Supreme Court To Decide Whether Disparate Impact Claims Are Available Under the Age Discrimination in Employment Act

This term, in Adams v. Florida Power Corp., 255 F.3d 1322 (11th Cir. 2001), the United States Supreme Court will address the issue of whether disparate impact claims, which challenge facially neutral policies that are alleged to have an adverse impact on members of a protected class, are permitted under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. 621 et seq. In its 1993 decision in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), the Court refused to consider the issue, notwithstanding that this type of claim had been recognized under Title VII of the Civil Rights Act of 1964 since the Supreme Court’s decision in Griggs v. Duke Power Co., 401 U.S. 424 (1971). The Court’s willingness to finally address this question will put to rest the split among the Circuit Courts following Hazen Paper.

In Adams, a group of former Florida Power Corporation employees who were fired during a corporate reorganization filed a disparate impact claim against the company. The issue arrived on the steps of the Supreme Court when the employees appealed from the Court of Appeals for the Eleventh Circuit’s decision that disparate impact claims could not be brought under the ADEA. In so holding, the Eleventh Circuit joined several other Courts of Appeals, including the First, Third, Sixth, Seventh and Tenth Circuits. See Ellis v. United Airlines, Inc., 73 F.3d 999 (10th Cir. 1996); E.E.O.C. v. Francis W. Parker Sch., 41 F.3d 1073 (7th Cir. 1994); Lyon v. Ohio Educ. Ass’n and Professional Staff Union, 53 F.3d 135 (6th Cir. 1995); DiBiase v. SmithKline Beecham Corp., 48 F.3d 719 (3d Cir. 1995); Mullin v. Raytheon Co., 164 F.3d 696 (1st Cir.), cert. denied, 538 U.S. 811 (1999). Only the Second, Eighth and Ninth Circuits recognize disparate impact claims under ADEA. See Frank v. United Airlines, Inc. , 216 F.3d 845 (9th Cir. 2000); Smith v. City of Des Moines, Iowa, 99 F.3d 1466 (8th Cir. 1996); District Council 37 v. New York City Dep’t. of Parks and Recreation, 113 F.3d 347 (2d Cir. 1997). The Fourth, Fifth and District of Columbia Circuits have not squarely addressed this issue. Not surprisingly, the Equal Employment Opportunity Commission recognizes a disparate impact claim under the ADEA in its interpretive guidelines.

The crux of the dispute over whether disparate impact claims are cognizable under ADEA centers on the language of the ADEA. Those courts that have permitted disparate impact claims analogize language in the ADEA to language in Title VII. For example, the ADEA provides that an employer may not “limit, segregate, or classify his employees in any way which would … adversely affect his status as an employee, because of such individual’s age.” This language is identical to the language in Title VII, which the Griggs Court relied upon in recognizing disparate impact claims under that statute. This same argument is advanced by the employees in Adams.

Conversely, the courts that question the viability of such a claim make three arguments. First, they hold that there are important differences in the language of the ADEA and Title VII. Specifically, the ADEA provides that an employer may “take any action otherwise prohibited … where the differentiation is based on reasonable factors other than age.” In Mullin v. Raytheon Co.Mullin, the First Circuit reasoned that this language precludes disparate impact claims. Similarly, the Eleventh Circuit in Adams found this provision to be sufficiently distinguishable from Title VII, raising doubt over the viability of a disparate impact claim. The First, Tenth, and Eleventh Circuits also view this exclusion as similar to section 206(d)(1) of the Equal Pay Act, 29 U.S.C. 206(d)(1)(iv), which has been interpreted by the Supreme Court to preclude disparate impact claims. See County of Washington, Ore. v. Gunther, 452 U.S. 161 (1981). The employees in Adams view the exclusion differently, arguing that the exclusion would be meaningless if disparate impact claims were not permitted.

Second, courts refusing to allow a disparate impact claim have relied on the legislative history of the ADEA. Several courts have noted that the ADEA was enacted after the Secretary of Labor issued a report recommending that Congress ban disparate treatment of older workers because of their age. The report indicated that policies with “disparate impact” should be addressed in other ways, thereby implying that the ADEA does not cover that type of claim.

Finally, these same courts look to the language in Hazen Paper to find support for their view that disparate impact claims are not available under ADEA. The Eleventh Circuit in Adams referred to the Hazen Paper Court’s statement that “disparate treatment captures the essence of what Congress sought to prohibit under the ADEA” and its acknowledgment that factors correlated with age, such as pension status, do not rely upon “inaccurate and stigmatizing stereotypes.” The Eleventh Circuit reasoned that this language is “inconsistent with a disparate impact theory of liability.”

Currently, disparate impact claims under ADEA are not cognizable in the Third Circuit but are valid in the Second Circuit. Thus, the Supreme Court’s decision in Adams will certainly impact future employment litigation in the New York/New Jersey metropolitan area. The impact of the decision may be further highlighted by the fact that several employers are now considering or implementing workforce reductions in light of the recent downturn in the economy. These employers should consult with outside counsel in order to properly evaluate the affects of any such reductions in force on their workforce and potential litigation.