Publications: Age Discrimination Plaintiffs Still Face a Heavy Burden Despite Recent U.S. Supreme Court Decision

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Despite the U.S. Supreme Court’s decision last week recognizing “disparate impact” age discrimination claims, employees pressing such claims still face a heavy burden. Smith v. City of Jackson Mississippi, et al., No. 03-1160 (March 30, 2005). A disparate impact age discrimination claim attacks a facially neutral employment practice because it has a harsher impact on protected workers, those over 40, than it does on workers under 40 years of age.

Such a facially neutral practice was challenged in Smith, where the employer gave pay raises to all of its police officer and dispatcher employees in an effort to increase starting salaries to competitive levels. To achieve that goal, it gave officers and dispatchers with less than five years of seniority proportionately greater raises than those with more seniority. Predictably, most of the officers and dispatchers who had five or more years of seniority were also over 40. They sued under the Age Discrimination in Employment Act of 1967 (“ADEA”), claiming that the City’s pay plan had an adverse “disparate impact” on them.

The Supreme Court made two important rulings in Smith. First, it resolved the lower federal courts’ disagreement over whether employees can bring disparate impact age discrimination claims under the ADEA, thereby recognizing the viability of such claims. Significantly, Federal courts in Illinois, Indiana and Wisconsin (those within the jurisdiction of the Seventh Circuit Court of Appeals), did not previously recognize such claims. Consequently, employers in these states were previously immune to such disparate impact age discrimination claims. The Smith decision eliminated this immunity for Seventh Circuit employers.

Second, the Smith Court held that the older police officers did not state a disparate impact claim under the ADEA because the pay practice they complained of was prompted by “reasonable factors other than age.” In other words, the disparate impact on workers over 40 resulted from a pay raise policy that implemented the City’s legitimate goal of making junior officers’ salaries more competitive with those of other police departments. This disparate impact was not attributable to the City basing raises on its employees’ ages.

Employers, especially those in the Seventh Circuit, should take some comfort in the fact that their employment decisions may have an adverse disparate impact on older workers without violating the ADEA so long as the disparate impact is attributable to “reasonable factors other than age.” Accordingly, before finalizing a policy, practice, lay-off or restructuring decision, employers should determine whether it will have an adverse disparate impact on workers over 40. The contemplated practice or policy change should be well-grounded in a sound business rationale, and if it will have an adverse impact on workers over 40, employers should be prepared to articulate the “reasonable factors other than age” warranting it before they implement it.