“Ageism is as odious as racism and sexism.” --- Claude Pepper
Background of the ADEA -- 1964 Title VII Debates
– Age considered as possible protected class
– Congress could not decide if it should be placed under the
FLSA or Title VII
– Age discrimination was considered a by-product of false
beliefs and stereotypes
– Congress wanted research on impact of discrimination on
older workers and the economy
Some Data
Given the ADEA’s focus on the effects of prejudice and stereotypes in limiting
the opportunities of older workers (e.g., a belief that job performance declines
with age), here are some facts:
• Cleveland and Landy (1983) reviewed the gerontology literature and found
chronological age not to be a valid predictor of performance for a specific
individual in a particular job
• Evidence from a meta-analysis (Waldman & Avolio, 1986) found no
significant differences between age groups in objective work performance
measures. Rather, the analysis indicated that older workers received lower
performance scores when subjective supervisory ratings were used
• Laczko and Philipson (1991) reviewed studies of age effects on job
performance and learning ability. It was found that older workers are as
productive as younger workers, they are almost as capable of learning
(despite less formal education), and have an energy, flexibility, and
willingness to learn
History of ADEA
Secretary of Labor’s findings:
– Older workers are disadvantaged in retaining jobs and
finding new jobs when displaced
– Arbitrary age limits set without consideration of job
performance potential can put older workers at a
disadvantage
– The deterioration of skill, moral, and hire ability due to high
rates of unemployment and long-term unemployment is
common in older workers and the problem is increasing
– Age discrimination adversely affects commerce
ADEA Amendments
Year
Overview
1974
Extension of coverage to state, local, and federal entities
1978
EEOC is put in charge of ADEA administration and enforcement, age
extension
1984
Extension of coverage to overseas subsidiaries
1986
Guaranteed contributions to pension plans for employees that work past
65 in ADEA, ERISA, and IRS Tax Code
1987
Age cap eliminated
1990
OWBPA protections for benefits, early retirement, and voluntary
waivers
1991
CRA lengthens time for right to sue
•
1967: Age 40–65 protected
•
1984: Age 40–70 protected
ADEA Basics
Protected Group --- Individuals 40 years old and above
• Class is continuous, not categorical
– The favored person does not have to be under 40 for the decision to be
deemed discrimination
– Replacement must be “substantially younger” than plaintiff
• Favorable treatment of employees over age 40 compared to those under 40 is
allowed
Covered Entities:
Private. and public entities with 20 or more employees
Coverage extends to U.S. subsidiaries but not when ADEA laws conflict with
foreign laws (e.g., mandatory retirement ages)
~ ADEA Exemptions ~
• Mandatory retirement at age 65 for “bona fide executives” or “high
policymaking employees"
• Hiring and forced retirement for Safety Officers (e.g., police and firefighters)
consistent with State and local laws (e.g., not allowing firefighters to enter force
after age 35). Unless state and local laws are a ploy to evade ADEA
• Bona fide apprentice programs (e.g., can refuse to accept those over a given
age). Need to be able to show that age at entry is a BFOQ)
• Commercial airlines (pilots 65 years old).
See: The Fair Treatment for Experienced Pilots Act (2007)
• Air traffic controllers (those past 30 can be refused for hire; except retired
military air traffic controllers). But, they must retire at age 56
• Certain kinds of elected or appointed officials (e.g., State judges)
ADEA Burden of Proof Process
Phase 1: Challengers must establish a prima facie case by providing evidence of
age discrimination by showing that:
• They are 40 years old or older
• They were qualified for the position in question
• They were victims of an unfavorable employment decision (e.g., not hired,
promoted, fired)
• The organization favored an individual who was substantially younger than
the challenger or
•Show differential treatment in comparison with similarly situated younger
employees (for cases where no obvious replacements, e.g., RIFs)
Phase 2: Company must articulate that a legitimate, nondiscriminatory reason
exists for their decision (& age-specific factors of small age differences, same actor
defense, RIF, reorganization plans)
Phase 3: The challenger proves that the organization's reason for their rejection
is a pretext for discrimination
Affirmative Defenses in the ADEA
1) BFSS
2) BFOQ (e.g., public safety)
3) Bona Fide Benefits Plan (BFBP)
4) Good Cause (really a subset of RFOA)
5) RFOA (Reasonable Factor Other Than Age)
BFOQ Defense
1) “That the BFOQ is reasonably necessary to the essence of
the business” and
2) “That it has reasonable cause, i.e., a factual basis for believing
that all or substantially all persons within the protected age
group would be unable to perform safely and efficiently the
duties of the job involved, or whether it is impossible or
impractical to deal with persons in the protected age group on
an individual basis” (Usery v. Tamiami Trail Tours, Inc. 1976,
pg. 1241-1242).
