Recent High Court Ruling Raises Concerns About Age-Discrimination Cases
Before Knolls Atomic Power Laboratory in upstate New York laid off a group of workers in 1996, the government contractor took several precautions to stay on the right side of the law. But that was not enough to keep it out of court. And based on a recent U.S. Supreme Court ruling, it's not clear what actions it should have taken to avoid being sued.
Knolls carefully reviewed its criteria used in the layoff decision against the best practices at other companies. And, before deciding to eliminate the 31 positions involved, it sought approval from the U.S. Department of Energy – the agency it works for – and an internal committee.
But following the layoffs, 28 of the affected salaried workers – including Clifford Meacham – sued Knolls, claiming the RIF had a discriminatory impact on workers protected by the Age Discrimination in Employment Act (ADEA). The suit, which led to a decision that potentially makes it easier for others to sue in such cases, was filed because 30 of the laid off workers were at least 40 years old – the age at which an employee is covered under the ADEA.
On June 19, the Meacham vs. Knolls Atomic Power Laboratory made its way before the U.S. Supreme Court, testing a provision of the ADEA that allows otherwise-prohibited employer actions if they are "based on reasonable factors other than age" (RFOA). The question before the high court was this: If an employer is facing a disparate-impact claim and planning to defend its position based on RFOA, does that employer – in addition to producing evidence in defense of its action – also have to persuade the court of its merit?
In a 7-1 ruling, the court says that, when older workers are disproportionately affected by an employment decision, the employer bears the burden of explaining whether there was a reasonable explanation other than age for the company's action.
Nancy Hammer, manager of regulatory and judicial affairs for the Society of Human Resource Management (SHRM), said SHRM, along with the Equal Employment Advisory Council (EEAC) and the National Federation of Independent Business, filed an amicus brief supporting Knoll's position in the case.
The concern, Hammer said, is that the ruling will make it more difficult – and expensive – for employers to defend themselves in age-discrimination cases. Some say the recent decision also is likely to increase the number of age-discrimination claims. Under the new ruling, the employee has a relatively light burden of proof compared to what is now required of employers. And unlike most Title VII discrimination claims (e.g. those based on race or gender), plaintiffs have fewer hoops to jump through when it comes to age-related disparate-impact cases. Based on the recent decision, plaintiffs only have to identify the practice in question and then show that it is “not justified by business necessity,” she said.
Some say the ruling likely will increase the number of claims and lawsuits against employers as workers begin to comprehend the full impact of the high court's decision. In addition, the U.S. workforce is growing older and many workers are opting to stay in the workforce longer – resulting in an increasing number of employees eligible to file claims under the ADEA.
Still others point to the fact that the number of age-discrimination claims tends to increase during economic downturns – when more companies turn to cost-cutting measures like layoffs. Equal Employment Opportunity Commission (EEOC) figures, for example show that there were 19,103 age-discrimination charges filed in fiscal year 2007, compared to 16,546 in fiscal year 2006 – representing an increase of 15 percent in such claims. And age-discrimination charges filed with the EEOC represented just over 23 percent of all discrimination-related charges filed between 2006 and 2007.
For many in the business community, the Knolls case is unsettling on several fronts. For one, Knolls took a number of precautions before going forward with the "reduction in force" (RIF) action, Hammer said. Knolls did benchmarking to determine best practices. And the selection criteria used in the RIF process was reviewed and approved by the U.S. Department of energy, general counsel, and an internal review board, she said.
Yet despite all those precautions, the U.S. Supreme Court did not come down on the side of Knolls.
So the question now becomes: “What exactly does an employer have to do to prove reasonableness?” said Rae Vann, general counsel with the EEAC, a non-profit association of employers dedicated to advancing programs that eliminate workplace discrimination. Troubling to many in the business community is the lack of a clear answer to that question. The question: “What is reasonableness? will spark litigation,” Hammer said. “And it could also lead to potentially frivolous cases.”
“You can see why the business community is concerned,” Vann said. “I think this is going to be a big issue.”
More than likely, the question of “reasonableness” will be tested and further defined as age-discrimination cases are brought before the lower courts, said Tom Osborne, senior attorney with AARP Litigation in Washington, D.C. Clearly, the Meacham decision makes it easier for plaintiffs to successfully challenge age-discrimination issues in the workplace.
“It's a win for the plaintiffs,” Osborne said, “and I think the court got it right.”
Next week, read advice on how to prevent age-discrimination issue in your workplace, as well as a Q & A with an Equal Employment Opportunity Commission (EEOC) attorney about what the Supreme Court ruling means for your business.
Written by Jenny Cromie, certified human resources specialist (CHRS)
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Before Knolls Atomic Power Laboratory in upstate New York laid off a group of workers in 1996, the government contractor took several precautions to stay on the right side of the law. But that was not enough to keep it out of court. And based on a recent U.S. Supreme Court ruling, it's not clear what actions it should have taken to avoid being sued.
