This summary of age discrimination law in the USA has been prepared by Ford Harrison: www.fordharrison.com.
OVERVIEW
The Age Discrimination in Employment Act of 1967 (“ADEA” or “Act”) is the federal law that prohibits age discrimination against employees 40 years of age or older. The ADEA makes it unlawful for an employer to discharge any individual or otherwise discriminate against any individual with respect to compensation, terms, conditions, or privileges of employment, because of age. The ADEA also makes it unlawful for an employer to fire, demote, harass, or otherwise “retaliate” against employees or applicants because they have filed a charge of discrimination, complained to their employer or other covered entity about workplace discrimination, or participated in an employment discrimination proceeding (such as an investigation or lawsuit). Many states have analogous laws which prohibit employment discrimination based on age. Some state laws offer broader protections than the federal law.
Age-based discrimination claims generally fall into two categories: disparate treatment, meaning that the plaintiff claims he or she was treated differently than younger employees; and disparate impact, meaning that a facially neutral policy of the employer disproportionately affects older employees.
Disparate Treatment
An individual who seeks relief under the ADEA must demonstrate that s/he: 1) falls within the protected age group (e.g. 40 years or older); 2) was qualified for the position; 3) was nevertheless adversely affected; and 4) the defendant sought someone younger than the plaintiff, but with similar qualifications, to perform the work. The Supreme Court “has not definitely decided whether the evidentiary framework of McDonnell Douglas Corp. v Green[1]…utilised in Title VII cases is appropriate in the ADEA context.” [2] Most of the Courts of Appeals continue to apply McDonnell Douglas to create a presumption of age-based discrimination once an individual demonstrates these four elements.[3] If the employer rebuts the presumption by articulating a legitimate, non-discriminatory reason for its decision, the individual must demonstrate that the reasons offered by the employer are merely pretext for discrimination, and, ultimately, that his or her age was the “but-for” cause of the employer’s adverse action.[4]
In addition, plaintiffs do not necessarily have to present direct evidence of discrimination to prevail on a claim.
For termination cases, the U.S. Supreme Court has held that a plaintiff does not have to show that the person who replaced him was less than 40 years of age (i.e. someone outside of the “protected class”). Rather, a plaintiff must merely show that he was replaced by someone younger than himself. Moreover, an individual can establish a valid claim for age discrimination even when the decision maker is over the age of 40, as long as he is younger than the complaining employee. In addition to the federal law, various states have laws that protect younger workers from age discrimination.
Generally, stray remarks, standing alone, will not give rise to an inference of discrimination. For example, one remark that a company wanted a “new face” in the position sought by the plaintiff was considered a stray remark that was “was facially and contextually neutral.” [5] However, such comments, when made by management in an environment where other indicia of discriminatory intent are also present, may support an age discrimination claim.
Where the same individual hires and fires the employee claiming age discrimination, some courts have held that the so-called “same actor” defence may be rebutted. For instance, if the terminated employee can demonstrate other evidence of age discrimination, he may overcome the “same actor” presumption and still succeed at trial.
It is not unlawful to promote a candidate under the age of 40, over a candidate over the age of 40 if that decision is based on the younger candidate’s superior experience or work-related qualifications. An employer may not, however, refuse to select a candidate for promotion simply because the individual is over the age of 40.
Disparate Impact
Under the ADEA, an individual may also challenge an employer’s facially neutral practice or policy as having a disparate impact on older workers.[6] To bring a disparate impact claim, a plaintiff must first establish a prima facie case of age discrimination by demonstrating that an employment practice has disparately impacted members of the protected class to a degree that is statistically significant. The employer may then rebut the prima facie case by showing that the practice or policy was based on a reasonable factor other than age (“RFOA”).
The Supreme Court has rejected the application of a “business necessity” defence, used in Title VII discrimination cases, as an element on RFOA.[7] According to regulations promulgated by the Equal Employment Opportunity Commission (“EEOC”) in 2012, to establish a RFOA defence, an employer must show that the employment practice in question was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer. RFOA involves a slightly less rigorous analysis than business necessity, as the RFOA defence only requires that the employer’s actions be “reasonable”, not whether the employer could have or should have achieved its goals in a different manner so as to further minimise the resulting disparate impact on a protected class.
Affirmative Defences
The statute provides several affirmative defences to employers.[8] Under the ADEA, an employer may take action that would otherwise be prohibited where:
Age is a bona fide occupational qualification (“BFOQ”) reasonably necessary to the normal operation of the particular business;
The employer’s treatment of the plaintiff was based on a bona fide seniority system;
The employer’s treatment of the plaintiff resulted from the plaintiff’s participation in a bona fide employee benefit plan;
The action was based on a reasonable factor other than age (“RFOA”); or
The action was based on a good cause
The burden is on the employer to prove the affirmative defence.
