Final Review Of ADEA Regulations May Change An Employer’s Affirmative Defenses and Burden of Proof In Disparate Impact Cases

Contributed by Allison Chaplick

The Equal Employment Opportunity Commission just issued its January 2012 Status Report on Retrospective Regulatory Review. One of the items targeted for final review by the Office of Management and Budget (OMB) is the EEOC’s draft final rule to amend certain ADEA regulations.

The relevant regulations currently interpret the ADEA as prohibiting an employment practice that has a disparate impact on employees in the protected age group unless the practice is justified by a business necessity.  However, the EEOC proposes to revise paragraph 1625.7(d) to state that an employment practice that has a disparate impact on individuals within the protected age group is discriminatory unless the practice is justified by a “reasonable factor other than age” (RFOA).  Revisions to paragraph 1625.7(e) may also include that the employer has the burden of showing that a reasonable factor other than age exists factually.  The OMB anticipates completing its review of this draft final rule by March of 2012.

So, why is the EEOC doing this?  The answer is simple: to comply with the U.S. Supreme Court’s ruling in Smith v. City of Jackson, 544 U.S. 228 (2005) and to conform to Meacham v. Knoll Atomic Laboratory, 128 S.Ct. 2395 (2008).  Smith arose out of the city of Jackson’s decision to grant raises to police officers and dispatchers who had less than five years of tenure in an effort to make these positions’ starting salaries comparable with the regional average.  Accordingly, those police officers with less than five years of seniority received proportionately greater raises than those police officers with more seniority, many of whom were over the age of 40. 

The Smith court agreed with the EEOC’s regulations that disparate impact claims were cognizable under the ADEA, but held that the proper defense for such a claim was not “business necessity” but RFOA.  The Smith court remained silent as to whether the employee or employer had the burden of proof on the RFOA defense, but took up this issue in Meacham

In Meacham, the employer was forced to make a reduction in force. To determine which employees should be laid off, the company instructed its managers to score their subordinates on “performance,” “flexibility,” and “critical skills” along with points for years of service.  Following this review, thirty of the thirty-one employees laid off were over the age of 40.  The Meacham court held that an employer defending a disparate impact claim under the ADEA bears the burden of production and persuasion for the RFOA affirmative defense.