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Aug. 10 — Federal discrimination law protects workers 40 and over as they age, so employers must see that their policies don’t inadvertently hit workers in their 50s harder than those in their 40s, or people in their 60s harder than those in their 50s.
At least that’s the view of the Equal Employment Opportunity Commission and others. Employer advocates disagree, including in a case pending before the U.S. Court of Appeals for the Third Circuit.
The Age Discrimination in Employment Act permits subgroups of the 40-plus crowd to sue for disparate impact discrimination—unintended bias arising from the application of a facially neutral employment policy or practice—even when their claim is that the employer favored a different subgroup of 40-or-over workers, according to the EEOC.
Allowing such claims is consistent with changing societal views of workers, Professor Sandra Sperino told Bloomberg BNA. An associate dean of faculty at the University of Cincinnati’s College of Law, she has written on the issue.
That 50 is viewed by many as the new 40 makes the argument that disparate impact subgroup or subclass claims are permitted under the ADEA “more compelling,” she said July 29.
“Many employers now view workers in their 40s as being at the peak of their performance capabilities, but they see those in their 50s and older as being past their prime and at the end of their careers,” Sperino said.
But the ADEA, as written, doesn’t allow for ADEA subgroups, and with good reason, employer advocates say. If who is “old” really has changed, or the ADEA was meant to provide scaled coverage, then the law should be amended, they say.
“The problem with allowing disparate impact subgroups is that there would then be ‘reverse engineering’ to generate evidence supporting a claim,” management-side attorney Gerald L. Maatman Jr. said.
A partner with Seyfarth Shaw LLP in Chicago, Maatman said July 29 that ADEA protections are determined only in relation to how workers 40 and over are treated by an employer or affected by its employment policies and practices when compared with those under 40.
Maatman said he’s been helping employers make and implement large-scale employment decisions such as workforce reductions for 30 years and that he “shudders to think of the impact” that allowing ADEA disparate impact claims by subgroups of older workers would have.
“The stakes are high,” he said.
Population and workforce statistics and projections may help put Maatman's concern into context (see box and charts).
Studies show that the population and the labor force have gotten older since enactment of the Age Discrimination in Employment Act in 1967 and—spurred by the aging baby-boomer generation—will continue to do so.
For example, a March 2015 Census Bureau publication estimates that the number of people in the U.S. who are 45 or older will increase every decade through 2060, with those 65 or older accounting for a growing share of that rise (see Chart 1). Overall, between 2014 and 2060, the 45-64 age group will jump 19.8 percent, while the 65-and-older crowd is predicted to grow by 112.2 percent (see Chart 2).
A Bureau of Labor Statistics April 2016 study showed that 20 percent of those 65 and older are working, which is the highest percentage since the early 1960s, before Medicare was enacted, Bloomberg recently reported.
In December 2015, the BLS projected the average annual growth rate of the 55-and-older group over the 2014–2024 period to be 1.8 percent, more than three times the growth rate of the overall labor force. Moreover, that group’s share of the labor force is anticipated to increase from 21.7 percent in 2014 to nearly 25 percent in 2024.
Relatedly, a 2015 Federal Reserve study found that 27 percent of U.S. workers said they will keep working as long as possible, and another 12 percent said they don't plan to ever retire.
The high stakes are why the EEOC, the U.S. Chamber of Commerce and the Equal Employment Advisory Council have all submitted friend-of-the-court briefs in a case in which the Third Circuit appears poised to rule on the issue, Maatman said. The EEAC is an employers' organization in Washington.
In Karlo v. Pittsburgh Glass Works, LLC, 3d Cir., No. 15-3435, appeal filed 10/15/15 , a group of workers 50 and older is asking the appeals court to reverse a lower court’s rejection of their request for certification as a class to pursue a claim that the company’s 2009 RIF had a disparate impact on them that didn’t similarly hurt workers in their 40s.
