please discuss, your experience and your opinion on the following scenarios:
- 1) Chapter 8: Opening Scenario 2
- 2) Chapter 12: Opening Scenario 2
Employment Law for Business
Chapter 12
Age Discrimination
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Learning Objectives 1
Differentiate the reality of the value that an older worker could bring to the workplace from the bias that permeates some of our perception of them.
Describe the history of protection of older workers in the United States.
Distinguish the ADEA and state-based age discrimination laws.
Identify the legal options available to an employee who believes that he or she is a victim of age discrimination.
Articulate the prima facie case of discrimination based on age.
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Learning Objectives 2
Describe the bona fide occupational qualification defenses available to employers under the ADEA.
Explain the difference between situations where disparate impact and disparate treatment apply in connection with age discrimination.
Analyze factual circumstances when employer economic concerns may justify adverse action against particular groups of workers.
Recognize necessary elements to establish pretext under the ADEA.
Define the parameters of a valid waiver of ADEA rights.
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Statutory Basis – ADEA
Exhibit 12.1: Age Discrimination in Employment Act.
Sec. 4 (a) It shall be unlawful for an employer:
To fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privilege of employment, because of such individual’s age;
To limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunity or otherwise adversely affect his status as an employee, because of such individual’s age; or,
To reduce the wage rate of any employee in order to comply with this chapter.
Source: 20 U.S.C. § 623.
The ADEA law is distinct from the Civil Rights Act of 19 64; its interpretations are not identical and are generally less favorable to claimants.
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Age Discrimination Context 1
American culture values youth.
Ageist stereotypes regarding energy, innovation, interest and productivity declines.
Information technology industry in particular faces challenges to its ageist culture.
Examples: Zuckerberg’s speech to Stanford University audience and Google settlement with 54-year-old former executive Brian Reid.
EEOC: “Despite decades of research finding that age does not predict ability or performance, employers often fall back on precisely the ageist stereotypes the ADEA was enacted [in the 19 60s] to prohibit.”
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Age Discrimination Context 2
Concurrently, older workers are tending to stay on the job longer.
Better health.
Lingering economic/savings effects of Great Recession.
Older employees may be perceived as more expensive because of greater experience, seniority.
Research suggests experience may be under-valued, and ‘Switching Costs’ and associated productivity losses not fully accounted-for.
As always, generalizations lead to wrongful discrimination.
Individualized consideration and conclusions are required.
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Regulation: Age Discrimination in Employment Act (ADEA) 1
Age Discrimination in Employment Act:
Prohibits discrimination in employment on the basis of age.
Applies to individuals who are at least 40 years old.
Coverage: Businesses with 20+ FTEs, all governments.
Individuals < 40 years old are not protected by the act and may be discriminated against on the basis of their age.
No upper age limit for coverage under ADEA.
Claims increased around Great Recession.
Claims decreased recently, likely based on economic conditions, state law filings and arbitration effects. (see next slide)
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Regulation: Age Discrimination in Employment Act (ADEA) 2
Exhibit 12.3: EEOC Charge Statistics, Age Discrimination Charges (2001 to 2021).
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Distinctions between ADEA and Title VII 1
ADEA more lenient than Title VII regarding latitude afforded employers’ adverse employment decisions.
ADEA allows an employer to rebut a prima facie case of age discrimination via any “reasonable factor other than age” that motivated the decision.
Claimant not barred because a favored employee is also > 40, if claim based on age.
Significant age gap (for example, 55 v. 45) lends credibility.
No “reverse discrimination” claims available to protect younger workers (some state laws vary).
Applies to disfavored workers < 40 as well as an older worker favored over a younger worker when Both are > 40.
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Distinctions between ADEA and Title VII 2
Some states’ sovereign immunity insulates them from ADEA claims by state employees.
ADEA has specific record-keeping provisions for employers regarding applicants and employees to ensure that appropriate and adequate information exists as to age-related hiring practices.
3 years: name, address, DoB, Occupation, Pay Rate, Compensation.
1 year: apps, resumes, no-hire decisions, job changes/employee, recruiting orders to agencies (incl. temps), test scores, physical exams, sourcing and overtime opportunity announcements.
Note: re benefits: compliance choice between equal benefiots for All workers or equal expense/worker (older worker benefits typically cost more).
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State Law Claims 1
State laws on age discrimination vary widely.
