Supreme Court Rules That Disparate Impact Claims May Be Brought Under the Age Discrimination in Employment Act
The Facts of the Case
The named plaintiff in Smith and certain other police department employees over the age of 40 sued
The Court's Rationale for its Decision
The Supreme Court reversed the lower court ruling and concluded that disparate impact claims are available under the ADEA. The Court relied primarily on the applicable language of the ADEA, which it noted is nearly identical to that of Title VII. Because the language of the two statutes is so similar, the Court found that the ADEA, like Title VII, authorizes disparate treatment claims. However, the Court also noted that there are some differences between the two statutory schemes, and that such differences require that only a narrower scope of a disparate impact claim be permitted under the ADEA. Specifically, unlike Title VII, under ADEA any "otherwise prohibited" action of an employer is lawful provided the action is based on reasonable factors other than age. Therefore, an employer can justify a policy that has a disproportionately adverse effect on older employees by showing that the policy is based on "reasonable" factors other than age. By contrast, an employer defending a disparate impact claim under Title VII must show that a policy having an adverse effect on the basis of race or sex is justified by "business necessity," a standard that requires the employer to show that it has no alternative means to achieve its business goals. The reasonableness standard under the ADEA is far less onerous for employers, making it easier for employers to defend disparate impact claims under the ADEA than under Title VII.
Notably, despite finding that disparate impact claims are available under the ADEA, the Court dismissed the plaintiffs' claims based on the specific facts presented in Smith. The Court noted that the burden is on the plaintiff-employee to isolate and identify the specific employment practices that are allegedly responsible for any statistical disparities based on age, which the Smith plaintiffs failed to do. The Court also held that the city's stated reasons for the pay plan, including the need to bring the junior officers' salaries in line with comparable positions in the labor market, were reasonable. Accordingly, the Court dismissed plaintiffs' disparate impact claim.
The Implications for Employers
Obviously, the Supreme Court's decision in Smith is not good news for employers, particularly in jurisdictions that had previously refused to recognize disparate impact claims under the ADEA. But, because the scope of disparate impact claims under the ADEA is not as broad as those filed under Title VII, it should be easier for employers to defend these claims. However, as a result of this decision, employers should review their policies and practices to evaluate their impact, if any, on older workers.