They argue that the specter of age discrimination increases as a 40-or-over worker gets older and that the ADEA treats age as a continuous variable. Like Sperino, they contend that society’s perception of age has evolved and that workers in their 40s are no longer viewed as “old.”
In support of the workers, the EEOC argues that the plain text of the statute, as well as the law’s legislative history and remedial purpose, all indicate that disparate impact subgroups claims should be permitted under the ADEA. The agency also cites a trio of U.S. Supreme Court cases to bolster its argument.
The EEOC says that those cases support the propositions that the ADEA prohibits bias “based on age,” not merely because someone is 40 or over; that, as does Title VII of the 1964 Civil Rights Act, the ADEA principally protects individual workers rather than a group of workers as a whole; and that the ADEA is concerned with protecting “relatively” older workers.
The federal appeals courts, however, thus far haven’t backed the EEOC’s position. The only circuits to decide the issue—the Second, Sixth and Eighth—have all declined to recognize ADEA subclasses. Some lower federal courts, on the other hand, have permitted ADEA disparate impact subclass claims. They include the original lower court ruling in Karlo and other district courts in the Third Circuit.
Unless subclasses are allowed, the disparate impact theory of discrimination won’t be fully used “as a powerful tool to dismantle age discrimination under the ADEA,” Daniel B. Kohrman, a senior attorney with AARP Foundation Litigation in Washington, said.
As “we’re on the cusp of the 50th anniversary” of the law, “that’s a pity,” Kohrman told Bloomberg BNA July 29. AFL is an advocate in courts nationwide for the rights of people 50 and older.
But Barry A. Hartstein of Littler Mendelson P.C. told Bloomberg BNA Aug. 4 that while the issue is “fascinating” from an intellectual perspective, “the EEOC is trying to push the envelope a little” from a legal standpoint.
The Chicago-based management-side lawyer said that when you think about disparate impact discrimination, “it's always between workers within the protected class and those outside of the protected class.” For example, Hartstein said, the comparisons under Title VII are between black and white workers, female and male workers, etc.
“That's how the doctrine of disparate impact bias has traditionally been applied,” he said.
There will be increased legal exposure for employers if the Third Circuit and other courts begin to adopt the EEOC's position on disparate impact subclasses under the ADEA, Hartstein said.
In its amicus brief in Karlo, the EEAC argues that the EEOC's view isn't entitled to deference because the agency has never published a notice-and-comment rulemaking or any sub-regulatory guidance on ADEA subgroup disparate impact claims.
If anything, the agency's ADEA regulations support the rejection of ADEA subclasses, the Chamber urges in its Karlo brief. Those rules—at 25 CFR § 1625.7(c)—provide that disparate impact claims under the ADEA are intended to reach workers only within the 40-and-above protected age group, the Chamber says.
Hartstein and Maatman both likened the EEOC's argument in favor of ADEA subclasses to the agency's current approach to LGBT bias under Title VII. They were referring to the position the EEOC has taken in administrative rulings and in court that the plain language of Title VII's sex discrimination prohibition also bars sexual orientation and gender identity discrimination even though neither of the latter types of bias is mentioned in the statute.
In arguing that the plain text of the ADEA and Title VII support its positions, the EEOC is engaging in “selective parsing” of the statute “to make the law say what” the EEOC wants it to say, Maatman said. “It's mental gymnastics,” he said.
The problem with allowing subgroups of older workers to sue for disparate impact bias, Maatman said, is that unlike for Title VII-protected classes, employers won't be able to define the group of protected workers.
Instead, the protected group “would be a moving target,” he said, and employers “would be required to run the numbers on hundreds of different categories” of workers to be sure a planned workforce reduction or similar personnel move doesn't result in a disparate impact on some cohort of the 40-and-older protected class.
Employers like to perform internal “stress tests” on their workplace plans to make sure they treat workers fairly and comply with the law, Maatman said, and they won't be able to do that effectively under the approach advocated by the EEOC.
