United States Supreme Court Holds that the Age Discrimination in Employment Act Permits Claims Based on Disparate Impact Theory of Discrimination

In a closely watched case, the U.S. Supreme Court has settled a question under the Age Discrimination in Employment Act (“ADEA”) that it had answered decades earlier for claims under Title VII -- whether discriminatory intent is a necessary element to recover for claims under the ADEA. The case, Smith v. City of Jackson, was decided on March 30, 2005. The Court, in an 8-3 decision, held that facially neutral employment practices can still be held unlawful under the ADEA if those practices have a “disparate impact” on persons in a legally protected age group. Under this theory of recovery, it is not a defense for an employer merely to show that it did not “intend” to discriminate against older workers; rather, the employer must also show that the challenged employment practice “is based on reasonable factors other than age.”

The Court’s holding is consistent with its 1971 holding in Griggs v. Duke Power Co., 401 U.S. 424, which recognized the disparate impact theory of recovery in discrimination cases brought under Title VII. Title VII is the federal civil rights statute that prohibits employment discrimination on the basis of race, color, religion, sex and national origin. In Griggs, the Court stated that, when passing Title VII, Congress had “directed the thrust of the Act to the consequences of employment practices, not simply the motivation.” Because the statutory language in the ADEA parallels that of Title VII, the Court in Smith concluded that a disparate impact theory should be cognizable under the ADEA as well.

Although the Court’s holding in Smith generically permits disparate impact claims to go forward under the ADEA, the Court ultimately concluded that the plaintiffs in that case failed to establish their right to recover under that theory. At issue in the case was the employer’s newly revised pay structure for its police officers. As a result of the revisions, raises were given to all of the City’s officers; however, those officers who had less than five years of tenure received proportionately greater raises when compared to their former pay than those officers with more seniority. Further, although, some officers over the age of 40 had less than five years of service, most of the older officers had more.

While these facts showed that the pay plan at issue was relatively less generous to older workers than to younger workers, the Court determined that more was needed from the plaintiffs to meet their evidentiary burden:

[Plaintiffs] have not identified any specific test, requirement, or practice within the pay plan that has an adverse impact on older workers. [I]t 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.” [citation]. Their failure to identify the specific practice being challenged is the sort of omission that could “result in employers being potentially liable for the myriad of innocent causes that may lead to statistical imbalances.”

The Court also concluded that even if a specific employment practice could be identified as subject to challenge, the plaintiffs still could not recover in this case because there is a provision under the ADEA that expressly permits an employer to adopt an “otherwise prohibited” employment practice if the adverse impact arising from that practice “is based on reasonable factors other than age.” The Court noted that while the raises afforded to the older officers under the City’s pay plan represented a smaller percentage of their salaries than those given to the junior officers, this proportional disparity was attributed to the fact that the older officers had a higher overall salary based on their respective years in service; that “the City’s decision to grant a larger raise to lower echelon employees was for the purpose of bringing salaries in line with that of the surrounding police forces[;]” and that this decision was “based on a reasonable factor other than age that responded to the City’s legitimate goal of retaining police officers.”

Persons wishing further information or who have questions or comments about either this case or any of the cases that have appeared on this website can contact any of the attorneys at Epstein, Turner & Song.