Eleventh Circuit Recognizes ADEA Disparate Impact Claims by Applicants

Practical Law Legal Update w-001-0099 (Approx. 6 pages)

Eleventh Circuit Recognizes ADEA Disparate Impact Claims by Applicants

by Practical Law Labor & Employment

Background

In November 2007, Richard Villarreal applied for a position as a regional sales representative (known as a Territory Manager) with the R.J. Reynolds Tobacco Company. Villarreal was 49 years old when he applied for the position. R.J. Reynolds did not respond to Villarreal's application.

In 2010, Villarreal discovered that R.J. Reynolds has "resume review guidelines" for the Territory Manager position that encourages the company's hiring managers to:

Target younger applicants.
Stay away from candidates with 8 to10 years of sales experience.

Shortly after becoming aware of this, Villarreal filed an EEOC charge alleging that R.J. Reynolds discriminated against him on the basis of his age. While the EEOC charge was pending, Villarreal applied five more times for the Territory Manager position. R.J. Reynolds rejected his application each time. Villarreal amended his EEOC charge to include the multiple rejections.

In 2012, after receiving a right-to-sue notice from the EEOC, Villarreal sued R.J. Reynolds in US district court, bringing both ADEA disparate treatment and disparate impact claims on behalf of himself and other similarly situated applicants. Villarreal's complaint acknowledged that his EEOC charge had been filed more than 180 days after his first Territory Manager application in 2007 but Villarreal sought equitable tolling of the limitations period until April 2010, when he first became aware of R.J. Reynolds's hiring guidelines.

R.J. Reynolds moved to dismiss Villarreal's lawsuit in part. The district court:

Dismissed:
- Villarreal's disparate impact claim entirely, finding that the ADEA does not recognize such claims by job applicants, only by current employees; and
- All claims relating to R.J. Reynolds’s hiring decisions before November 19, 2009 (six months before Villarreal filed his EEOC charge) because those claims were untimely.
Rejected Villarreal's equitable tolling argument.

The district court denied Villarreal leave to amend his complaint with additional facts to support his equitable tolling argument. Villarreal:

Voluntarily dismissed his remaining ADEA disparate treatment claim.
Appealed the district court's decision to the Eleventh Circuit.

Outcome

The Eleventh Circuit:

Reversed the district court's dismissal of Villarreal's ADEA disparate impact claim.
Reversed and remanded the district court's rejection of Villarreal's equitable tolling argument.

The Eleventh Circuit held that:

Although ADEA is unclear on whether applicants may pursue disparate impact claims, courts should defer to the EEOC's consistent interpretation that Section 4(a)(2) of ADEA authorizes disparate impact claims by applicants. Therefore, ADEA recognizes disparate impact claims by applicants like Villarreal.
Equitable tolling of the statute of limitations was warranted in this case because the ADEA statute of limitations period did not begin to run until April 2010, when Villarreal became aware of facts supporting his age discrimination charge.

ADEA Disparate Impact for Employment Applicants

The Eleventh Circuit noted that:

Section 4(a)(2) of the ADEA prohibits an employer from limiting, segregating or classifying its employees in a way that would, because of age:
- deprive or tend to deprive "any individual of employment opportunities;" or
- "otherwise adversely affect" the employee's status as an employee.

(29 U.S.C. § 623(a).)

Section 4(a)(2) of ADEA authorizes disparate impact claims brought by current employees premised on an employer's facially neutral policies and practices that negatively impact older employees over younger employees (Smith v. City of Jackson, Miss., 544 U.S. 228 (2005)).
The Supreme Court's seminal decision on disparate impact liability under Title VII repeatedly referenced job applicants and following that decision Congress amended Title VII to expressly reference job applicants. However, Congress did not amend ADEA to reference job applicants. (Griggs v. Duke Power Co., 401 U.S. 424, 91 S. Ct. 849 (1971; 42 U.S.C. § 2000e-2(a)(2).)
When a statute like the ADEA is ambiguous, courts defer to the EEOC's reasonable interpretation because it is the agency charged with enforcing ADEA (Federal Express Corp. v. Holowecki, 552 U.S. 389, 403 (2008); Smith, 544 U.S. at 240; Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984)).
The EEOC's ADEA regulation addressing disparate impact does not distinguish between current and potential employees. It extends disparate impact liability to all "individuals within the protected age group." (29 C.F.R. § 1625.7(c).)

The Eleventh Circuit found that:

ADEA Section 4(a)(2) was unclear on whether it applied to job applicants because it referred to both:
- an employer's employees; and
- "any individual."

(29 U.S.C. § 628.)

The EEOC's disparate impact regulation was reasonable and entitled to deference based on:
- the Supreme Court's analysis in Smith;
- a separate EEOC regulation issued in 1981 through notice and comment rulemaking echoing the DOL's position that pre-employment tests that have an adverse impact on applicants within a protected age group must be justified by business necessity; and
- the EEOC's longtime insistence (including in amicus briefs submitted to the Supreme Court since 1995) that applicants can pursue ADEA disparate impact claims.

Equitable Tolling

The Eleventh Circuit noted that:

ADEA requires that a discrimination charge be filed within 180 days of the discriminatory act (29 U.S.C. § 626(d)(1)(A)).
The ADEA statute of limitations period does not begin to run until the facts supporting a cause of action either:
- become apparent; or
- should have become apparent to a reasonably prudent person.

(Jones v. Dillard’s, Inc., 331 F.3d 1259, 1267 (11th Cir. 2003).)

The court found that:
Although Villarreal's EEOC charge was filed nearly two years after he first applied for the Territory Manager position, Villarreal's claim could be eligible for equitable tolling based on his contention that he did not know (and could not have known) that he had been discriminated against until April 2010, one month before he filed his charge with the EEOC.
Villarreal's argument for equitable tolling was strong because until April 2010 he was unaware of:
- R.J. Reynolds' hiring process and hiring guidelines for the Territory Manager position that urged against hiring experienced salespeople; or
- statistics showing that less than 20 of over 1,000 Territory Managers (or only about 2%) hired by R.J. Reynolds between 2007 and 2010 were over the age of 40.

The Eleventh Circuit remanded to the district court to:

Apply the proper ADEA equitable tolling standard.
Determine if Villarreal could have known the facts giving rise to his charge earlier than April 2010.

Practical Implications

The Eleventh Circuit's decision in Villarreal holds that job applicants can pursue disparate impact claims under ADEA. Eleventh Circuit employers should:

Be aware that they could be subject to ADEA disparate impact lawsuits by rejected job applicants.
Avoid hiring policies and practices that:
- expressly or implicitly encourage hiring younger candidates over older candidates; and
- result in statistically significant disparities between the number (or percentage) of new hires below and above 40 years old.

Eleventh Circuit Recognizes ADEA Disparate Impact Claims by Applicants | Practical Law