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Age neutral: If your practice has a disparate impact on older workers, be ready to explain yourself

By Carol Lundberg
Dolan Media Newswires

Employers who make hiring, firing and compensation decisions that impact older workers more negatively than their younger counterparts are going to have to explain themselves a little more clearly, due to new regulations by the Equal Employment Opportunity Commission.

The EEOC issued its final regulations on disparate impact and “reasonable factors other than age” this spring.

This action clarifies that the Age Discrimination in Employment Act prohibits policies that harm older workers more than younger workers, unless the employer can show that the policy or practice is based on a reasonable factor other than age.

The new regulations give employers an idea of what “reasonable” might look like.

“I think it will give practitioners a better foothold,” said Brian Koncius, of Bogas, Koncius & Croson PC in Bingham Farms, Mich. “I like that this deals only with disparate impact. As long as the ADEA [Age Discrimination in Employment Act] has been around, with its focus on disparate treatment, it’s only been in the last five years or so that there has been this disparate impact issue. Any revision has to be seen as a positive.”

According to the EEOC, age discrimination and its impact on older workers is a big problem: the number of age discrimination charges filed with the commission has increased by 50 percent since 2000.

Sometimes, however, employers implement neutral policies that happen to have a negative impact on older workers, and that’s what the new regulations seek to fix.

Business opposition

Business groups and the U.S. Chamber of Commerce are opposed to the regulations, said Gary Chamberlin, in the Grand Rapids office of Miller, Johnson, Snell & Cummiskey PLC. He represents employers, and doesn’t think the sky is falling.

“The regulations do give the employers some idea of what’s reasonable, a checklist you can roll out to show that your practices are reasonable,” Chamberlin said.

He said the regulations will come up most frequently in hiring decisions, particularly where an employer administers a pre-hire test, or has certain standards — such as being able to lift a certain amount of weight — to be met prior to hiring. It also will frequently come up in work force reductions, and, to a lesser degree, in compensation policies, Chamberlin said.

The rule will apply to all private employers with 20 or more employees, state and local government employers, employment agencies and labor organizations.

According to the EEOC, the rule does two things.

First, it makes the existing regulation consistent with the U.S. Supreme Court’s holding that defense to an ADEA disparate impact claim is RFOA, and not business necessity.

Since the court’s 2005 decision in Smith v. City of Jackson, the ADEA has not required that an employer be motivated by age discrimination when it implements policies that have a disparate impact on older workers.

And in 2010, the court held in Meacham v. Knolls Atomic Power Laboratory that policies and practices with an adverse impact on older workers would be considered a violation of ADEA unless the employer could prove a reasonable factor other than age.

“The Supreme Court clearly held [in Smith] that the ADEA did in fact provide for a disparate impact claim,” even when there was no intent to discriminate, said Saura Sahu from the Detroit office of Miller, Canfield, Paddock and Stone PLC.

Then, in Meacham, he said, the court suggested that “a business necessity de¬fense won’t apply in disparate impact cases.”

What the decisions didn’t do, Chamberlin said, was to define what would be deemed a reasonable factor in making hiring and firing decisions.

“We just didn’t have the framework,” he said. “[The regulations] do put the onus on the employer to put some planning into their HR practices.”

Second, the new regulation explains the meaning of the RFOA defense to employees, employers, and those who enforce and implement the ADEA.

The employer would only be required to prove the RFOA defense after an employee has first identified a specific employment policy or practice that harmed older workers.

“In a tight economy, employers as a matter of course, must take a look at their compensation policies,” Sahu said. “The question is, just how far are the courts and juries going to get involved in the processes of a business?”

Management’s discretion

Chamberlin said that one area where employers will have to adapt is in the amount of discretion they give their managers and supervisors.

“Some employers give their supervisors carte blanche to select, screen and hire workers,” Chamberlin said. “They might have total authority to develop hiring tests that may or may not be relevant to their business. If the supervisor hasn’t had any training in developing those tests and the test has never been validated as job related, the EEOC says that will be held against an employer.”

The same is true on the back end, during a layoff, Chamberlin said. Employers who tell their supervisors to select the poorest-performing workers during a reduction in force will be heavily scrutinized by the EEOC.
Koncius said smaller employers may have the hardest time with the idea of RFOA.

A mom-and-pop bakery, for example, might be the subject of a complaint because a condition of employment is to be able to lift 50 pounds, he said.

While no employer wants to have to defend itself to the EEOC, Koncius said that the bakery would not have too much trouble proving that it needs workers who can lift 50-pound sacks of flour every Wednesday because that’s when it receives its delivery, and the employees have to be able to put stock away when it arrives.

Sahu said he hopes the commission doesn’t intrude too deeply into his clients’ business decisions.

“The ADEA is supposed to be there to target discrimination,” Sahu said. “Congress did not intend to hamper business decisions, so they stuck in the language about RFOA, and recognized that there could be reasonable factors. The new regulations impose directly on employers this concept of reasonable care in business plans that simply have an adverse impact on older workers.”


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