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EEOC Final Rule Amends ADEA Regulations on Reasonable Factors Other than Age Defense
Practical Law Legal Update 2-518-7416 (Approx. 3 pages)
EEOC Final Rule Amends ADEA Regulations on Reasonable Factors Other than Age Defense
by PLC Labor & Employment
| Published on 30 Mar 2012 • USA (National/Federal) |
The EEOC issued a final rule amending ADEA regulations concerning disparate impact claims and the reasonable factors other than age (RFOA) defense. The rule clarifies that, in the absence of an RFOA, the ADEA prohibits employer policies that have a disparate impact on older workers, and also establishes factors to consider in determining reasonableness.
On March 30, 2012, the EEOC issued a final rule to amend ADEA regulations concerning disparate impact claims and the reasonable factors other than age (RFOA) defense. It will become effective 30 days later.
The rule revises two earlier notices of proposed rulemaking, one published on March 31, 2008, and another on February 18, 2010, which addressed issues resulting from the Supreme Court's decisions in Smith v. City of Jackson and Meacham v. Knolls Atomic Power Lab. In Smith, the court ruled that the ADEA recognizes disparate impact claims, but noted that employers are not liable where the impact is attributable to an RFOA.
The EEOC's final rule, published following consideration of public comments, clarifies that the ADEA prohibits employer policies and procedures which have a disparate impact on older workers unless the employer can show that the impact is justified by an RFOA.
Specifically, the rule states that:
- An RFOA is a non-age factor that an employer exercising reasonable care would use to avoid limiting the opportunities of older workers, in light of all the surrounding facts and circumstances.
- The RFOA provision is an affirmative defense for employers in disparate impact cases, but is unavailable in disparate treatment cases.
- An employer defending an ADEA disparate impact claim bears the burdens of proof of production and persuasion in showing the existence of an RFOA.
Determining whether an employment practice is based on an RFOA involves a fact-intensive inquiry. Factors relevant to whether an employment practice is reasonable and is based on factors other than age include the extent to which:
- The factor is related to the employer's stated business goals.
- The employer defined and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination.
- The employer limited supervisors' discretion to assess employees subjectively.
- The employer assessed the adverse impact of its employment practice on older workers.
- Older workers are harmed, in terms of the extent of injury, the numbers of persons adversely affected and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.
The EEOC expects the rule to have several positive effects, including:
- Reduction of employer uncertainty over the RFOA standard following the Supreme Court's recent holdings in Smith and Meacham.
- Reducing unemployment among older workers through the discouragement of employer practices adversely affecting older workers.
The final rule becomes effective April 30, 2012. For more information on the ADEA, see Practice Note, Age Discrimination.
Practical Implications
Although the final rule provides clarification and guidance for employers on the RFOA defense, the EEOC's test for the reasonableness of employment practices raises numerous fact-based issues which may impede resolution of age discrimination claims at the summary judgment stage of litigation.
To better protect against age discrimination lawsuits under the ADEA, employers should closely consider the new standard for reasonableness when assessing the impact of employment practices on older workers. Employers should also consider incorporating this new rule into anti-discrimination training.