Federal Courts Limit Hiring Protections for Older Workers

As a former employment lawyer and a Baby Boomer, I am dismayed that two recent federal appeals courts, one within the last month, have held that the Age Discrimination in Employment Act does not protect older workers looking for jobs from disparate impact age discrimination, only those who already have jobs.

We are talking about the use of hiring criteria that might not expressly mention age but disfavor job candidates who have too much experience or who graduated too many years ago—factors which correlate closely with age.

Companies are still not allowed to adopt policies that tend to substantially harm existing older employees as a group but they are free to do so in the hiring context, where older people need protection as much or more than those who are already employed. As companies close down, merge, move offshore, and downsize, more and more older workers are finding themselves on the job market, often after having spent decades and the bulk of their careers with one or two employers. They have a harder time finding new jobs and tend to be unemployed for longer. New jobs they do find often pay considerably less. And in some cases, those who are 62 or older give up the search and start collecting Social Security at a younger age than they otherwise would, resulting in a permanently lower benefit than if they had been able to stay employed longer and wait a few more years.

A data analysis published by Pro Publica and the Urban Institute last December found more than half of U.S. workers over the age of 50 are “pushed out of longtime jobs” before they are ready to retire and suffer “financial damage that is often irreversible.”

The Age Discrimination in Employment Act (ADEA) is a federal law enacted in 1967, which prohibits employers from discriminating against people over the age of 40 on account of their age. The ADEA was modeled on Title VII of the Civil Rights Act, passed just three years earlier, which outlawed discrimination based on race, color, religion, sex, or national origin. Both the ADEA and Title VII protect against disparate treatment and disparate impact affecting those in the protected categories.

Disparate treatment is the most straightforward kind of discrimination, overtly refusing to hire someone, firing them, or treating them worse than their fellow employees in other ways because of their age, race, gender, or some other characteristic covered by civil rights law. Disparate impact, on the other hand, involves a facially neutral policy, practice, criterion, or classification that adversely affects individuals in a protected group to a disproportionate extent.

In a recent example, the restaurant chain Ruby Tuesday agreed in October 2017 to enter into a consent decree and pay $45,000 to settle a disparate impact suit brought by the EEOC in the U.S. District Court for the Southern District of Florida, based in Miami. The EEOC alleged violation of the ADEA because the company failed to hire then-59-year old Floyd Cardwell, who had over 20 years of experience in the food and beverage industry, for a general manager position at its Boca Raton restaurant and told him the reason was that it was seeking a candidate who could “maximize longevity.” Someone almost 20 years younger than Cardwell got the job instead.

The outsized effect on a particular gender, race, or age group can be the unintended consequence of a good faith policy or action. It can also serve as a more devious means to discriminate.

For plaintiffs suing over workplace bias, the advantage of disparate impact claims is that they do not need to prove discriminatory intent or motive. They can make the case with statistics that show a facially neutral policy or action harms older workers substantially more than younger ones. Once they have done that, it is not the end of the story, however. If the employer can show that the policy or action was based on a reasonable factor other than age, it will not be liable, as set forth in an EEOC rule, 29 CFR 1625.7, adopted in 2012.

The two recent federal appellate decisions, by the Seventh and Eleventh Courts of Appeal, disallowed disparate impact claims under the ADEA based on failure to hire.

Richard Villarreal was 49 years old in 2007 when he submitted an online application for a territory manager position with R.J. Reynolds & Co. A contractor helping with the hiring screened out his application based on guidelines from RJR that described the targeted candidate as someone “2-3 years out of college” who “adjusts easily to changes” and instructed the contractor to “stay away” from applicants “in sales for 8-10 years.”

Villarreal never heard back but in April 2010, he was contacted by lawyers who told him RJR had discriminated against him because of his age. Villarreal filed a complaint with the Equal Employment Opportunity Commission (EEOC) and, over the next two years, unsuccessfully reapplied five more times to RJR. In April 2012, the EEOC issued him a notice of his right to sue RJR and he did so, in the U.S. District Court in the Northern District of Georgia, which is based in Atlanta.

His class action complaint in Villareal v. R.J Reynolds Tobacco Co. was brought on behalf of “all applicants for the Territory Manager position” since the date RJR “began its pattern or practice of discriminating against applicants over the age of 40” who were 40 years of age or older at the time and were rejected for the position. It alleged disparate treatment under section 623(a)(1) of the ADEA as well as disparate impact under section 623(a)(2), which makes it “unlawful for an employer ․ . . to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.”

In 2013, District Judge Richard Story tossed the entire case as untimely filed and further held that the ADEA’s disparate impact protections apply only to those already employed, not disappointed job applicants, such as Villarreal.