South Dakota has no age discrimination law – employees are limited to the remedies provided by the ADEA.
Other states have laws that protect against age discrimination.
Some of these state laws track the ADEA.
Others expand the protections for age-based discrimination.
See Exhibit 12.5 for variations among states.
Enforcement trends have varied with political administrations.
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State Law Claims 2
Claimants’ reasons to file under applicable state statutes include:
Broader application, esp. to smaller employers.
Broader remedies, including emotional distress, punitive damages.
Longer time to file, both initial agency claims and later litigation complaints.
Note: Split among federal appeals circuits as to whether ADEA coverage in limited to employees, or extends to applicants, as well.
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Employee’s Options 1
Employee may file a complaint using employer’s internal grievance procedure (if it exists – not required).
Further (concurrent) legal options.
File a complaint with the federal Equal Employment Opportunity Commission (EEOC).
File a complaint with the state equivalent of the EEOC (if one exists).
File a lawsuit in federal court under the ADEA (with ‘right-to-sue’ letter).
File a lawsuit in state court under state age discrimination laws.
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Employee’s Options 2
Deadline for filing a complaint with the EEOC.
180 days from when the discrimination occurred.
Extended to 300 days if the state has age discrimination laws and an administrative agency to oversee age discrimination complaints.
Upon receiving the complaint, EEOC can:
Dismiss the complaint if it believes that the charges have no merit.
Investigate the charges (per CH 3 process).
Issue a right-to-sue letter → 90-day limitations period to file suit.
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Employee’s Prima Facie Case: Disparate Treatment 1
Both Disparate Treatment and Disparate Impact claims are available to employees under ADEA.
Four elements to persuade the court about a claim for age discrimination.
Employee is a member of the protected class: age = 40+.
Adverse employment action: termination, demotion, etc.
Qualified for the job: meeting/able to meet position’s legitimate requirements
Dissimilar Treatment versus non-protected or younger employees based on age.
Re ads: overall ‘context > ‘trigger words’ in judging discriminatory intent
Note: ‘microtargeting’ esp. of on-line ads to specific demographic segments may exclude protected individuals.
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Employee’s Prima Facie Case: Disparate Treatment 2
Burden shifting prior to Supreme Court’s Gross case, 2009 (similar to Civil Rights Act).
Once prima facie case presented, burden of proof shifted to employer to present a legitimate nondiscriminatory reason (LNDR) for its actions.
In ‘mixed-motives’ cases, discrimination could be found to be a sufficient motivating factor, even in presence of LNDRs. Discrimination could be among several reasons for employer’s action.
Gross case holding: under the ADEA claims require proof that age was the “but for” cause of the adverse employment action (see next slide).
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Burden Shifting No More: Gross
Case: Gross v. FBL Financial Services. Inc. 2009.
No burden shifting occurs in ADEA cases: plaintiff must prove age was the "but-for" factor.
Mixed-motives age discrimination claims do not exist under the ADEA in disparate treatment cases.
Employee could recover only if the employment action would not have taken place but for age discrimination.
Employer may rebut evidence of the but-for factor.
Gross has been difficult to apply: Courts of Appeal have since concluded:
Age need not be the Only factor, but Primary factor in employer decision.
Burden of producing evidence has shifted to claimant, who has always borne the burden of persuasion in all discrimination cases.
Public sector cases: mixed motives standard applies.
Note: multiple attempts at legislative clarification, so far unsuccessful (2023).
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Employer Defenses
Bona Fide Occupational Qualification (BFOQ).
Age is one of the most consistently applied BFOQs.
EEOC guidelines for employers in ADEA cases:
The age limit is reasonably necessary to the essence of the employer’s business.
All or substantially all of the individuals over that age are unable to perform the job’s requirements adequately.
Some of the individuals over the age possess a disqualifying trait that cannot be ascertained except by reference to age (per competent expert evidence – perception is inadequate).
Case: Western Airlines v. Criswell – individualized health assessments possible (note that EEOC requires individualized assessments re pandemic response).
NOTE: Employers may also observe terms of bona fide seniority system, voluntary retirement plans, and may discipline employees for good cause.
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Summary: Employee’s Prima Facie Case Disparate Treatment
Disparate Treatment
Step 1: Employee’s prima facie case.
The employee is in the protected class.
She or he was not hired, terminated or demoted.
Employee met employer’s legitimate expectations.
Others not in the protected class were treated more favorably.
