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4/5/2005
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United States Supreme Court Recognizes Disparate
Impact Claims Under the Age Discrimination in
Employment Act
On March 30, 2005, in Smith v. City of Jackson, the United
States Supreme Court, in a 5-3 decision, expanded liability
under the federal Age Discrimination in Employment Act of
1967 (ADEA) to include disparate impact claims. Disparate
impact discrimination occurs when a neutral employment
practice has an adverse effect on a protected class of
persons (e.g., workers age 40 and older). The Supreme
Court previously recognized such claims under Title VII of
the Civil Rights Act of 1964 over 30 years ago. Since that
time, federal appellate courts remained split as to whether
a disparate impact theory of liability could also be used by
employees in ADEA age discrimination lawsuits, with the
Ninth Circuit Court of Appeals authorizing disparate impact
claims.
Factual Background
In 2001, 30 police officers and public safety dispatchers
over age 40 filed suit against their employer, the City of
Jackson, Mississippi, alleging they had been discriminated
against on the basis of their age in violation of the ADEA.
The officers' lawsuit challenged a pay plan, claiming the
plan was discriminatory and resulted in disparate
treatment of, and a disparate impact on, police officers
over age 40 by providing them with proportionately smaller
wage increases than those given to younger officers. The
officers supported their claim of disparate impact by
presenting statistical evidence that the pay increases given
to new officers with five or fewer years of tenure were four
standard deviations higher than the pay raises given to
officers with five or more years of tenure who were over
age 40.
The City did not dispute the officers' claim that new
officers with five or fewer years of tenure received
proportionately greater raises than more senior officers.
However, the City pointed out that the new pay structure
was designed to provide its officers with competitive
salaries, as compared to similar jurisdictions, for both
junior and senior officers. The City argued that the pay
increase differential was due to the disproportionately
higher rate of pay its more senior officers were already
receiving.
The City also presented evidence that the minimum salary
for the junior officers was increased by a smaller
percentage than the minimum salary for all other more
senior officers. In support of its argument that senior
officers were already paid relatively well, the City showed
that the pre-raise salaries for junior officers were
approximately 10 percent below the new pay range
minimum, while the pre-raise salaries for senior officers
were actually above the new pay range minimum.
Liability Under the ADEA Is "Narrower" in Scope Than
Under Title VII
In recognizing the legitimacy of a disparate impact claim
under the ADEA, the Supreme Court's opinion relied on the
similarity between the language in the ADEA and Title VII
as it relates to "the effects of the action on the employee
rather than the motivation for the action of the employer."
However, the Supreme Court's decision in Smith v. City of
Jackson limited the scope of disparate impact liability
under the ADEA, providing that an employer will not be
liable if the employer can prove that the differentiation
between younger and older workers is based on "reasonable
factors other than age." As the Supreme Court explained, ".
. . it is not surprising that certain employment criteria that
are routinely used may be reasonable despite their adverse
impact on older workers as a group." Further, the Supreme
Court also recognized that Title VII's 1991 amendments,
which expanded the coverage of Title VII following the
Supreme Court's decision in Ward's Cove Packing, Co., Inc.
v. Antonio (U.S. Supreme Court, 1989) by, in relevant part,
requiring employers to prove that a challenged practice is
"job related for the position in question and consistent with
business necessity," did not apply to the ADEA.
The Supreme Court Unanimously Affirmed Summary
Judgment in Favor of the Employer
In a result that drew the concurrence of all eight justices
participating in the decision, the Supreme Court affirmed
the Fifth Circuit's grant of summary judgment to the City.
The opinion noted that the officers had done "little more
than point out that the pay plan at issue is relatively less
generous to older workers than to younger workers." The
opinion continued:
. . . it is not enough to simply allege that
there is a disparate impact on workers, or
point to a generalized policy that leads to
such an impact. Rather, the employee is
"'responsible for isolating and identifying the
specific employment practices that are
allegedly responsible for any observed
statistical disparities.'" . . . . In this case not
only did petitioners thus err by failing to
identify the relevant practice, but it is also
clear from the record that the City's plan was
based on reasonable factors other than age.
What This Means for Employers
For employers in the Ninth Circuit, the U.S. Supreme
Court's decision in Smith v. City of Jackson confirms what
had previously been the law in this circuit; that is, that
employees may bring disparate impact claims under the
ADEA for employment practices that they allege to have a
disparate impact on older (i.e., over 40) workers, but only
if they can identify the specific employment practice they
believe is responsible for the statistical disparity. Further,
the Supreme Court's decision also confirms that practices
that result in an adverse impact on older workers may still
be permissible if the result is attributable to "reasonable
factors other than age." Employers should consult counsel
regarding whether their neutral policies and practices that
might adversely impact workers over 40 years old are
nonetheless permitted under the ADEA, under the
standards articulated by the Supreme Court in this case.
Employers should also be mindful that prohibitions against
age discrimination under state statutes may be judged
under different standards than those applicable to the
ADEA.
For more information, please contact the Labor and
Employment Law Practice Group at Lane Powell:
206.223.7000 Seattle
503.778.2100 Portland
employlaw@lanepowell.com
www.lanepowell.com
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