Role of Individual Assessment
Western Airlines v. Criswell (1985)
Brief facts:
--- Western Airlines policy forced flight engineers to retire at age 60;
--- Criswell filed an ADEA suit and met his Phase 1 burden under the ADEA
Phase 2: Western Airlines claimed that age was a BFOQ
• Their primary business was the safe transportation of passengers
• They had a rational basis for believing those over 60 were not qualified
• Testing the ability of all flight engineers age 60 or above was impractical
Supreme Court Decision in Criswell
ADEA intended a BFOQ to be a relatively narrow exception; a lot of
individual variation exists
The Court said that the ADEA indicates a:
“ ... preference for individual evaluation expressed in the language and
legislative history of the ADEA. Under the Act, employers are to evaluate
employees … on their merits and not their age. In the BFOQ defense,
Congress provided a limited exception to this general principle, but
required that employers validate any discrimination as "reasonably
necessary to the normal operation of the particular business." It might well
be "rational" to require mandatory retirement at any age less than 70, but
that result would not comply with Congress' direction that employers must
justify the rationale for the age chosen.”
Other problems with Western Airline’s position
• Other airlines did not require mandatory retirement before age 70
• Western Airlines used individualized tests in other, comparable
situations
• The Federal Aviation Administration believed that
individualized testing was practical for such jobs
Criswell won.
O'Conner v. Consolidated Coin Caterers (1996)
• O’Conner, 67 years old, was replaced him with someone age 40 (i.e., someone in the
protected age group)
• The organization said the O’Conner did not establish a prima facie case because
he was replaced by an individual who was also in the protected age group
Supreme Court: The ADEA was meant to disallow discrimination because of age.
Therefore, the critical evidence for age discrimination in this case was that the person
who replaced the fired employee was substantially younger.
Generally, age difference of between 8-10 years in considered substantial. But, smaller
age differences may be sufficient given additional evidence of age animus
“The fact that one person in the protected class has lost out to another person in the
protected class is thus irrelevant, so long as he has lost out because of his
age. … there can be no greater inference of age discrimination … when a 40 year
old is replaced by a 39 year old than when a 56 year old is replaced by a 40 year
old. … the fact that a replacement is substantially younger than the plaintiff is a far
more reliable indicator of age discrimination than is the fact that the plaintiff was
replaced by someone outside the protected class.”
~ Same Actor Defense ~
“When the same person was responsible for for hiring and terminating an individual, who was
already a member of the ADEA protected class when hired, there is an inference that age was
not the reason for the termination.” (From White v. Omega Protein, 2003)
– Introduced by Proud v. Stone (1991)
• Proud was both hired and fired by Klauss -- terminated 6 months later
for poor performance
• Klauss had attempted to help Proud improve performance
Klauss was responsible for the hiring and firing of Proud within a six-month time
frame, and the evidence of his enumerated job deficiencies in a supervisory position makes
any inference of discriminatory animus unwarranted.
But, supplemental evidence can counter same-actor defense
– Madel v. FCI Marketing (1997)
• Carlson had hired and recommended termination for both Madel and
Brennen
• Substantial evidence of age-based derogatory remarks by Carlson
Plaintiffs have created a fact issue as to whether FCI’s proffered reasons are pretextual, and Carlson’s
age-based epithets create a reasonable inference that age was a determinative factor in the
termination
decision. [emphasis by authors]
Mixed-Motive Scenarios
• Gross v. FBL Financial Services (2009)
– Gross presented indirect evidence that he was demoted for age-based
reason -- similarly situated younger workers were treated less harshly
– Trial judge ruled FBL could only prevail by proving a legal motive
for the demotion, Gross awarded $46,000
– 8th Circuit ruled burden of proof could only pass to defence if Gross
had direct evidence of illegal motive
– Burden of proof should have stayed with plaintiff, jury should have
decided if Gross proved age was the determining factor in the
decision
Price Waterhouse v. Hopkins
Supreme Court decision:
• Proper defense standard for proving a legal motive is a “preponderance of
evidence” (not “clear and convincing evidence” used by lower courts)
• Disagreement on whether an illegal motive (e.g., sex) must be a motivating
factor or a substantial factor
• O’Conner stated that proof of an illegal must be in the form of direct evidence
(used by subsequent lower courts even though she was alone on the Court in this
belief)
“… What is required is what Ann Hopkins showed here: direct evidence that decision
makers placed substantial negative reliance on an illegitimate criterion in reaching their
decision.”