Discrimination is ‘but-for’ factor in employer’s decision.
Step 2: Employer defenses.
Bona fide occupational qualification.
RFOA – evidence disputing the ‘but-for’ claim.
Step 3: Employee may evidence pretext for employer actions.
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Mandatory Retirements
Mandatory retirement: Employee must retire upon reaching a specified age.
Deemed illegal by the 19 86 amendments to the ADEA, with few exceptions. Limited to:
Retirement at age 65 or beyond for high-level executives (only) who receive a company pension of $44,000 or more.
Police officers and firefighters.
Note: voluntary retirement plans are permitted (see later slides).
Employer cannot base employment decisions on age-related stereotypes.
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Proving a Case of Age Discrimination: Disparate Impact
Step 1: Employee’s prima facie case.
A facially neutral policy or rule is imposed by an employer.
Which has a different effect on an older group of workers.
No intent to discriminate is necessary.
Step 2: Employer defenses.
Reasonable factor other than age (RFOA).
Economic concerns.
Seniority.
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Employee’s Prima Facie Case: Disparate Impact
Reasonable Factors Other than Age (RFOA):
Defense to a prima facie claim of age discrimination, offered by employers.
May include any requirement that does not have an adverse impact on older workers, as well as those factors that do adversely affect this protected class but are shown to be job-related.
Lower standard than business necessity: effect is to narrow viability of ADEA claims.
“While there may have been other reasonable ways for the employer to reach its goals [without] a disparate impact on a protected class, the ‘reasonableness’ inquiry includes no such requirement.”
There is no RFOA-type defense in Title VII cases.
Case: Smith v. City of Jackson.
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Employee’s Prima Facie Case: Disparate Impact – Economic concerns
Firm may opt to reduce its workforce (RiF) based in part on salary amounts to have the greatest economic impact.
Despite Smith, some courts reluctant to accept this justification.
Burden is on Employer to establish RFOA as an affirmative defense (Meacham case).
Note: to counter concerns that economics are a proxy for age bias, it is crucial that discharges be made per an objective standard and procedure that serves the business need.
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Employee’s Prima Facie Case: Disparate Impact – What Constitutes an RFOA?
EEOC lists five considerations for assessing reasonableness of an RFOA.
Extent to which:
Factor is related to the employer’s stated business purpose.
Factor was well defined and applied fairly and accurately.
Employer limited supervisors’ subjective discretion.
Employer assessed the effect of the employment practice on older workers.
Degree of the harm to individuals within the protected age group, and Employer’s attempts to reduce that harm.
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Reductions in Force (RIFs) 1
Generally, RFOA defense standard easier to meet that ‘business necessity’ defense under Title VII.
Case: Meacham v. Knolls Atomic Power Lab.
Employer burden to establish RFOA defense.
Employer need not meet every factor in EEOC rule, but it has the burden of persuasion that defense is appropriate to case facts.
Note: may higher paid, older workers be offered lower wage terms to avoid lay-off? No, per statute section 4(a)(3).
Murky application of standard – seek counsel.
Some authority that failure to accept such an offer may lead to age discrimination if successor ultimately paid more.
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Reductions in Force (RIFs) 2
In the event of an RiF, age discrimination may be proved where an Employer:
Refuses to allow the discharged (or demoted) employee to bump others with less seniority.
Hires younger workers when the jobs become available after the employee was discharged (or demoted) at the prior salary of the older worker.
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Defenses Based on Benefit Plans and Seniority Systems
ADEA specifically excludes bona fide retirement plans that distinguish based on age but are “not a subterfuge to evade the purpose of [the] Act.”
Bona fide voluntary retirement options must be truly voluntary.
Reasonable person would not feel compelled to retire under similar circumstances.
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“Same Actor” Defense
When the same “actor” both hires and fires a worker protected by the ADEA, in some Circuits there is a permissible inference that the employee’s age was not a motivating factor in the decision.
Case: Lodis v. Corbis Holdings, Inc.
Defense may be subject to extenuating circumstances, including who ‘actually’ ordered the termination.
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Retaliation
ADEA prohibits retaliation in response to an age discrimination complaint filed.
Protects the person filing the complaint and any other employee who might have participated in the claim.
Punitive damages.
Money over-and-above compensatory damages.
Imposed by a court to punish a defendant for willful acts and to act as a deterrent.
Designed to punish the employer.
