The EEOC’s New Rule On An ADEA Defense Creates Confusion and Greater Restraints On Employers Defending Against Such Claims

By Rachel Hulst

Since its inception, the Age Discrimination in Employment Act (ADEA) has protected workers over the age of 40 from discrimination. In an attempt to make this Act consistent with Supreme Court case law, the Equal Employment Opportunity Commission (“EEOC”) has now issued its final new rule that purportedly better describes defenses an employer may assert against certain ADEA claims[1]. The result appears to be a more confusingly rigid standard for employers to meet when defending against these types of claims.

The ADEA has always permitted employees to bring two basic claims against an employer with 20 or more employees, disparate treatment and disparate impact claims.

Disparate treatment claims require an individual to prove that an employer intentionally discriminated against he/she on the basis of his/her age. Employers primarily defend against such claims by producing evidence that the alleged discriminatory decision at issue was not arbitrary or irrational (the “legitimate nondiscriminatory reason”).

Conversely, disparate impact claims allege neutral Company policies or practices that have an effect of harming a group of older workers more than younger workers. Fairly recently, two US Supreme Court decisions have held that an employer may assert an affirmative defense to such disparate impact claims under the ADEA – the Reasonable Facts Other than Age (RFOA) defense[2]. This new rule professes to better clarify how employers can assert this defense. In doing so, the EEOC lays out a number of “considerations” for determining if an employer has established the RFOA defense. While not all are required, the more an employer can cite, the better off it is in defeating this type of claim. They are as follows:

  • 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 it fairly and accurately (including how managers were given guidance or training);
  • the extent to which the employer limited supervisor’s discretion to assess employees subjectively (ie: did not permit unconstrained discretion);
  • the extent to which the employer assessed the adverse impact of its practices on older workers (not always warranted or necessary); and
  • the degree of the harm to individuals within the protected age group and the steps the company took to reduce the harm.

Unfortunately, these fact-intensive considerations leave room for greater debate that will surely result in additional suits brought against employers under this Act. Moreover, they are arguably inconsistent with the Supreme Court case holdings they purport to clarify. Smith and Meacham both held that employers defending their policies against ADEA disparate impact claims need not show a “business necessity”, which requires evidence that the Company looked at other ways to achieve the same goals that did not result in a disparate impact. Rather, employers need only establish that the decision to implement the policy was reasonable.[3] Yet, the above considerations appear to describe the “business necessity” defense more than an “RFOA”, only leading to further confusion on what an RFOA actually is.

In the end, the EEOC’s new rule considerations focus on parsing out those practices and policies that are truly neutral against others which may have some (hidden) discriminatory intent. Accordingly, the EEOC is sending the message that employers (1) must consider age prior to implementing any new “neutral” policies or practices; (2) must put safeguards in place to ensure that these policies don’t adversely affect those over 40 and (3) must monitor such policies after they are implemented to continually ensure such policies or practices don’t later have an adverse effect on those over the age of 40. That puts a lot more on the employer to make certain that all of its management employees meticulously examine each and every policy and practice before (and after) implementation. Ironically, the message is: always consider age when executing future age-neutral policies.

To protect against such claims, employers are encouraged to continue to do some more of the same. Prior to policy implementation, (1) document the reasons behind it up front; (2) specifically set out neutral criteria; and (3) conduct an age specific statistical analysis where appropriate (such as for a reduction in force).

Additionally, it is prudent for all employers to now consider (1) providing additional guidance to management on how to implement new policies that have the potential of resulting in a disparate impact; (2) putting systems in place to continue to monitor the effects of the policies after they are in place; and (3) ensuring there are not other ways of employing such policies that would have less of an effect on older workers. It is unclear right now how important meeting all (or any) of these considerations will be for employers defending against disparate impact claims brought under the ADEA. We encourage all to proceed cautiously through these muddy waters.


[1] See 29 C.F.R. Part 1625; the final regulations go into effect on April 30, 2012.

[2] Smith v. City of Jackson (2005) 544 US 228 [court held that in addition to Title VII, the ADEA also exposes employers to liability for employment decisions that disparately impact older employees, unless those decisions are based on an RFOA]; Meacham v. Knolls Atomic Power Lab. (2008) 554 US 84, 97 [the court confirmed that an RFOA is an employer’s affirmative defense, that the burden of proof for this defense was on the employer and that the business necessity defense (a defense used in Title VII cases) “should have no place in ADEA disparate-impact cases".]

[3] See Smith at p. 243, Meacham at p. 97.

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