Note: Even though O’Conner was alone in requiring direct evidence, the
majority of lower courts used this standard in mixed-motive cases
– Supreme Court ruled ADEA is not governed by Title VII mixedmotive precedents or Price Waterhouse (must use McDonnellBurdine framework)
Struck down the use of Mixed-Motive Scenarios in ADEA
claims
From CRA of 1991
Except as otherwise provided in this subchapter, an unlawful employment practice is
established when the complaining party demonstrates that race, color, religion, sex, or
national origin was a motivating factor for any employment practice, even though other
factors also motivated the practice.
*** Congress may act to alter this ruling
Adverse Impact Scenarios
• In the 1980s courts evaluated ADEA adverse impact
following Title VII rules
• Geller v. Markham (1980)
– 55-year-old teacher was accepted for an immediate opening
and then replaced by a 25-year-old who was on a lower
salary step
– Defendant claimed that steps of a salary schedule was job
related (preference to those below the 6th step; cheaper)
– Courts rejected this defense due to the correlation between age
and steps (those 40 & over were much more likely to be over
the 6th step)
Adverse Impact Scenarios
• Leftwich v. Harris-Stowe (1983)
– During an RIF: a 47-year-old tenured professor was released,
while a 33-year-old nontenured and 62-year-old tenured
professors were retained
– Defendant used cost-cutting defense by equating age with
higher costs to the employer (also average age of retained and
released faculty were the same -- CT v Teal bottom line denied)
– Courts ruled for plaintiff due to the correlation between tenure
and age
– Such decisions were changed with Hazen
Summary:
• In 1980s, adverse impact claims under ADEA used Title VII rules (3 Circuit courts)
• Cost cutting not job-related defense (2 courts) and not usable as RFOA (1 court)
• EEOC Guidelines rejected RFOA in ADEA in adverse impact cases
Adverse Impact Scenarios
• Hazen v. Biggens (1993)
– Biggens fired at age 62 after 9 years on the job (10 years needed to be vested in
the company’s retirement plan; timing was a few weeks before he was eligible)
– Unanimous Supreme Court ruled that decision may be motivated by RFOA
even if the motivating factor is correlated with age
When the employer's decision is wholly motivated by factors other than age, the problem of
inaccurate and stigmatizing stereotypes disappears. This is true even if the motivating factor is
correlated with age, as pension status typically is. On average, an older employee has had more
years in the work force than a younger employee ….. Yet an employee's age is analytically
distinct from his years of service. An employee who is younger than 40 may have worked for a
particular employer his entire career, while an older worker may have been newly hired. Because
age and years of service are analytically distinct, an employers can take account of one while
ignoring the other, and thus it is incorrect to say that a decision based on years of service is
necessarily “age based.”
– The Hazen Court never ruled on adverse impact, but noted that disparate
treatment captures the essence of what Congress sought to prohibit in
the ADEA, implying that adverse impact does not. Plurality thought that it
was WRONG to use Title VII adverse impact analysis to the ADEA. The
ruling caused many Circuit courts to begin rejecting ADEA adverse impact
claims
Biggins was able to show ERISA violation --- e.g., fired soon before being vested (10 years)
Section 510 of the ERISA partly states:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against
a participant or beneficiary for exercising any right to which he is entitled under the provisions of an
employee benefit plan, [or ERISA] . . . or for the purpose of interfering with the attainment of any
right to which such participant may become entitled under the plan, [or ERISA]
Intended to prevent unscrupulous employers from discharging or harassing their employees
in order to keep them from obtaining vested pension rights.
ERISA Framework:
Plaintiff must show (with direct or indirect evidence) that he/she was:
1) covered under an employer’s plan;
2) subjected to adverse employment action;
3) meeting the employer’s reasonable expectations; and
4) discharged under circumstances giving rise to some basis for believing prohibited intent
existed
• Need to show that employer’s denial of benefits was a motivating factor
• Articulation of legitimate, non-discriminatory reason for adverse action and proof of
pretext are next steps
Summary of AI Cases Prior to Smith v. City of
Jackson
• In 1980s courts treated adverse impact in ADEA with Title VII rules
(e.g., Geller v. Markham, 1980 & Leftwitch v. Harris-Stowe, 1983)
• In Hazen v. Biggens (1993), the Court rules --- employer decisions may be
motivated by "factors other than age ... even if the motivating factor is
correlated with age."