Not Available for ADEA claims but may apply to retaliation claims.
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Employee’s Response: Proof of Pretext
Where there is direct evidence of discrimination, proof of pretext is not required. (Mauer v. Deloitte case)
Showing pretext:
Offered reasons for the adverse employment action have no basis in fact.
Offered reasons did not actually motivate the adverse employment action.
Offered reasons are insufficient to motivate the adverse action taken. (Westmoreland v TWC case).
See also: Reeves v. Sanderson Plumbing Products.
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Harassment: Employee’s ADEA Prima Facie Case: Hostile Environment Based on Age
Recognized by some circuit courts – no USSCt precedent yet (recall absence of statutory language on harassment under Civil Rights Act).
Prima facie case for hostile environment under the Act:
Employer is 40 years old or older.
Employee was harassed, through words or actions, based on age.
Harassment unreasonably interferes with employee’s work performance and creates objectively intimidating, hostile or offensive work environment.
Basis for inferring liability to employer (for example, complaints not responded-to).
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Waivers under the Older Workers’ Benefit Protection Act of 19 90 1
Waiver: Intentional relinquishment of a known right.
Older Workers’ Benefit Protection Act (OWBPA) concerns the legality and enforceability of early retirement incentive programs and waivers of rights under the ADEA.
Prohibits age discrimination regarding employee benefits.
Requires that every waiver must be ‘knowing and voluntary’.
Seven requirements met: checklist, next slide.
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Waivers under the Older Workers’ Benefit Protection Act of 19 90 2
The waiver must be written in a manner calculated to be understood by an average employee.
The waiver must specifically refer to ADEA rights or claims (but may refer to additional acts, such as Title VII or applicable state acts).
The waiver only affects those claims or rights that have arisen prior to the date of the waiver (i.e., the employee is not waiving any rights that will be acquired after signing the waiver).
The waiver of rights to claims may only be offered in exchange for some consideration in addition to anything to which the individual is already entitled. (This usually involves inclusion in an early retirement program.)
The employee must be advised in writing to consult with an attorney prior to execution of the waiver. (This does not mean that the employee must consult with an attorney; the employee must merely be advised of the suggestion.)
The employee must be given a period of 21 days in which to consider signing a waiver and an additional 7 days in which to revoke the signature. Note that where a waiver is offered in exchange for an early retirement plan, as opposed to some other consideration, the individual must have 45 days in which to consider signing the agreement.
If the waiver is executed in connection with an exit incentive (early retirement) or other employment termination program, the employer must inform the employee in writing of the exact terms and inclusions of the program. This information must be sufficient for the employee to test the impact of the selection decision made; in other words, does the decision about inclusion in the program have any discriminatory impact?
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Waivers under the Older Workers’ Benefit Protection Act of 19 90 3
Waiver may not bar the employee from filing a claim with the EEOC.
If employee signs a defective waiver, the employee is not required to give back any benefits received under the waiver.
Case: Oubre v. Entergy Operations.
OWBPA also contains provisions in connection with early retirement plans.
Employers may set a minimum age as a condition of eligibility for normal or early retirement benefits.
A benefit plan may provide a subsidized benefit for early retirement.
A benefit plan may provide for Social Security supplements in order to cover the time period between the time when the employee leaves the firm and the time when the employee is eligible for Social Security benefits.
While severance pay cannot vary based on the employee’s age, the employer may offset the payments made by the value of any retiree health benefits received by an individual eligible for immediate pension.
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Use of Statistical Evidence
Generally, more useful in disparate impact cases, vs. disparate treatment.
Skepticism relating to statistical evidence in age discrimination cases because of normal attrition in the workforce.
Supreme Court guidelines:
Difference of more than two or three standard deviations variation can be considered suspect.
Context is crucial – Statistical evidence depends on all of the surrounding facts and circumstances.
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ADEA Remedies
Equitable relief: Relief that is not in the form of money damages.
Reinstatement, promotions, and injunctions.
Not granted if adequate money damages (back pay or front pay) have been given.
Monetary damages for pain-and-suffering or emotional distress are not available under the ADEA.
Liquidated damages: Predetermined amount of damages, equal to the unpaid wage liability.
Available in ‘willful’ cases (lack of recruiter training does not defeat ‘willfulness’ claim Mathis v. Phillips Chevrolet case).
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Employee Retirement Income Security Act (ERIS