Generally, the “bona fide” defences (1-3) are used in disparate treatment cases, and the RFOA (4) and “good cause” (5) defences are used in disparate impact cases.
The EEOC has issued regulations which define the RFOA defence. According to the EEOC, “[a] reasonable factor other than age is a non-age factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances.” The regulations offer a non-exhaustive list of factors that are relevant to the establishment of a RFOA defence. The presence or absence of one or more factors does not automatically establish or preclude the RFOA defence. The factors are:
The extent to which the factor is related to the employer’s stated business purpose;
The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors are given guidance or training about how to apply the factor and avoid discrimination;
The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;
The extent to which the employer assessed the adverse impact of its employment practice on older workers; and
The degree of the harm to individuals within the protection age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.
WHO'S COVERED?
The ADEA’s prohibitions apply to employers with 20 or more employees, including federal, state and local governments, as well as to labour organisations, employment agencies, apprenticeship programs, and training programs. Importantly, the Act’s definition of “employee” includes citizens employed by covered employers in a workplace in a foreign country; however, employers are not required to take any action which would cause the employer to violate the laws of the country in which the workplace is located. Job applicants are also protected.
Although employers can be held liable for the discriminatory actions of their supervisors, Courts disagree on whether the supervisors themselves can be held individually liable for such discriminatory conduct.[9]
WHAT ENFORCEMENT/REMEDIES EXIST?
The EEOC the federal administrative agency responsible for enforcing, among other statutes, Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act, is also responsible for enforcing the ADEA.
Under the ADEA, a would-be plaintiff must first file a charge of discrimination with the EEOC before filing a lawsuit. Generally, the charge must be filed within 180 days of the discriminatory act, or, in a case where the alleged discriminatory action occurs in a state which has its own age discrimination law and agency administering the law, within 300 days of 30 days after receipt of notice of termination of any state proceedings, whichever is earlier. The EEOC will investigate the charge, attempt to reconcile the parties, and then either sue the employer or issue a right to sue letter to the charging party. The charging party can file a lawsuit in court 60 days after filing an EEOC charge but no later than 90 days after receiving a right to sue letter from the EEOC.
However, some analogous state laws do not require that a plaintiff first exhaust his administrative remedies by filing a charge before commencing a lawsuit.
The ADEA provides for both legal and equitable remedies which include back pay, injunctive relief, front pay, liquidated damages, interest and attorney’s fees. Compensatory and/or punitive damages are not available under the ADEA.
Back pay encompasses benefits like lost wages and pension benefits. There are, however, a number of circumstances which will limit the plaintiff’s accrual of back pay, including, but not limited to, when s/he accepted a higher paying position, failed to reasonably seek comparable employment, or rejected an unconditional offer of reinstatement. Further, Courts in their discretion may award front pay. Front pay is provided to compensate a plaintiff for future losses resulting from the discrimination. In addition, ADEA plaintiffs may also receive liquated or double damages on unpaid wages and overtime compensation if the employer’s wrongful acts are deemed wilful.
Lastly, Courts may also grant reinstatement, unless there is hostility between the parties that is so great that it would create a difficult work environment. Just as with back pay, entitlement to future reinstatement is lost if a plaintiff refuses to accept an unconditional offer of reinstatement.
WHAT CLAIMS ARE MOST COMMON AND WHAT ARE THE TRICKIEST ISSUES FOR EMPLOYERS?
As the U.S. workforce ages, age discrimination claims have become more common. The economic downturn of 2008 disproportionately affected older workers, leaving many unemployed for extended periods of time. The percentage of charges of age discrimination filed with the EEOC peaked in 2008 at 25.8% (or 24,582 charges) and continues to remain elevated above levels seen in the late 1990s and early 2000s. According to the EEOC’s most recent charge statistics, 21.8% (or 18,376 charges) filed with the agency in FY 2017 were age discrimination claims. Employers must be careful to avoid the appearance of age-based animus.
Additionally, releases of ADEA claims have become a highly litigated issue. The Older Worker Benefits Protection Act (“OWBPA”), which amended the ADEA, sets forth the requirements for valid ADEA releases. The EEOC has also issues regulations interpreting the OWBPA. Generally, waivers or releases must be drafted in plain language, and the burden of proving that the waiver is “known and voluntary” rests with the former employer – the party seeking to enforce the release.
