Over/Under 40 ADEA Analysis May be Too Limiting for Discrimination Review - American Society of Employers - Anthony Kaylin

Over/Under 40 ADEA Analysis May be Too Limiting for Discrimination Review

Under the Age Discrimination in Employment Act (ADEA), the law protects those employees who are at least 40 years of age.   The law has been interpreted that it protects these employees when, for example, they are replaced by employees who are less than 40 years old.  The U.S. 6th Circuit Court of Appeals, which includes Michigan, agrees with this interpretation.  However, a new case from the U.S. 3rd Circuit Court of Appeals takes a different approach, and the case may end up in the Supreme Court.

Pittsburgh Glass Works, LLC (PGW) manufactures automotive glass in Harmarville, Pennsylvania. Starting in 2008, PGW was impacted by the auto turndown and started a series of reduction in forces (RIF).  However, PGW gave unit directors broad discretion in selecting whom to terminate. PGW never trained the directors how to do the RIF, did not have any policies or guidelines, and did not conduct any disparate-impact analysis.  They also did not review with legal counsel.

On March 31, 2009, approximately 100 salaried employees in over 40 locations or divisions were let go.  Three who were riffed were over 50 and filed a complaint.  They argued that as a subgroup of those employees over 40, being 50 and older, there was disparate impact with statistical significance compared to those employees between 40-49 years of age.

At the trial court level, the court ruled that “subgroup” disparate-impact claims are not recognized under the ADEA.  In other words, the traditional view of over 40 years of age and under 40 years of age is the appropriate way to conduct any comparisons.  The court did not accept that a protected class, those over 40 years of age could be subdivided into separate groups for comparison purposes.

The 3rd Circuit of Appeals disagreed and stated that “subgroup” disparate-impact claims are recognizable under the ADEA.   As the court explains:

Disparate-impact claims in ADEA cases ordinarily evaluate the effect of a facially neutral policy on all employees who are at least forty years old—that is, all employees covered by the ADEA. In this case, plaintiffs claim to have identified a policy that disproportionately impacted a subgroup of that population: employees older than fifty. But because the policy favored younger members of the protected class, adding those individuals to the comparison group washes out the   statistical evidence of a disparity.

In other words, if a subgroup analysis is something not considered by the ADEA, then any analysis of those over 40 would likely fail to find any discrimination indicators.

First, the court compared the ADEA to Title VII cases, stating the language of the law is essentially the same as Title VII but with the limitation that it impacts only those workers over 40 years of age.  Next, the court reviewed the U.S. Supreme Court’s unanimous opinion in O’Connor v. Consolidated Coin Caterers Corp., 517 U.S. 308 (1996).  In that case, according to the 3rd Circuit, the Supreme Court stated that the ADEA proscribes age discrimination, not forty-and-over discrimination.  More specifically, the Supreme Court stated:

[The ADEA] bans discrimination against employees because of their age, but limits the protected class to those who are 40 or older. 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.

Therefore, the question of whether the comparators are in the same protected class but of different age categories is a legitimate review question when comparing the disparate impact of RIFs and other actions that impact older workers.  As the court states, “The appropriate disparate impact statistics should be guided by the trait protected by the statute, not the population of employees inside or outside the statute’s general scope.”

For HR professionals that will be dealing with any force reduction (at least in the Sixth Circuit), the standard over and under 40 analyses is still the appropriate analysis.  However, if the Supreme Court weighs in, the analysis could be a lot more complicated, especially identifying what the subgroups are and who the comparators are.  Attorneys should recommend conducting both type of analysis when these situations arise.


Source:  Karlo, et. al.  v. Pittsburgh Glass Works, No. 15-3435 (3rd Circuit Court of Appeals, 1/10/17)
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