Older Workers Can Sue for Age Bias Even if Comparators Are 40-Plus

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By Patrick Dorrian

Workers in their 50s can sue under federal age discrimination law when an employment policy inadvertently hits them harder than co-workers in their 40s, the U.S. Court of Appeals for the Third Circuit ruled ( Karlo v. Pittsburgh Glass Works, LLC , 2017 BL 6064, 3d Cir., No. 15-3435, 1/10/17 ).

The ruling will have a favorable impact for groups of older workers affected by discriminatory employment policies where there is no smoking gun evidence, Daniel B. Kohrman told Bloomberg BNA Jan. 10. He’s a senior attorney with AARP Foundation Litigation in Washington, which is not a party in the case.

“This can happen where the statistics don’t bear out an adverse impact” when a policy’s effect on all of an employer’s 40-and-over workers are considered, as opposed to just a subgroup of those employees, Kohrman said. Having to consider all 40-and-over workers in such situations can mask bias affecting a subset of employees in the 40-and-over group, he said.

Circuit Court Split

The decision creates a split among the federal appeals courts on whether the Age Discrimination in Employment Act permits disparate impact claims by “subgroups” of workers in the law’s “40-and-over” protected class when the alleged bias disproportionately affects older workers—in their 50s or over.

The ruling rejects the view of the Second, Sixth and Eighth circuits that such claims aren’t allowed. It also revives claims by a group of workers 50 and older who allege that Pittsburgh Glass Works LLC’s 2009 workforce reduction had a disparate impact on them that didn’t similarly hurt workers in their 40s.

Disparate impact claims generally seek to recover damages for unintended bias arising from the application of a facially neutral employment policy or practice. They typically are founded largely on statistical evidence.

It’s clear from the plain language of the law that ADEA disparate impact claims may be brought by subgroups of workers in the protected class, Judge D. Brooks Smith said, writing for the Third Circuit. The statute, he said, prohibits the adverse consequences of a neutral employment policy when such consequences are based on “age” rather than on a worker’s being 40 or over.

Not recognizing subgroups claims under the statute would ignore statistical disparities that might otherwise support actionable age bias claims, Smith said.

Court Creates New ‘Species' of Claim

The decision is “very plaintiff-minded,” Gerald L. Maatman told Bloomberg BNA. He's with management-side firm Seyfarth Shaw and did not participate in the case.

The court plunged ahead despite contrary case law and created a circuit split where none existed previously, he said. In doing so, it makes “a certain species” of age discrimination claim viable and opens the door to the sort of statistical manipulation employers fear, Maatman said Jan. 10.

The ruling will negatively affect employers in two ways, Maatman said. First, it will greatly complicate their ability to effectuate workforce reductions because they will now need to check for age-based impacts across all strata of their 40-and-over workers, he said.

As a result, employers conducting RIFs often “could be tied in knots” running numbers to make sure they're not setting themselves up for disparate impact age discrimination claims, he said.

Second, the ruling will make it more difficult for employers to defend against such claims when they reach court because of how a proposed class's statistical expert “can cut the numbers” to generate alleged evidence of bias, Maatman said. Employers will have a tougher time winning summary judgment in such cases, and a harder time prevailing at trial, he added.

He said he'd be “very surprised” if U.S. Supreme Court review isn't sought in the case, in light of the circuit split it creates and the implications of its holding for employers.

Allowing Subgroups Won't Lead to Surge in Lawsuits

The Third Circuit’s decision should become the leading case on the question of ADEA subgroups going forward, even though the court’s view is in the minority, he added. Smith’s opinion is “powerful and thorough” in its review of the law and its reasons for rejecting the views adopted by the other federal appeals courts that have addressed the issue, Kohrman said.

AARP believes the “dangers” raised by the employer here and its amicus for not permitting ADEA disparate impact claims by subgroups “are exaggerated” and that the ruling won’t lead to a surge of claims by proposed subclasses that have manipulated statistics to manufacture alleged evidence of disparate impact bias, Kohrman said.

Disparate impact claims are difficult to prove, he said. And as Smith notes, the subgroup still needs to tie the alleged disparate impact to a specific employment policy and practice. Moreover, the rules governing statistical evidence are stringent and safeguard against attempts to manufacture claims, he said.

Judges Theodore A. McKee and L. Felipe Restrepo joined the opinion.

Samuel J. Cordes & Associates and Obermayer Rebmann Maxwell & Hippel represented the workers. Freeborn & Peters and Cohen & Grigsby represented Pittsburgh Glass.

The Equal Employment Opportunity Commission appeared as an amicus supporting the workers. Paul Hastings represented the U.S. Chamber of Commerce and NT Lakis represented the Equal Employment Advisory Council as amici supporting Pittsburgh Glass.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

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