In a very divided 5-3 ruling, the U.S. Supreme Court held this morning that employees may bring so-called “disparate impact” claims under the federal statute prohibiting age discrimination.  According to the majority opinion, Congress’ use of similar language in the Age Discrimination in Employment Act (ADEA) as was included in Title VII of the Civil Rights Act of 1964 supports this interpretation of the law.  For employers, the decision likely means additional liability risk in the age discrimination arena, though the high court did appear to provide some protections for the business community. 
 
The “run-of-the-mill” employment discrimination case involves a claim of “disparate treatment,” i.e., that a protected trait actually motivated the employer’s decision.  However, from time to time, courts are called upon to consider whether a facially neutral nondiscriminatory policy in fact is discriminatory because the policy adversely affects a traditionally disadvantaged group on a statistically significant basis.  These are referred to as “disparate impact” cases.  While the Supreme Court long ago established that these claims may be brought under Title VII, the question in this case was whether these lawsuits may be brought under the ADEA.
 
Factual Background

The case decided today, Smith v. City of Jackson, was brought by a group of police and public safety officers who alleged that revisions to their pay plan violated the ADEA because many officers under the age of 40 received larger raises (in percentage terms) than officers over 40.
 
The trial court granted summary judgment for the defendants on the disparate impact claim.  The Fifth Circuit Court of Appeals agreed, holding that disparate impact claims are not actionable under the ADEA.  This is an issue the courts have struggled with for some time.  The Second, Eighth and Ninth Circuit Courts of Appeals had applied the disparate impact theory to ADEA actions, while the Fifth, Seventh and Eleventh Circuits had refused to do so.

Court’s Analysis

The majority opinion focused heavily on the similarity of the language in Title VII and the ADEA and the general goal of both statutes to eliminate discrimination – not just in terms of incidences where discriminatory intent is involved but also when the effect of a neutral employment practice or policy adversely impacts a protected group.  This view was endorsed by Justice John Paul Stevens (who wrote the majority opinion), Justice David Souter, Justice Ruth Bader Ginsburg and Justice Stephen Breyer – who are generally considered to be the liberal wing of the high court. 
 
The fifth vote came from an unlikely source – Justice Antonin Scalia (generally considered to be one of the most conservative justices).  He wrote a separate opinion deferring to regulations issued by the Equal Employment Opportunity Commission (EEOC), which he found endorsed the use of the disparate impact theory to pursue claims under the ADEA.
 
The dissenting opinion was drafted by Justice Sandra Day O’Connor, and she was joined by Justice Anthony Kennedy and Justice Clarence Thomas (Chief Justice William Rehnquist did not participate).  They argued that the language of the ADEA and Title VII is different, and that disparate impact claims are not consistent with Congress’ intentions in passing the statute.  They also concluded that interpretive guidance issued by the EEOC did not clearly authorize these types of lawsuits.
 
All the justices agreed, however, that disparate impact claims brought under the ADEA must be treated differently than those litigated under Title VII for two reasons.  First, the ADEA includes language that significantly narrows its coverage.  This provision provides a defense to employers where the differentiation between workers is “based on reasonable factors other than age.”  Second, amendments passed to Title VII in 1991 which broadened the availability of disparate impact claims under that statute do not apply to the ADEA.  As a result, workers who bring disparate impact claims under the ADEA will have a more difficult burden of proof.  Smith v. City of Jackson, No. 03-1160 (March 30, 2005).
 
Practical Impact

Michael W. Fox, a shareholder in Ogletree Deakins’ Austin, Texas office, described this claim under the ADEA as “disparate impact lite.”  According to Fox, “while this result may not be terribly palatable to employers, it certainly is better than if the high court had allowed Title VII-type disparate impact claims to be brought under the ADEA.”
 
This ruling, and the practical impact for employers, will be discussed in more detail in the next issue of The Employment Law Authority, Ogletree Deakins’ bimonthly newsletter, which clients will receive in the next two weeks.  Should you have any questions about this ruling or other employment law related issues, please contact the Ogletree Deakins attorney with whom you normally work or the Client Services Department at 404-881-1300 or via e-mail at clientservices@ogletreedeakins.com.

Note: This article was published in the March 30, 2005 issue of the National eAuthority.


Browse More Insights

Practice Group

Employment Law

Ogletree Deakins’ employment lawyers are experienced in all aspects of employment law, from day-to-day advice to complex employment litigation.

Learn more

Sign up to receive emails about new developments and upcoming programs.

Sign Up Now