrimination was actionable under a disparate impact theory.
Circuit Splits
The U.S. Supreme Court ruled in 1993 that the consideration of length of service is not the same as consideration of age.1 The Court determined that while claims for disparate treatment were clearly covered by the ADEA, it was not clear whether claims for disparate impact were also actionable. (Hazen Paper v. Biggins, 507 U.S. 604, 610 (1993)) (“By contrast, we have never decided whether a disparate impact theory of liability is available under the ADEA, and we need not do so here.”).
Other federal courts have addressed the issue of whether disparate impact claims are permitted under the ADEA. For example, the Seventh Circuit held prior to 1993 that disparate impact claims were cognizable under the ADEA, but reversed that conclusion after the Hazen decision. Since Hazen, several federal appellate courts have debated whether disparate impact claims are actionable under the ADEA; most courts compare the similarities and differences between Title VII and the ADEA in deciding which way to decide the issue. In 1991, Title VII was updated and Congress added language that Title VII prohibited actions that have a “disparate impact, irrespective of motive or intent.” Similar language is markedly absent from ADEA, despite several amendments. Further, a 1991 amendment to the ADEA added language excluding liability where an employer’s action is based on “reasonable factors other than age.” Some circuits interpret “reasonable” to provide an exception to liability and believe that such an exception signifies Congress’ intention to exclude unintentional discrimination, and thus, consequently, would not permit claims under the disparate impact theory. Of course this language can be interpreted differently. Other courts have argued that this language could be read as announcing a general rule that disparate impact is actionable but then carving out a defense for adverse impacts that can be justified as a business necessity.
The First, Fifth, Seventh, Tenth and Eleventh Circuits have all determined that the ADEA does not permit claims for disparate impact, and there is no evidence that Congress intended for disparate impact claims to be actionable under the ADEA. The Second, Eighth and Ninth Circuits have ruled in favor of permitting disparate impact claims under the ADEA.
Quick Note on Legislative History
According to the Fifth Circuit’s review of the legislative history, the ADEA’s protected class (employees over the age of 40) is more susceptible to disparate treatment based upon age and not neutral policies or practices that result in disparate impact. This legislative history, may indeed be outdated as the initial report was filed in 1965 and last updated in 1981.
Significance
The text of the ADEA states that its purpose is to promote the employment of older employees and prohibit arbitrary age discrimination in employment. While the ADEA expressly prohibits direct and express age discrimination in employment policies or practice, there is much debate as to whether language added by subsequent amendments makes unlawful neutral employment practices and policies that have a greater adverse impact on employees over the age of 40.
The question is of enormous importance to employers. The over 40 working population continues to grow. It is a fact of life that legitimate employment issues – such as performance – are to a degree correlated with age. Thus, performance requirements and other seemingly legitimate and neutral policies and practices are likely to have a more substantial adverse impact on employees over the age of 40. Because proof of a discriminatory motive is not necessary for a finding of disparate impact liability, a Supreme Court decision allowing disparate impact liability will allow suits without any showing of discriminatory intent and require employers to justify these practices in court.
We will keep you posted on the outcome of this landmark case.
For more information, e-mail Jolynn Caroline at
jolynn.caroline@hklaw.com or call toll free, 1-888-688-8500.
1 Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993).
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