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Thanks to a US Supreme Court decision on a landmark age-bias case, workers can sue employers whose policies discriminate on the basis of age -- even if the policy isn't discriminatory on its face. At the same time, the decision says employers can prevail in defending those same suits simply by demonstrating a legitimate business reason for the policies that have the effect of treating older workers less favorably.
That's the potentially confusing fallout of Smith vs. City of Jackson, Mississippi. The case tests the application of the Age Discrimination in Employment Act of 1967 (ADEA), which protects workers older than 40.
Something for Both Sides
Although the net effect of the decision isn't clear, advocates on both sides see a kind of victory for workers.
"This is a huge decision for older workers," says Laurie McCann, senior attorney for AARP Litigation Foundation, the Washington, DC-based legal arm of the lobby group for older Americans. The high court's decision puts employers on notice that they must look out for potential age bias in all their policies, she explains.
Corporations generally are unhappy with the decision. "We were very disappointed that the court created a new way to sue your employer," says Ann Reesman, general counsel for the Equal Employment Advisory Council, which represents more than 300 large private employers.
‘Disparate Impact' Hard to Prove
Still, most in the business community aren't deeply concerned with the net effects of Smith vs. City of Jackson, Mississippi. "The decision will create some increase in ADEA suits, but not a really significant one," says Robert Costagliola, labor and employment counsel for the National Chamber Litigation Center of the US Chamber of Commerce in Washington, DC. "The large proportion of these cases will get dismissed."
McCann concurs. "On a practical basis, we know it's going to be very difficult to prevail with disparate impact," she says.
This difficulty is born out in the dual nature of the majority opinion. The Supreme Court ruled 5-3 that workers can sue if they can prove an employer policy had even an unintentional negative impact, particularly on older employees. But in the case at hand, the court ruled 8-0 against the Jackson workers, because the city had a legitimate reason -- a competitive recruitment environment -- for creating pay policies that gave larger-percentage pay increases to workers with less seniority, who also tend to be younger.
Will Employers Be More Cautious?
Large employers will increase their vigilance against the potentially discriminatory effects of their policies and actions, some legal experts say. But many management attorneys minimize the need for change. "I don't think there's any reason that employers need to stand up and say, ‘I'm going to have to do things really differently,'" says Gregg Lemley, a partner in the St. Louis office of Bryan Cave.
Still, worker advocates are hopeful that the potential legal liability this decision has created will change employer behavior. "This will make companies look more closely at layoff decisions" to determine how they might affect different age groups of workers, says Janet Hill, president of the National Employment Lawyers Association, which advocates for employee rights. "Small employers are less likely to have thought about this." The ADEA applies to companies with 20 or more employees.
What Is a ‘Reasonable' Policy?
To mount a successful defense of a disparate-impact case under ADEA, "all the employer needs is any reasonable factor for the policy in question, not a business necessity for it," says Reesman.
"Once the employer posits a factor other than age for implementing a policy, the burden of proof shifts to the employee to show that it's not a reasonable factor," says Lemley.
Much will depend upon federal courts' future interpretations of what constitutes a reasonable factor for instituting an employment policy that has a disparate impact on older workers. "This is where the battleground will be: What's the ‘reasonable' standard, [and] how will we make sure the barrier isn't set too low?" says McCann.
Additional Resources
Check out the Equal Employment Opportunity Commission's Web site for information about age discrimination and how to file a charge against an employer.