U.S. Supreme Court Reminds Employers That Age Discrimination Claims Persist

by M. Edward Taylor

In its recently ended term the Supreme Court issued an unprecedented number of decisions interpreting the Age Discrimination in Employment Act (“ADEA”), all but one of which generally favored employees. These cases serve as a reminder that age discrimination claims still present significant risks to employers and that care must be taken to avoid liability associated with employment decisions affecting members of the aging work force.

Meacham v. Knolls Atomic Power Lab., 128 S. Ct. 2395 (2008). In Meacham, a group of older employees claimed that the criteria used by the employer in selecting employees for a layoff had an adverse impact on older employees (in an adverse impact case the employee claims a facially neutral practice adversely impacts a protected group and need not show that there was intentional discrimination). The Court ruled that in an adverse impact suit under the ADEA, after the employee demonstrates that a policy or practice creates an adverse impact, the employer bears the burden of proving as a defense that it relied on reasonable factors other than age.

Sprint/United Management Co. v. Mendelsohn, 128 S. Ct. 1140 (2008). During pre-trial proceedings the trial court granted the employer’s motion to exclude evidence of alleged age discrimination directed against other employees who had different supervisors—”me too” evidence. The court of appeals held that the trial court had improperly concluded that me too evidence is never admissible and that the evidence should have been admitted. The Supreme Court reversed the decision of the court of appeals and held that whether me too evidence is properly admitted must be decided based on a factually intensive analysis of whether the other employees are similarly situated in order to decide whether the evidence is probative and is not unduly prejudicial.

Federal Express Corp. v. Holowecki, 128 S. Ct. 1147 (2008). The ADEA provides that no lawsuit can be commenced until at least sixty days after an employee has filed a charge of age discrimination with the EEOC. When Holowecki and others filed a lawsuit claiming that FedEx was engaged in a campaign to drive out older employees, the Company obtained dismissal of the lawsuit on the ground that the intake questionnaire and affidavit Holowecki had filed did not constitute a charge. The court of appeals reversed the trial court. The Supreme Court upheld the EEOC’s position that a filing can be deemed a “charge” under the ADEA if it can be reasonably construed as a request for the agency to take remedial action to protect the employee’s rights.

Gomez-Perez v. Potter, 128 S. Ct. 1931 (2008). The ADEA prohibits retaliation against a private sector employee who complains of age discrimination, but contains no similar provision protecting a federal employee against retaliation. The Supreme Court held that the ADEA grants an implied right of action to federal employees claiming retaliation. (In a non-ADEA case, CBOCS West Inc. v. Humphries, 128 S. Ct. 1951 (2008), the Supreme Court held that Section 1981, a Civil War Era statute outlawing race discrimination, likewise contains an implied right of action for retaliation.)

Kentucky Retirement System v. EEOC, 128 S. Ct. 2361 (2008). The EEOC challenged the provision of a retirement plan that granted more generous benefits to employees who became disabled before reaching normal retirement age than to employees with the same years of service who became disabled after normal retirement age. The Supreme Court rejected the EEOC’s position and held that the plan did not violate the ADEA. The Court noted that the plan merely gave employees under age 55 enough credit so that they would qualify for benefits under the plan. It therefore concluded that the differentiation was based on pension eligibility status, not age, and thus was permissible.

Employer Guidance and Best Practices

Although these recent decisions are somewhat narrow and will not impact most employers, they illustrate that, even with a more conservative Supreme Court, the ADEA and other discrimination statutes still have relevance to workplace decision-making and pose risks for unwary employers. Particularly in difficult economic times when layoffs and other cutbacks are more common, employers must remain vigilant to avoid claims of age discrimination. Steps employers can take to avoid age discrimination claims include:

Review policies and procedures to be sure they are based on reasonable factors other than age and serve legitimate business reasons. Areas of special emphasis include hiring criteria, layoff criteria, compensation systems, severance plans and retirement programs.
Thoroughly document all employment-related decisions and actions and take care to ensure that the business reasons underlying the decisions can be understood by the average person.
When undertaking a layoff, develop a selection program based on objective criteria that focus on legitimate business needs. After the initial selection process is completed, conduct a statistical analysis to determine whether there is an adverse impact (i.e., are age-protected employees statistically over-represented in the pool of employees to be laid off). Such an analysis can be undertaken with the assistance of counsel to provide confidentiality under the attorney-client privilege.

This Employment Law Note is written to inform our clients and friends of developments in labor and employment relations law. It is not intended nor should it be used as a substitute for specific legal advice or opinions since legal counsel may be given only in response to inquiries regarding particular factual situations. For more information on this subject, please call Sebris Busto James at (425) 454-4233.