• 3 Justices also stated that there are good reasons to preclude adverse
impact claims in the ADEA
• After Hazen, most circuit courts rule that adverse impact is unavailable
in ADEA as a matter of law, but some courts rule otherwise
Brief Facts in Smith v. City of Jackson
• Police officers and dispatchers with less than 5 years
experience get higher percentage increases
• Those over 40 sue on grounds of adverse impact via ADEA
(significant difference of 4 SDs in average age of 2 groups)
• Lower courts ruled adverse impact is unavailable in ADEA
as a matter of law
• Supreme Court takes case to settle split among circuit courts
Supreme Court Ruling in Smith
•
Adverse impact is available in the ADEA (sort of)
Plaintiffs did not form a prima facie case. They failed to identify “any specific test,
requirement, or practice within the pay plan that has an adverse impact on older workers”
[the Smith plaintiffs failed to identify any specific test, requirement, or practice within the pay
plan that had an adverse impact on older workers]
• RFOA identified. Raising salaries for lower level employees to compete with those in
surrounding areas is a RFOA (goal was to retain police officers). Scalia wanted to use
Title Vii (business necessity)! while Stevens used Wards Cove to justify RFOA defense!
Why? RFOA is a mandated statutory defense.
CRA ‘91 rejected Wards Cove for Title VII -- NOT the ADEA.
•
•
Using Wards Cove confused things – implied production burden in Strep 2
•
Adverse impact follows same prima facie (Phase 1) rules in Title VII and ADEA -- Statistical evidence of an identified employment practice that disproportionately
excludes protected group members
Unlike Title VII, which demands proof of job-relatedness & consistency with
business necessity (in Phase 2) forcing the plaintiff to prove an equally valid practice
with less or no adverse impact (in Phase 3) the ADEA permits the RFOA defense in
Phase 2 forcing plaintiffs to prove that factors advanced are not reasonable or
pretext (Phase 3)
•
Meacham v. KAPL (2004)
[Before Supreme Court ruling in Smith]
• KAPL instituted an RIF for employees with 20 or more years of experience
• Over 98% of RIF victims are 40 or older (30/31 laid off)
• KAPL articulates non-discriminatory reason(s) for its decisions
(criticality of skills and flexibility for retraining)
Step 2 under Wards Cove
• Plaintiffs proved there are alternatives with less adverse impact,
including (a) hiring freeze and (b) extension of a voluntary separation plan
to employees with less than 20 years of service
• Plaintiffs Win
But --------->
Meacham v. KAPL (2006)
After Supreme Court ruling in Smith
[SC agreed to Meacham case but sent it back to 2nd Circuit
after its Smith decision)
• 2 Circuit judges agree that KAPL’s articulation was sufficient to satisfy an
RFOA (
• Plaintiffs required to prove the articulation was unreasonable -- which
they could not do
>>> Plaintiffs lose 2-1
• 3rd judge writes long dissent (e.g., RFOA is an affirmative defense and thus
requires persuasion/proof)
Supreme Court Ruling in
Meacham v. KAPL
• Supreme Court unanimously agrees with the dissenting
judge, listing numerous reasons why statutory defenses such
as RFOA are affirmative defenses
The ADEA’s text and structure indicate that the RFOA exemption creates an
affirmative defense, for which the burden of persuasion falls on the
employer. The RFOA exemption is listed alongside one for bona fide
occupational qualifications (BFOQ), which the Court has recognized to be
an affirmative defense ..... this Court has spoken of both the BFOQ and
RFOA as being among the ADEA’s “five affirmative defenses.”
