<nobr>Mar 30, 2005</nobr>

ERIC: Supreme Court Permits Disparate Impact Claims Under ADEA

The Supreme Court held today that plaintiffs may bring age discrimination claims against their employer for instituting policies which have an adverse impact on older workers. Smith v. City of Jackson (544 U.S. _(2005), Case No. 03-1160). As explained in an ERIC Member Alert on this case in April, 2004, there is concern that sponsors of cash balance and other hybrid plans could be affected by this decision. Plan sponsors may face additional or exacerbated exposure under a disparate impact theory of recovery if an employer's benefit plan design results in greater benefits to younger employees, even if older employees cannot demonstrate evidence of discriminatory intent. Plaintiffs may be able to prevail by showing that the employer's practices, while apparently neutral, had a negative effect on older employees.

A copy of the Court's decision is below.

Background

Plaintiffs-appellants, thirty police officers and public safety dispatchers (all over forty) employed by the City of Jackson and the City of Jackson Police Department, filed suit under the Age Discrimination in Employment Act ("ADEA") claiming injuries as a result of an allegedly age-discriminatory performance pay plan implemented by the City. The district court held, as a matter of law, that a disparate impact claim could not be brought under the statute, and granted summary judgment in favor of the defendants on the plaintiffs' disparate impact and disparate treatment claims. At the appeals level, the court addressed the question of whether a disparate impact theory of liability was available to plaintiffs suing for age discrimination under the ADEA. The circuit court agreed with the district court on the disparate impact issue, and affirmed summary judgment in favor of the City on the disparate impact claim, finding that such claims could not be brought under the ADEA.

Opinion of the Court

The majority opinion of the Court holds that the ADEA does, in fact, authorize disparate impact claims. The Court pointed out that the language of the ADEA is derived from the language of Title VII of the Civil Rights Act of 1964 (prohibiting race discrimination in employment decisions). In Griggs v. Duke Power Co., 401 U.S. 424 (1971), the Supreme Court held that the language of Title VII allows plaintiffs to bring a claim for race discrimination to challenge employment practices that have the impact, if not intent, of discriminating against minorities. The Court reasoned that its interpretation of the language of Title VII in Griggs strongly suggests that disparate impact claims should also be cognizable under the parallel language of the ADEA. This finding was supported by the fact that the Department of Labor and the EEOC have consistently interpreted the ADEA to authorize disparate impact claims.

The Court did note, however, that that scope of liability for disparate impact claims brought under the ADEA is narrower than it is for claims brought under Title VII, for two reasons: 1.) The language of Title VII has been amended to broaden its coverage, while the ADEA has not been similarly amended; and 2.) the ADEA precludes liability for disparate impact claims if the employer can show a reasonable factor other than age (RFOA) for the employment policy in question. For purposes of the plaintiffs' claim in Smith, the Court held that the City had demonstrated a reasonable factor other than age that led to the implementation of the pay plan -- specifically, that the City needed to raise pay for younger workers with less seniority in order to become competitive with other jurisdictions in the region.

While the participating Justices agreed that the Smith plaintiffs should not recover under a disparate impact theory, they differed regarding the reasoning that should support the decision. Justice Scalia, in a separate opinion, stated that the Court should have deferred to the EEOC's interpretation of the statute rather than looking to Title VII. In a third opinion, Justices O'Connor, Kennedy, and Thomas stated that they would also deny plaintiffs' claim, but on the ground that disparate impact claims are not actionable under the ADEA.

Vanessa A. Scott
Legislative Counsel
The ERISA Industry Committee
1400 L Street, NW Suite 350
Washington, DC 20005
Tel: 202.789.1400 Fax 202.789.1120
http://www.eric.org

Text Files:

Court Decision: Smith v. City of Jackson

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