In Smith v. City of Jackson, the U.S. Supreme Court found that the ADEA authorizes recovery in disparate-impact cases, but also decided that there’s no such liability when the impact is due to reasonable factors other than age. Thus, “reasonable factors other than age” can provide an important defense in an ADEA action. For several years, the EEOC has proposed rules and collected comments on regulations clarifying this defense. On March 31, 2012, the EEOC published its final Rule on the “reasonable factors other than age” defense.
The final Rule provides that a reasonable factor other than age is one that “is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances.” Whether a non-age factor is the reason for differential treatment “depends on the basis of all the particular facts and circumstances surrounding each individual situation.” To prevail, the employer has the burden of persuasion and “must show that the employment practice 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.”
Employers should note a non-exhaustive list of considerations set forth in the Rule itself that can be taken into consideration to determine if the employment decision was based on a reasonable factor other than age. These considerations include:
- 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 were 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.
- The degree of harm to individuals within the protected 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.
The Rule clarifies, however, that the “reasonable factors” are not required elements, but rather, only “manifestly relevant to determining whether an employer demonstrates the RFOA defense.”
The final Rule takes effect on April 30, 2012.
Article courtesy of Worklaw® Network firm Shawe Rosenthal (www.shawe.com).