Hartstein agreed. “How are employers going to test” to prevent potential bias against all workers in the various 40-and-over age bands, he said.
“It's almost an impossibility. Their flank will be completely exposed,” Hartstein said.
In other words, employers will be exposed to cherry-picked claims or gerrymandering, or required to achieve statistical parity among the protected-age subgroups to avoid legal liability, Hartstein and Maatman said, echoing the arguments of the employer and its amici in Karlo.
“A skilled statistician can make the numbers sing,” Maatman said.
“The flip side no one wants to talk about,” he added, “is that allowing subclasses encourages quotas” to ensure an employer's numbers will pass muster. “I don’t think that’s a public policy that Congress was trying to achieve” when it enacted the ADEA, he said.
Sperino acknowledged that the statistical parity and related arguments are likely what most worry the courts that have rejected ADEA disparate impact subgroups. However, she said the concern is ill-founded for several reasons.
Among those reasons, she said, is the decreased participation in the workforce of people as they age. She said that means 40-and-over workers in the older cohorts generally won't be present in an employer's workforce in sufficient numbers to allow for acceptable sample sizes for statistical purposes.
In addition, she said, disparate impact plaintiffs under the ADEA already face a difficult burden of proof, which will be even more difficult in subgroup cases. Also, costs are always an issue as disparate impact cases are “very expensive” to prepare and litigate. Moreover, the remedies aren’t as good under the ADEA as under other federal employment bias laws, and employers have better defenses under the ADEA than under those other laws, Sperino said.
She said her sense is that disparate impact claims fail so frequently for a lack of an adequate statistical showing—if they even make it that far—that the courts should allow some subgroup cases and let them “play out” to see if they present the problems predicted by employers.
Agreeing, Kohrman said “the parade of horribles” that employer advocates “roll out as reasons for not allowing” ADEA disparate impact subgroup claims “should really just be the start of the analysis.”
“How about doing this on a case-by-case basis,” he said. District courts can screen out cherry-picked claims on an individual basis without the need for a blanket prohibition, Kohrman said.
“It’s conceivable to us that some age-neutral policies will fall most harshly” on subgroups of 50-and-over, 60-and-over or 70-and-over workers, he said. That’s especially so in certain industries, he said, such as those with employers that might impose a physical-strength minimum or a similar requirement, for example.
AARP Foundation Litigation's view is that disparate impact subgroups “should be permitted under the ADEA in appropriate circumstances,” Kohrman said.
Everyone Bloomberg BNA spoke with agreed that if the ADEA is amended to make clear what Congress originally intended with regard to protections for workers as they continue to age, that fix should come from Congress itself rather than the courts. However, there was little consensus that such a change is necessary or what it would look like.
Courts shouldn’t be legislating, especially where there’s a long line of established precedent on an issue, Hartstein said. He said he understands the position that “the older you get, the more protection” you need from age bias, “but that’s not what the law says.”
“Let Congress expand the law if that’s its intent,” Maatman said. “Then employers will have no beef.”
Hartstein said it’s hard to predict how any change would play out legislatively. But if Congress revisits the ADEA, he said, it's hard to believe the lower age limit for coverage would remain 40. He said he wouldn't be surprised to see it raised to 50 or higher.
“The issue is really who needs to be protected from age bias in employment in this day and age,” he said. People are living longer and are in better health, and they're needing to work into their later years, he said.
“The question should be which workers potentially are being screened out of employment because of their age,” Hartstein said. “Do we really still think age discrimination is touching people in their 40s?” he asked.
But Sperino said she wouldn’t advocate for adjusting the ADEA's coverage limit upward. “We still see age bias against workers in their 40s,” she said. Such a limit, however, might make sense in the subclass context, she added.
Kohrman said that if the ADEA's lower age limit were changed to 50, a “no subclass” rule might be in order. “But to say the law as it exists precludes any claim by older subgroups doesn’t seem reasonable,” he said.
We may soon find out in Karlo whether the Third Circuit agrees.
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