EEOC Issues Rule Amending Its ADEA Regulation

by Morgan Lewis
Contact

Final rule discusses the regulation's RFOA defense and its impact on disparate treatment and disparate impact claims.

On March 30, the EEOC issued a final rule amending its Age Discrimination in Employment Act (ADEA) regulation, 29 C.F.R. § 1625.7, regarding the "reasonable factor other than age" (RFOA) defense and its application to disparate treatment and disparate impact claims under the ADEA. 62 Fed. Reg. 19,080 (Mar. 30, 2012). The amended regulation confirms that (1) the plaintiff bears the burden of "isolating and identifying the specific employment practice" that allegedly causes any observed statistical disparities, and (2) the employer bears the burdens of production and persuasion to demonstrate the RFOA defense. 29 C.F.R. § 1625.7(c), (d). The regulation also attempts to clarify what constitutes a "reasonable factor other than age," and provides a nonexhaustive list of considerations that are relevant in determining whether a practice is based on a reasonable factor other than age. 29 C.F.R. § 1625.7(e).

Although the regulation contains provisions that will assist employers in defending ADEA actions, the text of the regulation and its preamble contain ambiguities that may make the RFOA defense more difficult to prove and that are likely to increase the amount and cost of ADEA disparate treatment litigation. At a minimum, the preamble serves as forewarning that the EEOC interprets the statute in a manner that will likely significantly impact employers' policies and practices.

Potential Issues Raised by the Final Rule and Its Preamble

As an initial matter, consistent with Supreme Court precedent, the regulation confirms that the plaintiff bears the burden of "isolating and identifying the specific employment practice" that causes the alleged disparate impact. As the Supreme Court has stated, this "is not a trivial burden" and, if applied correctly, it should serve to limit disparate impact litigation. However, there is nothing in the regulation beyond this acknowledgement of binding caselaw that "clarifies" the RFOA defense. Rather, there are a number of ambiguities in the regulation and its preamble that plaintiffs' lawyers may attempt to exploit in an effort to reach a jury on whether factors are "reasonable."

First, the regulation defines a "reasonable factor" as one that is "objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances." On the one hand, read properly, this recognizes that the Supreme Court's reasonableness standard is an objective standard that focuses on the actions of prudent employers, including what other employers do in similar circumstances. Applying this standard should lead courts to decide many or most disparate impact claims on summary judgment, as the Supreme Court did in Smith v. City of Jackson, 544 U.S. 228 (2005). On the other hand, the EEOC's definition creates an apparent (and potentially problematic) incongruity by stating that a prudent employer is one that is "mindful of its responsibilities under the ADEA." without clarifying how the "mindful of its responsibilities under the ADEA" language modifies the objective test. At a minimum, the phrasing is circular, since, according to the Supreme Court, the only responsibility an employer has under the ADEA is to base its decisions on a reasonable factor other than age. Nonetheless, plaintiffs are sure to argue that even if a policy would otherwise be reasonable to achieve the goal of the employer, it may be unreasonable for the employer to use that policy if it has a disparate impact on older workers. Such a standard, of course, would turn the entire disparate impact framework on its head.

Second, the regulation also suggests that in assessing whether a policy is reasonable, courts should consider the extent to which the employer took steps to reduce harm to older workers caused by its non-age factor. This will give plaintiffs the opportunity to argue that an employer must choose less-burdensome alternatives, even though the Supreme Court has stated employers have no such duty. See Meacham v. Knolls Atomic Power Lab., 554 U.S. 84, 97 (2008) ("the business necessity defense should have no place in ADEA disparate-impact cases"). While rejecting any inference that "the employer must search for and select the least discriminatory alternative," the EEOC still suggests that the existence of such alternatives is relevant to determine whether an employer's policy is reasonable. See 77 Fed. Reg. at 19,086 ("[t]here may be circumstances in which the availability of a measure that would noticeably reduce harm was or should have been so readily apparent that it would be manifestly unreasonable for the employer to fail to use it"), 19,089 ("a failure to have taken reasonable steps to avoid or mitigate the impact is relevant to whether the employer's actions were based on reasonable factors other than age"), 19,090 n.76 ("the failure to adopt a less discriminatory alternative may be evidence of pretext under certain circumstances").

Third, the EEOC's presentation of a "non-exhaustive" list of factors for consideration is problematic, even though the EEOC made it clear that the failure to satisfy one or more factors is not dispositive. The regulation directs courts to evaluate the extent to which the employer policy at issue limits managerial discretion. Since the plaintiffs' bar has long argued that policies allowing excessive subjectivity lead to discriminatory decision making that can be challenged on a class basis, it will certainly use this factor to attack policies that permit decisions based on criteria that, even if arguably subjective, are clearly reasonable (e.g., performance).

Fourth, the regulation suggests that courts should evaluate the extent to which employers give managers guidance or training on how to implement the employers' policies and expressly requires an evaluation of the implementation of those policies in judging reasonableness. While consideration of these factors is discretionary, the regulation's existence should incentivize employers to create more formalized processes in order to defend against potential disparate impact claims.

Conclusion

The EEOC's Final Rule regarding disparate impact claims and the RFOA defense under the ADEA will have complex impacts on employers' decision making when implementing decisions that may have a disparate impact on older workers. Employers should carefully evaluate the Final Rule as they implement new policies to minimize the costs and risks associated with potential disparate impact litigation under the ADEA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morgan Lewis | Attorney Advertising

Written by:

Morgan Lewis
Contact
more
less

Morgan Lewis on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.