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WASHINGTON—The Equal Employment Opportunity Commission's recently issued guidance on age discrimination policies goes beyond the U.S. Supreme Court's rulings on the issue and will add a burden to employers, say many observers.
Observers charge that the new ruling creates impractical and unworkable standards that employers must use to evaluate whether their actions have a discriminatory impact on older workers.
An EEOC official, though, defended the agency's guidance.
The EEOC issued its final rule on “disparate impact and reasons other than age that still comply with the Age Discrimination in Employment Act” last month.
According to the EEOC, the rule clarifies that the 1967 ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, unless the employer can show the policy or practice is based on a reasonable factor other than age.
“The final rule strikes the appropriate balance between protecting older workers from discriminatory, unreasonable business decisions and preserving an employer's ability to make reasonable business decisions,” said the EEOC in a statement.
The guidance is intended to address situations such as when an employer implements a reduction-in-workforce plan and terminates a higher percentage of older workers than younger workers.
The EEOC has said its rule, which goes into effect April 30, is based on the Supreme Court's 2005 Azel P. Smith et al. vs. City of Jackson ruling, which allowed “disparate impact” claims that do not require showing discriminatory intent under the ADEA, and its 2008 decision in Meacham vs. Knolls Atomic Power Laboratory, in which the high court held that employers must show that there was a reason other than age discrimination in cases where layoffs appear to target older workers.
Also cited by the EEOC in its commentary on the rule is the Supreme Court's 2009 ruling in Jack Gross vs. FBL Financial Services Inc., in which the court held that plaintiffs in age discrimination cases must prove age was the determinative factor in an adverse job action, not just one of several motivating factors, to successfully pursue their case. This case is the focus of legislation that would overturn it (see related story).
Experts say the guidance creates difficulties for employers. Jeffrey D. Polsky, a partner with law firm Fox Rothschild L.L.P. in San Francisco, said the EEOC rule “contains a lot of terms that are difficult to define and therefore make it harder for a court to decide that there's no issue there to go to the jury,” and dismiss the case.
For example, the definition says that a reasonable factor other than age must be one that is “objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances.”
“There's an awful lot in there for lawyers to argue about,” said Mr. Polsky. “What is "objectively reasonable,' and what is a "prudent employer' and what does it mean to be mindful of their responsibilities under like circumstances?” he asked. It also states that these determinations “must be decided based on all the particular factors and circumstances,” which “gives no guidance at all.”
“I think they're being protective of employees and going beyond the standard as it's been defined by the Supreme Court,” Mr. Polsky said.
Michael A. Kalish, a member of law firm Epstein Becker & Green P.C. in New York, said the rule “injects a whole lot of what an employer needs to do in order to establish” that it has acted reasonably, defining “reasonable factors other than age” through a “multifactor test that seems a whole lot more stringent” than it was previously thought would be required.
Gregg M. Lemley, a shareholder with law firm Ogletree Deakins Smoak Nash & Stewart P.C. in St. Louis, said, “I think the EEOC has taken some pretty serious liberties with the standard established by the Supreme Court.” It “creates a basically unworkable standard for an employer,” he said.
Richard B. Cohen, a partner with Fox Rothschild in New York, said, “It does seem the EEOC has used the Supreme Court as a springboard to expand and go beyond” the rulings.
However, Thomas H. Christopher, a partner with law firm Kilpatrick Townsend & Stockton L.L.P. in Atlanta, said, “I think it'll have a negative effect, to some extent, but not a seismic impact.
“I would say it's kind of picking at the margins of the law, rather than really going into the core” of the ADEA. However, it does make “the burden greater on employers,” he said.
Employers' unhappiness with the ruling will eventually be heard in court, some observers say. Mr. Lemley said the question remains as to the degree to which the courts will uphold the regulations.
While employers should adhere to the rules, “the story's only partially told, and I think there's a fairly good likelihood these will be at least limited in some respects by the courts.”
EEOC senior attorney adviser Cathy Ventrell-Smith defended the guidance, stating it fairly implements the Supreme Court's Smith and Meacham decisions. “The Supreme Court did not provide any guidance” as how to establish a “reasonable factor other than age” standard to a policy that disproportionately harms older workers, which is the EEOC's role, she said.
“The Supreme Court itself said that employers do have a burden. They have to actually present evidence as to a reasonableness of the factors they relied on that sets a standard,” she said.
Ms. Ventrell-Smith said, “It seems that employers' complaints may stem from the fact that prior to the Supreme Court decisions, there really wasn't much of a standard, and the courts pretty much found that almost anything was reasonable.”
As a result, “If you juxtapose almost no burden prior to the Supreme Court cases, and the EEOC now providing guidance and explaining what employers need to do, that can appear to be more of a burden.”
WASHINGTON—Legislation has been introduced that would overturn the U.S. Supreme Court's 2009 ruling in Jack Gross vs. FBL Financial Services Inc., which made it easier for employers to defend age discrimination lawsuits, but the bill is given little chance of passage, observers say.