EEOC Issues Final Regulations for RFOA Defense Under ADEA

 

Last week, we reported that several senators had introduced new amendments to the Age Discrimination in Employment Act ("ADEA") to make it easier for plaintiffs in age discrimination cases to prove their claims.  U.S. Senators aren't the only ones busy refining federal age discrimination laws - on March 30, 2012, the Equal Employment Opportunity Commission (EEOC) published its final rule on the “reasonable factors other than age” (RFOA) defense under the ADEA.  Acting in response to two U.S. Supreme Court cases, Smith v. City of Jackson in 2005 and Meacham v. Knolls Atomic Power Laboratories in 2008, the rule bring the EEOC regulations in line with Supreme Court precedent and clarifies the scope of the RFOA defense

In Smith, the Supreme Court held that disparate impact claims are cognizable under the ADEA.  The Court further held that a practice having a disparate impact on older workers need only be justified by “reasonable” factors other than age; an employer need not satisfy the more rigorous “business necessity” defense applicable to Title VII claims.  In Meacham, the Court held that the employer bears the burden of production and persuasion on the RFOA defense.   

The regulation points out that the EEOC believes that “reasonable” factors other than age reflects a higher standard than a simple “rational basis” standard.  According to the EEOC, equating the RFOA defense with a rational-basis standard would improperly conflate ADEA disparate-treatment and disparate-impact standards of proof: “If an employer attempting to establish the RFOA defense were only required to show that it had acted rationally, then the employer would merely be required to show that it had not engaged in intentional age discrimination.”

The rule provides a non-exhaustive list of factors to be considered in determining whether an employment practice is based on RFOA:

  • 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 bout 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; and
  • The degree of the 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 final rule makes clear that the EEOC will take a very dim view of an employer’s RFOA defense where supervisors are given broad discretion to make subjective decisions.  Accordingly, prudent employers will take steps to ensure that decisions are made consistent with business purpose, that supervisors are properly trained, and that supervisors exercise their discretion in a way that does not violate the ADEA.

For more information, visit EEOC’s Questions and Answers page.  The rule will take effect on April 30, 2012.

 

EEOC Proposes New Age Discrimination Regulations

Today the Equal Employment Opportunity Commission (EEOC) releases new regulations that will define employers' "reasonable factors other than age" or "RFOA" defense under the Age Discrimination in Employment Act (ADEA).  The new regulations would reflect two Supreme Court cases interpreting the RFOA defense: Smith v. City of Jackson (2005) and Meacham v. Knolls Atomic Power Laboratories (2008).  Click here to read the EEOC's Proposed ADEA Regulations.

The Supreme Court held in Smith that employment practices having a disparate adverse impact on workers age 40 and older may violate the ADEA.  The Court in Meacham then ruled that when a plaintiff proves such an adverse impact, employers have the burden of proving that the practice that caused the adverse impact was based on reasonable factors other than age.”  Since Smith and Meacham, however, there have not been any interpretive regulations under the ADEA to guide employers on the RFOA defense. 

The proposed rule defines a "reasonable factor other than age" as "one that is objectively reasonable when viewed from the position of a reasonable employer (i.e., a prudent employer mindful of its responsibilities under the ADEA) under like circumstances.  To establish the RFOA defense under the new rules, an employer must show that the employment practice was both (1) reasonably designed to further or achieve a legitimate business purpose and (2) 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, to the employer.  The rule also provides a non-exhaustive list of six factors relevant to determining whether an employment practice is "reasonable":

  1. Whether the employment practice and the manner of its implementation are common business practices;
  2. The extent to which the factor is related to the employer’s stated business goal;
  3. The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);
  4. The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
  5. The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
  6. Whether other options were available and the reasons the employer selected the option it did.

The EEOC's proposal also explains that the RFOA defense turns on the facts and circumstances of each particular situation and whether the employer acted prudently in light of those facts.

An employer who is considering a change in employment practices -- such as a layoff, change in employment qualifications, etc. -- should examine the impact of the change to determine whether it may create an adverse impact based on age.  If it appears that it may, the employer should then apply the EEOC's six factors to see if it can adequately defend the change as based on reasonable factors other than age.  If the change does not appear to pass each of the EEOC's six factors, the employer may want to consider altering the change to reduce the impact or abandoning it altogether.