• Court rules 7–1 for Meacham that the employer must meet
the burden of persuasion (i.e., prove their RFOA, not simply
articulate it)
~ Moral of Smith and Meacham ~
• Very hard for plaintiffs to win with factors that are correlated with age
(as in Smith)
• However, actual decisions that negatively affect actual employees (as in a
RIF) are problematic for employers (e.g., Meacham)
Recommendation: In a RIF, avoid criteria such as “flexibility” and
“criticality” unless you can affirmatively prove they are reasonable
The BFBP Defense
• Originally legal to discriminate in benefits based on age if a
plan was “not a subterfuge (a scheme) to evade the purposes
of the ADEA”
• The DOL and EEOC defined subterfuge as any differential
treatment of older versus younger workers in benefits (unless
the benefits were more costly for older workers)
Not law --- struck down in subsequent
cases (e.g., McMann, Betts)
The BFBP Defense
• United Airlines v. McMann (1977)
– McMann signed up for a retirement plan in 1964 and retired in 1973 at age
60
– ADEA enacted to protect older workers in 1967 McMann challenged the
plan as a subterfuge/scheme to avoid ADEA
– Any plan that predated ADEA could not be labeled as a subterfuge/scheme
• Congress amended ADEA in 1978 and deemed any plan forcing retirement
below the protected age limit (unlimited now) to be a subterfuge regardless of
implementation date
• The 1978 amendment did not codify EEOC regulations on actuarial costs
The BFBP Defense
• Retirement System of Ohio v. Betts (1989)
– Betts was over 60 and disabled
Use of age and
no evidence of
increased costs
for older
employees
– Forced to choose between unpaid medical leave and retirement
benefits paying $158.50/month
– If she was under 60 she would have received disability benefits
paying $355/month
– Based on McMann, the Supreme Court ruled the plan could not be
proved to be a subterfuge/scheme because the Congress 1978
amendment was not applicable since it only applied to
involuntary/forced retirement
– So, plaintiff needed to show that Ohio used a scheme to
intentionally discriminate against older people ---- Betts lost.
The BFBP Defense
Congress reversed Betts in Title 1 of the OWBPA
by:
•
- Eliminating the term subterfuge/scheme as it pertains to
benefits in ADEA language
BFBP can only be used when:
•
–
Benefits are more costly for older workers (codified EEOC
regulations)
–
Plan is part of a legitimate voluntary early retirement
package that is consistent with ADEA
The BFBP Defense
• Kentucky Retirement System v. EEOC (2008)
– Workers under 55 who were disabled were given retirement benefits (years
added to pension) that were not given to workers over 55 who became
disabled
– Defendant claimed retirement package was based on years of services, age,
and eligibility for retirement (e.g., decision was not motivated by age)
– Courts ruled that a plan based on factors correlated with age (using Hazen
v. Biggens case) is exempt from OWBPA coverage
– As a result, the burden is on the plaintiff to show pretext
>>> Minority (using Congress’ objection to Betts) thought defendants
have the burden of proof to show increased costs basis for plan
>>> Odd decision and odd combo of judges; stay tuned for how this case
will be interpreted by courts and Congress’ role
Older Worker Benefits Protection Act of
1990 (OWBPA)
• Addresses four issues:
–
–
–
–
Bona Fide Benefits Plan (BFBP) statutory defense
Early retirement packages
Voluntary early retirement
Voluntary waivers of ADEA rights
• Title I—addresses the Bona Fide Benefits Plan (BFBP)
• Title II—addresses voluntary waivers of ADEA rights
Voluntary Early Retirement (Basics)
• OWBPA makes early retirement packages legal as
long as they are not coercive and inconsistent with
the purposes of ADEA
• Plans that do NOT have maximum ages are legal
• It is legal for packages to be enhanced where older
workers receive more benefits than younger workers
even within the protected group
• The legal packages are often based on a
combination of years of service and starting age
~ OWBPA ~
Voluntary Waiver Rules
Rule 1 It is clearly written and easily understood by the average individual
Rule 2 It refers to rights or claims that fall under ADEA
Rule 3 Does not include claims that may arise after the waiver is signed
Rule 4 Benefits must offer something new; not something of value that the
individual is already entitled to
Rule 5 Employees are advised in writing of their right to seek counsel
Rule 6 It provides 21 days for individuals (45 days for groups) to make a
decision
Rule 7 It is revocable within 7 days of signing
Rule 8 For group offers, employees must receive extensive additional
information about all employees
Some Compliance Issues
– Do not include any age limitations or wording that deters older workers
from applying in advertisements
– Do not ask questions that elicit age-related information on applications
(such as graduation dates)
– Although cost cutting is a viable RFOA (as an affirmative defense), if it
is used as a pretext then it is illegal: Carras v. MGS (2008)
– Discourage age-based remarks, even those made in jest; avoid hostile,
derogatory remarks
– Be cognizant of age differences in replacements
• Carras v. MGS (2008)
– 62-year-old was terminated and a younger worker was
hired
– Cost-cutting factors were cited as the reason for
termination
– However, Carras had offered to take a pay cut in order to
keep his job
– The new hire was being paid more than Carras had
offered to work for
– Carras showed pretext and the courts ruled in his favor