In particular, the requirements for a valid release are as follows:
The waiver must be part of a written agreement between the employee and employer that is written in a clear, understandable manner;
The waiver must specifically refer to claims arising under the ADEA;
The employee must not waive the right to claims that may arise after the date on which the waiver is signed;
The employee must be given consideration (something of value) in exchange for the waiver of age discrimination claims in addition to that which the employee is already entitled;
The employee must be advised in writing to consult an attorney prior to signing the waiver;
The employee must be given at least 21 days in which to consider the proposed waiver. This requirement is extended to at least 45 days if the waiver is requested in connection with a group termination; and
The employee must be given seven days after signing the waiver to revoke
A waiver in settlement of an EEOC charge or of an age discrimination lawsuit must comply with the requirements one through five above. Often, drafting challenges arise when addressing compliance with other laws, particularly state laws. Such a waiver is not subject to any specific time requirement other than that the individual be given a reasonable period of time to consider the settlement agreement.
In addition to the extended 45-day requirement for group exit incentives or other employment termination programs, each employee who is offered participation in such a group program must receive an additional written notice laying out the following:
The class of individuals covered by such a program;
The eligibility requirements of the program;
The time limits applicable to such program;
The job titles and ages of the employees eligible or selected for the program; and
The ages of all employees in the same job classification or organisational unit who are not eligible or selected for the program
Lastly, because consideration for a waiver must be in addition to anything of value to which the employee is already entitled, payment of severance benefits is not adequate consideration for a waiver if the employee was already entitled to those payments under company policy.
ARE THERE ANY SPECIFIC EXCEPTIONS IN YOUR LAW?
One of the statutory defences to a claim under the ADEA is where age is a bona fide occupational qualification (“BFOQ”) reasonably necessary to the operation of a business. To prove that age is a “bona fide occupational qualification” the employer must prove that:
The age limit is reasonably necessary to the essence of the business; and
Either all or substantially all individuals excluded from the job involved are in fact disqualified, or
Some of the individuals so excluded possess a disqualifying trait that could not be ascertained except by reference to age
Many of the decisions involving the invocation of a BFOQ to an age discrimination claim involve public safety jobs, such a pilots or police officers. An employer who asserts that public safety is the reason for making age a factor in an employment decision must successfully prove that the elimination of those individuals who are within the protected age group does in fact effectuate the stated goal of public safety and that no available alternative to advance the goal of public safety exists that has a lesser discriminatory impact.
In addition to the BFOQ defence, the ADEA also contains the following four exemptions from a claim of age discrimination:
Where the action is based on reasonable factors other than age;
Where the action is in observance of a bona fide seniority system;
When the action is in observance of a bona fide employee benefit plan; or
Where the employer has a good cause to discipline or discharge the employee
RETIREMENT AGES
Generally, employers are prohibited from requiring employees within the protected class (i.e. 40 years of age or older) to retire because of their age. Therefore, seniority systems and benefits plans cannot permit the forced retirement of employees because of their age. However, early retirement incentive programs (“ERIP”) which are purely voluntary and offered to reduce costs are lawful.
Notwithstanding, the ADEA has an exception that permits the mandatory retirement of certain high-level executive or high policymaking officials, assuming the following three conditions are met; 1) the employee must be at least 65 years old; 2) the employee must have been employed for the two years immediately prior to retirement in a bona fide executive or high-policy-making position; and 3) the employee must be entitled to an immediate non-forfeitable annual retirement benefit from the pension, profit sharing, savings, or deferred compensation plan of at least $44,000 a year.
INTERESTING CASES
In Smith v City of Jackson, 544 U.S. 228 (2005), the U.S. Supreme Court resolved a longstanding circuit split by holding that plaintiffs can rely on the disparate impact theory when bringing claims under the ADEA. Therefore, direct evidence of age discrimination is not required to maintain a claim. However, because the Court held that the “scope of the disparate impact liability under ADEA is narrower than under Title VII”, prevailing on an ADEA claim under a disparate impact theory is difficult. For example, a practice having a disparate impact on older workers need only be justified by “reasonable” non-age factors and need not satisfy the “business necessity” defence applicable to Title VII. In addition, the burden of proof remains with the plaintiff and will only shift to the employer if the plaintiff can isolate a specific employment practice that has caused an observed statistical disparity. The employer will then have the opportunity to articulate a legitimate, non-discriminatory reason for adopting the challenged practice. The plaintiff will then have the burden of persuasion of disproving the employer’s reason. Illustrating this difficulty, the Smith plaintiffs failed to prove their case. There, the plaintiffs were police officers who alleged that the city violated the ADEA by giving older officers less generous salary increases compared to younger officers. The Court found that the plaintiffs failed to isolate a specific test, requirement, or practice that was responsible for the statistical disparities between the older and younger officers. The Court also found that the city had proffered a reasonable basis for its pay plain; trying to make its police department more competitive by matching the salaries of surrounding communities. Consequently, the plaintiffs’ claims were dismissed.
