Employers Not Liable for Age Discrimination Absent Discriminatory Intent
Employers faced with cutbacks and downsizing can breathe a little easier. In Mullin v. Raytheon Company (1st Cir. 1999), the Court of Appeals for the First Circuit joined courts from the Sixth, Seventh and Tenth Circuits in holding that employees cannot maintain a claim under the Age Discrimination in Employment Act (ADEA) without evidence of discriminatory intent.
The facts in Mullin are all too familiar. In response to cuts in defense spending, Raytheon, a large defense contractor, restructured and downsized its work force. As part of this restructuring, Raytheon re-evaluated the responsibilities and compensation of its upper-level managers, including the plaintiff. Raytheon eventually demoted the plaintiff and decreased his salary. The plaintiff brought suit, alleging age discrimination in violation of the ADEA.
The court found that Raytheon had assembled "strong, objectively verifiable" evidence of a legitimate, non-discriminatory explanation for the plaintiff's demotion: massive Defense Department cutbacks culminated in a uniform re-evaluation of all upper-echelon, salaried employees. The plaintiff, on the other hand, had failed to present any countervailing evidence that Raytheon's explanation was mere pretext. Accordingly, the court affirmed summary judgment for the employer on the plaintiff's discriminatory treatment claim.
The court also rejected the plaintiff's claim that, even if Raytheon lacked discriminatory intent, it was still liable for age discrimination because its restructuring had a "disparate impact" or disproportionate effect on older employees. After carefully scrutinizing the relevant statutory provisions, legislative history and case law, the First Circuit concluded that disparate impact claims are not cognizable under the ADEA.
For decades plaintiffs have brought successful disparate impact claims under Title VII, and, by analogy, courts in the Second, Seventh, Eighth and Ninth Circuits have permitted plaintiffs to bring similar claims under the ADEA. In 1993, however, the U.S. Supreme Court issued a watershed opinion in Hazen Paper Company v. Biggins. Although Hazen Paper involved a disparate treatment claim, the Supreme Court also explicitly rejected the rationale behind disparate impact claims under the ADEA. Distinguishing Title VII, which seeks to remedy past discriminatory practices, from the ADEA, which seeks to protect older workers from discrimination based on "inaccurate and stigmatizing stereotypes," the Supreme Court reasoned that the ADEA should not apply where factors other than age motivate employment decisions.
In the Mullin opinion, the First Circuit found the reasoning in Hazen Paper well-supported by a close reading of the ADEA's statutory language and legislative history. In contrast to Title VII, the ADEA contains an express proviso excepting employment actions "based on reasonable factors other than age." 29 U.S.C. §623(f)(1). When Congress amended Title VII in 1991 to provide explicitly for disparate impact claims, no similar amendment was made to the ADEA, although Congress did enact other modifications to that statute.
As confirmed in the ADEA's legislative history, Congress intended the ADEA to address the debilitating effects of stereotyping older employees while leaving educational and institutional programs to address disproportionate impact cases.
In sum, the Mullin decision offers much comfort to employers. The decision reinforces the principle that employers forced to downsize or restructure because of legitimate, non-discriminatory reasons will not be held liable for age discrimination claims, even if such employment actions have a disproportionate effect on older employees. The decision also reminds employers that to avoid liability for discriminatory treatment, employment actions should be made uniformly, using well-documented and objective criteria whenever possible. Mullin, however, is not a panacea.
Employers considering layoffs still must address a number of important legal issues, including, among other things, releases, the federal WARN act, state laws governing mass layoffs and discrimination claims based on factors other than age.
For more information please call Paul Lannon at 1.888.688.8500.