Applicant Cannot Sue For Disparate Impact Under ADEA: Eleventh Circuit | Practical Law

Applicant Cannot Sue For Disparate Impact Under ADEA: Eleventh Circuit | Practical Law

In Villarreal v. R.J. Reynolds Tobacco Co., the US Court of Appeals for the Eleventh Circuit held that the plain text of Section 4(a)(2) of the Age Discrimination in Employment Act of 1967 (ADEA) makes clear that an applicant for employment cannot sue an employer for disparate impact because the applicant has no "status as an employee."

Applicant Cannot Sue For Disparate Impact Under ADEA: Eleventh Circuit

Practical Law Legal Update w-003-8406 (Approx. 4 pages)

Applicant Cannot Sue For Disparate Impact Under ADEA: Eleventh Circuit

by Practical Law Labor & Employment
Published on 11 Oct 2016 • USA (National/Federal)
In Villarreal v. R.J. Reynolds Tobacco Co., the US Court of Appeals for the Eleventh Circuit held that the plain text of Section 4(a)(2) of the Age Discrimination in Employment Act of 1967 (ADEA) makes clear that an applicant for employment cannot sue an employer for disparate impact because the applicant has no "status as an employee."
On October 5, 2016, in Villarreal v. R.J. Reynolds Tobacco Co., the US Court of Appeals for the Eleventh Circuit held that the plain text of Section 4(a)(2) of the ADEA makes clear that an applicant for employment cannot sue an employer for disparate impact because the applicant has no "status as an employee" ( (11th Cir. Oct. 5, 2016)).

Background

On November 30, 2015, in Villarreal v. R.J. Reynolds Tobacco Company, the Eleventh Circuit held in a 2-1 decision that job applicants may pursue disparate impact claims under the ADEA. The court found that the ADEA is unclear on the issue, but deferred to the EEOC's consistent interpretation that the ADEA recognizes applicants' disparate impact claims. ( (11th Cir. Nov. 30, 2015); see Legal Update, Eleventh Circuit Recognizes ADEA Disparate Impact Claims by Applicants.)
On February 10, 2016, the Eleventh Circuit granted a petition for rehearing en banc and vacated that opinion.

Outcome

The Eleventh Circuit majority:
  • Held that the plain text of Section 4(a)(2) of the ADEA makes clear that an applicant for employment cannot sue an employer for disparate impact because the applicant has no "status as an employee."
  • Ruled that Villarreal failed to state a claim of disparate impact.
  • Affirmed the dismissal of the claim of disparate impact and remanded.
The Eleventh Circuit majority noted that under Section 4(a)(2) of the ADEA, an employer may not "limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's age" (29 U.S.C. § 623(a)(2)).
The majority reasoned that:
  • The key phrase in Section 4(a)(2) is "or otherwise adversely affect his status as an employee" (29 U.S.C. § 623(a)(2)). By using "or otherwise" to join the verbs in this Section, Congress made "deprive or tend to deprive any individual of employment opportunities" a subset of "adversely affect[ing] his status as an employee."
  • Congress limited Section 4(a)(2) to discrimination against employees. Applicants who are not employees when alleged discrimination occurs do not have "status as an employee."
  • Statutory context confirms its reading of Section 4(a)(2). For example, the following provisions, unlike Section 4(a)(2), apply to applicants as well as employees, but can be differentiated because:
    • Section 4(c)(2) specifically adds the language "or as an applicant for employment" (29 U.S.C. § 623(c)); and
    • Section 4(a)(1) makes it unlawful for employers "to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age" (29 U.S.C. § 623(a)(1)).
  • Unlike Section 4(a)(1), Section 4(a)(2) does not mention an employer refusing to hire someone, and unlike Section 4(a)(2), Section 4(a)(1) says nothing about a "status as an employee."
  • Applicants are not without recourse; they have a cause of action for disparate treatment under Section 4(a)(1). However, Villarreal voluntarily dismissed his timely claims of disparate treatment.
Circuit Judge Martin dissented from the majority opinion (joined by Circuit Judges Wilson and Pryor, and joined in part by Circuit Judges Jordan and Rosenbaum). The dissent concluded that:
  • In Smith v. City of Jackson (the US Supreme Court's most recent opinion interpreting Section 4(a)(2)), the Supreme Court held that people who have been discriminated against because of their age can rely on the ADEA to bring disparate impact claims (544 U.S. 228 (2005)).
  • The majority's decision makes the Eleventh Circuit the first court of appeals to hold that Smith does not allow for disparate impact claims by people alleging discrimination in hiring.
The majority misread the Supreme Court's landmark decision in Griggs v. Duke Power Co., stating that Griggs had nothing to do with discrimination in hiring (401 U.S. 424 (1971)). However, in Texas Department of Housing & Community Affairs v. Inclusive Communities. Project, Inc., the Supreme Court held that Griggs did create disparate impact liability for discriminatory "hiring criteria" (135 S.Ct. 2507 (2015)). The text of the ADEA interpreted in this case is identical to the text the Supreme Court interpreted in Griggs. Therefore, this court should have reached the same result as the Supreme Court did in Griggs, allowing Villarreal's disparate impact claim to proceed.