March 30, 2005
Supreme Court Recognizes "Disparate Impact" Claims Under Age Discrimination in Employment Act (But With Limitations)
On March 30, 2005, the U.S. Supreme Court issued its long-awaited opinion in Smith v. City of Jackson. In this case, the Court was to resolve a split among the Circuit Courts and decide, once and for all, whether "disparate impact" claims are recognized under the Age Discrimination in Employment Acrt (ADEA).
For the non-lawyers who may be reading this, in discrimination law there is a difference between "disparate treatment" cases, which involve intentional acts of discrimination which are directed at a specific employee or group of employees, and "disparate impact" cases, which involve employment decisions which disproportionately affect a particular class of employees, even if this is done unintentionally. In "disparate impact" cases, an employee does not have to prove the employer's intent to discriminate, and frequently these cases involve an examination and comparison of the statistical effects of an employment decision on a group of employees. Since proof of intent is not required, the "disparate impact" theory permits employers to he held liable for decisions which were simply bad judgments, or decisions which were not carefully thought through, when those decisions had a statistically adverse impact upon a protected group of employees. In this sense, these are dangerous and dreaded claims by employers.
The "disparate impact" theory has been recognized in Title VII cases (race, sex, religion, national origin, etc. discrimination). However, it has never been quite clear whether this theory was available under the ADEA -- until now.
In Smith, the Court considered a case wherein the City had awarded raises to its police officers in an attempt to bring their salaries up to regional averages. However, the officers with more experience got proportionately lower raises than lesser experienced officers, and those more experienced officers tended to be above age 40. They sued for a discriminatory "disparate impact." The Fifth Circuit Court of Appeals decided that "disparate impact" claims are not available under the ADEA (contrary to the holdings of the Second, Eighth and Ninth Circuits).
The Supreme Court held that the "disparate impact" theory is available under the ADEA, but "disparate impact" claims under the ADEA face two important hurdles which are not found in Title VII claims: (1) the employee must identify very precisely the exact standard or prcatice which has caused the statistically significant disparate impact; and (2) the employer has an available defense under the ADEA of showing a "reasonable factor other than age" which motivated the business decision, which is easier to prove than the defense under Title VII claims of a "business necessity."
In summary, disparate impact claims are now available under the ADEA, and most likely there will be an increase in age discrimination litigation. However, these claims will face significant (and in many cases insurmountable)hurdles, so there probably will not be a dramatic increase in employer liability, but there probably will be an increase in litigation expenses in defending the newly-recognized claims.