These principles were affirmed in Meacham v Knolls Atomic Power Laboratory, 554 U.S. 84 (2008), where the Supreme Court emphasised that it is not enough for an ADEA plaintiff to cite a generalised policy which disparately impacts older workers. Consistent with Smith, plaintiffs must isolate and identify the specific employment practices that are allegedly responsible for any observed statistical disparities. However, when an employer raises the affirmative defence that its decision was based on a reasonable factor other than age, the employer bears not only the burden of production, but also the burden of persuasion, that the reasonable factor other than age is indeed reasonable.
Finally, in Gross v FBL Financial Services, 557 U.S. 167 (2009), the Supreme Court held that the burden-shifting analysis available in so-called mixed-motive cases under Title VII does not apply to claims of age discrimination under the ADEA. In Gross, a plaintiff raised a “mixed motive” claim by presenting evidence that the employer’s decision to reassign him was motivated in part by his age. The district Court applied the Price Waterhouse v Hopkins, 490 U.S. 228 (1989), burden-shifting analysis for mixed-motive cases under Title VII by instructing the jury to find in favour of the plaintiff if he proved by a preponderance of the evidence that his age was a motivating factor in the employer’s decision, and the employer could not provide that it would have taken the same adverse action regardless of the plaintiff’s age. The employer challenged the jury instruction, arguing that a mixed motive instruction was not warranted where the plaintiff did not show direct evidence that age was a motivating factor. The Supreme Court vacated this decision. Comparing Title VII’s text to the ADEA’s, the Court found that, “[u]nlike Title VII, the ADEA’s text [which makes adverse employment decisions unlawful if they are taken “because of” an individual’s age] does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor”. Gross, 557 U.S. at 174. Thus, the district Court’s jury instruction improperly applied the Price Waterhouse Title VII burden-shifting standard to the plaintiff’s ADEA age discrimination claim. Even if the plaintiff could provide some evidence that age was a factor in the challenged employment decision, he could not prevail unless he could prove by direct or circumstantial evidence that the employer would not have made the adverse decision but for his age.
Footnotes
[1]McDonnell Douglas, 411 U.S. 792 (1973)
[2]Gross v FBL Financial Services, 557 U.S. 167, 175 , n.2 (2009)
[3]See, e.g. Velez v Thermo King de P.R., 585 F.3d 441, 447, n.2 (1st Cir. 2009) (continuing to apply McDonnell Douglas to ADEA claims “until told otherwise by the Supreme Court”); Gorzynski v JetBlue Airways Corp, 596 F.3d 93, 106 (2d Cir. 2010); Smith v City of Allentown, 589 F.3d 684, 691 (3d Cir. 2009); Geiger v Tower Auto, 579 F.3d 614, 622 (6th Cir. 2009); Anderson v Durham D&M, L.L.C, 606 F.3d 513, 523 (8th Cir. 2010); Horn v United Parcel Serv., 433 F. App’x 788, 793 (11th Cir. 2011)
[4]Id. At 447-48, applying Gross v FBL Financial Services, in which the Supreme Court held that the burden-shifting analysis available in so-called mixed-motive cases under Title VII does not apply to claims of age discrimination under the ADEA. This means that an individual cannot merely claim that age played only a motivating part in the challenged decision. Rather, age must be the “but-for” cause of the employer’s decision. Gross, 557 U.S. at 180
[5] Aulick v. Skybridge Ams., Inc., 860 F.3d 613, 620 (8th Cir. 2017).
[6]Smith v City of Jackson, 544 U.S. 228 (2005)
[7]Meacham v Knolls Atomic Power Lab., 554 U.S. 84 (2008)
[8]29 U.S.C. 623(f)
[9]See, e.g. Medina v Ramsey Steel Co., Inc., 238 F.3d 674 (5th Cir. 2001); Horwitz v Bd. of Educ., 260 F.3d 602, 610 n.2 (7th Cir. 2001); Smith v Lomax, 45 F.3d 402, 403 n.4 (11th Cir. 1995); Miller v Maxwell’s Int’l, Inc., 991 F.3d 583, 587 (9th Cir 1993)