On the initial appeal, a three-judge panel reversed, holding 2-1 that spurned job applicants can claim under disparate impact, because the court found section 4(a)(20 ambiguous and so deferred to the position of the EEOC, which has long recognized such claims. The opinion also referred to statistics that suggested a pattern of RJR hiring younger people: “Of the 1,024 people hired as territory managers from September 2007 to July 2010, only 19 were over the age of 40.”

The majority further found that Villarreal had no reason to know about the discrimination until 2010 and acted quickly once he did. Thus, there was thus equitable tolling of the 180-day time to sue and his claims were not time-barred.

The case then went to the entire Eleventh Circuit which, on October 5, 2016, held that section 623(a)(2) does not cover job seekers and thus the district court correctly dismissed that claim.

Judge William Pryor Jr., placed on the court by President George W. Bush, wrote for the majority that an applicant for employment cannot sue an employer for disparate impact because the applicant has no “status as an employee.” He interpreted the statute’s reference to adversely affecting “status as an employee” as limiting the reach of that provision to existing employees.

Judge Beverly Martin, appointed by Barack Obama in 2010, dissented on the disparate impact holding, along with two other judges. In her view, section 623(a)(2)’s use of the term “any individual” meant that it covered job applicants too and the mention of “job status as an employee” encompassed prospective or future status.

In addition, the majority interpretation was not consistent with U.S. Supreme Court precedent, she wrote. Martin pointed out that the EEOC read the law the same way she did, adopting a rule to that effect in 1981 following notice and comment.

In addition, she found that equitable tolling saved Villarreal’s ADEA claims from being time-barred because he had “no knowledge and no reason or means to know about RJ Reynolds’s secret elimination of older workers from the hiring pool” until just before he filed his EEOC charge and the law requires only “reasonable diligence” for equitable tolling.

Villarreal sought an appeal, but the Supreme Court denied his petition for certiorari in June 2017.

The more recent case, Kleber v. CareFusion Corp., was decided by the Seventh Circuit Court of Appeals in Chicago, on January 23, 2018.

Dale Kleber, an attorney, in March 2014, applied for a senior in-house law position at CareFusion, a healthcare products company. The job description required applicants to have “3 to 7 years (no more than 7 years) of relevant legal experience.” Kleber, who was 58 at the time, had more than that. A 29-year old who did not exceed the experience criterion got the job.

Kleber’s age discrimination lawsuit, filed in the U.S. District Court for the Northern District of Illinois, played out much like Villarreal’s. A District Judge, Sharon Johnson Coleman, granted a motion to dismiss his disparate impact claim on the ground that section 623(a)(2) does not extend to outside job applicants. A divided three-judge appellate Court reversed. When the matter was heard en banc by the entire appeals court, it agreed with the district court that only existing employees can bring disparate impact claims under the ADEA.

Circuit judge Michael Scudder Jr., a Donald Trump appointee, wrote the majority opinion, basing it in part on Villarreal and a similar analysis of the statutory language that found no ambiguity in section 623(a)(2).

This time, there were two dissenting opinions. One, by Judge David Hamilton, found disparate impact protected job applicants based on the wording and purpose of the ADEA, as well as Supreme Court precedent, especially Griggs v. Duke Power Co., 401 U.S. 424 (1971)—which interpreted nearly identical language in the Title VII.

Hamilton, who was first appointed to the bench by President Bill Clinton and later elevated to the Court of Appeals by President Barack Obama, noted the absence of “any plausible policy reason” from the defendant, amici or the en banc majority “why Congress might have chosen to allow disparate-impact claims by current employees, including internal job applicants, while excluding outside job applicants” and accused the majority of “following instead a deliberately naïve approach to an ambiguous statutory text, closing its eyes to fifty years of history, context, and application.” He was joined by three other judges, Chief Judge Diane Wood and Judges Ilana Rovner, and Frank Easterbrook.

Easterbrook, a President Ronald Reagan appointee and former Chief Judge, also authored a separate dissent in which he disagreed with Hamilton to the extent that he looked beyond the text of the state to the purpose of the ADEA. But relying solely on the text, Easterbrook reached the same result as Hamilton, looking at language beyond section 4(a)(2) which indicated that the word “individual” in that section was meant to encompass job seekers.

It is not yet known if Kleber will seek to appeal to the U.S. Supreme Court and, of course, whether the Court would accept the appeal. Given the current composition of the Court, an appeal would be a risky proposition for the AARP Foundation, which represents Kleber.

In the meantime, job applicants older than 40 in the states that comprise the Seventh and Eleventh Circuits—Illinois, Indiana, Wisconsin, Alabama, Florida and Georgia—will be unprotected from disparate impact job discrimination.

New Jersey, fortunately, is located in the Third Circuit, where court precedent recognizes disparate impact hiring claims, as does the state’s own Law Against Discrimination, which protects workers of all ages, not just those over 40. It does, however, allow companies to refuse to hire people who are older than 70 or younger than 18.

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