Supreme Court: ADEA Authorizes Disparate Impact Suits
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But obtaining ultimate recovery under a disparate impact theory will be much more difficult under the ADEA than it is for discrimination on the basis of race, gender, religion or national origin under Title VII of the Civil Rights Act of 1964. Indeed, an otherwise divided Court unanimously affirmed dismissal of the complaint in the case before it.
The plurality opinion of Justice Stevens notes that the prohibitory language of §4(a)(2) of the ADEA (29 U.S.C. §623(a)(2)), is identical to language in Title VII, except referring to “age” instead of “race, color, religion, sex or national origin.” That language has long been interpreted to allow disparate impact recoveries under Title VII on the theory that Congress wanted to affect the “consequences of employment practices, not simply the motivation.” Griggs v. Duke Power Co., 401 U.S. 424, 432 (1971). The plurality opinion then concludes that since the language is the same in both statutes and the statutes have similar purposes, “Congress intended ... the same meaning in both statutes.” Hence, Griggs is an important precedent for construing the ADEA. While Griggs relied on the purposes of Title VII and its interpretation by the Equal Employment Opportunity Commission (EEOC), the Court also analyzed the statutory language, observing it “focuses on the effects of the action on the employee, rather than the motivation for the action of the employer.”
While the Court finds that disparate impact recovery is available under the ADEA, it also notes that the ADEA scope of liability is narrower than under Title VII. The ADEA, unlike Title VII, permits an “otherwise prohibited” action if “based on reasonable factors other than age.” (RFOA). This “reasonable factors” standard is much looser than the “business necessity” standard of Title VII. Another major difference results from Wards Cove Packing Co. V. Antonio, 490 U.S. 642 (1989), which significantly narrowed employer liability for disparate impact by holding that a generalized policy leading to disparate impact is not enough. Instead, plaintiff must isolate and identify the “specific employment practices that are allegedly responsible for any observed statistical disparities.” Wards Cove was widely seen as inconsistent with the purpose of Title VII. Congress took corrective action in the Civil Rights Act of 1991, but only with respect to Title VII and not the ADEA. Hence, Wards Cove is still the law for ADEA cases, although not for Title VII.
Plaintiffs in this case, police officers in Jackson, Mississippi, complained that the result of the city’s salary plan was to provide lower percentage salary increases for officers over age 40 than for younger officers. Although the lower courts had assumed that plaintiffs would be entitled to relief if they were allowed to proceed on a disparate impact theory, the Supreme Court affirmed the dismissal of their complaints, both because they failed to identify the relevant practice (Wards Cove) and because there was an RFOA. The reasonable factor was the city’s need to raise the salary of junior officers to make the positions competitive with other cities in the region.
Justice Scalia concurred in the opinion of Justice Stevens, except that he would have based the holding as to the availability of disparate impact relief on deference to the views of the EEOC in accord with his long-standing interpretation of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Justice O’Connor, joined by Justices Kennedy and Thomas, concurred in the judgment, but dissented from the Court’s conclusion as to the availability of relief under a disparate impact theory. She relied heavily on the legislative history, particularly the Wirtz Report which was mandated by the Civil Rights Act of 1964, to conclude that the ADEA was restricted to “arbitrary” discrimination based on age and also on the “genuine relationship between age and ability to perform a job.”
Smith leaves many questions unanswered for older workers. What is clear is that there will be more litigation, particularly around what constitutes a legitimate RFOA. For example, if an employer faced with a need to cut costs decides to cut higher paid workers in a particular job category and retain those with lower wages, would the need to cut costs be an RFOA? Stay tuned.