Smith v. City of Jackson: ADEA Authorizes Employee Disparate Impact Claims

In Smith v. City of Jackson, Miss., 544 U.S. 228 (2005), the Supreme Court recognized that the Age Discrimination in Employment Act, like Title VII of the Civil Rights Act, authorizes disparate impact claims. This means that an employee, to prevail on an age discrimination claim, does not necessarily have to prove her employer intended to discriminate against her because of her age. Under a disparate impact approach, an employee may prove age discrimination by showing the employer took an adverse action against her based on a standard or test that has the effect of adversely impacting older workers — regardless of whether the employer intended to adversely impact older workers. Unlike Title VII, however, § 4(f)(1) of the ADEA narrows its coverage by permitting any “otherwise prohibited” action “where the differentiation is based on reasonable factors other than age[.]” 544 U.S. at 233 (citing 29 U.S.C. § 623(f)(1)). The scope of disparate-impact liability under ADEA is therefore arguably narrower than disparate-impact liability under Title VII. Id. at 240.

As discussed in an earlier post, the Age Discrimination in Employment Act protects employees over age 40 from discrimination based on age in hiring, discharge, promotion, compensation, or other terms, conditions or privileges of employment

Title VII of the Civil Rights Act contains similar provisions outlawing discrimination because of race, sex, or religion. As discussed in an earlier post, the Supreme Court in in Griggs v. Duke Power Company, 401 U.S. 424 (1971), addressed the Title VII issues created by employer policies that are facially neutral, and which the employer does not intend as discriminatory, but which adversely impact employees on the basis of race, sex, or religion. Griggs decided that where an employer uses a neutral policy or rule, or utilizes a neutral test, and this policy or test disproportionately impacts minorities or women in an adverse manner, then the neutral rule or test violates Title VII unless the employer proves it is justified by “business necessity.”

City of Jackson addressed the question of whether the ADEA, like Title VII, allows disparate impact claims by prohibiting facially neutral employer practices that disparately impact older workers.

Facts

City of Jackson involved a challenge to a city’s pay plan for police officers that was relatively less favorable to older workers than to younger workers.

The Jackson plan divided the officers into five basic positions — police officer, master police officer, police sergeant, police lieutenant, and deputy police chief — and divided the pay scale for those positions into a series of steps and half-steps. The few officers in the two highest ranks were all over age 40. The raises they received under the plan, though higher in dollar amount than the raises given to junior officers, represented a smaller percentage of their salaries. These officers in the two highest ranks were the members of the class arguing that the pay plan had a “disparate impact” against older workers.

The Jackson plaintiffs’ evidence established two main facts: First, almost two-thirds (66.2%) of the officers under 40 received raises of more than 10% while less than half (45.3%) of those over 40 did. Second, the average percentage increase for the entire class of officers with less than five years of tenure was somewhat higher than the percentage for those with more seniority. Because the older officers tended to occupy more senior positions, on average they therefore received smaller increases when measured as a percentage of their salary. Jackson, 544 U.S. 228, 241–42.

The older officers in the two highest ranks filed suit against the City under the ADEA, on the grounds that the pay plan violated the law by having a disproportionate impact on workers over age 40.

The Court’s Decision

Addressing these facts, the Supreme Court held, that like Title VII, the ADEA authorizes disparate-impact claims. The Court also pointed out, however, that unlike Title VII, § 4(f)(1) of the ADEA narrows its coverage by permitting any “otherwise prohibited” action “where the differentiation is based on reasonable factors other than age[.]” Jackson, 544 U.S. at 233. The scope of disparate-impact liability under ADEA is therefore narrower than disparate-impact liability under Title VII. Id. At 240.

To make out an ADEA disparate-impact claim, the Court held that plaintiffs must do more than show a pay plan generally has the effect of being less generous to older workers. They must establish a “specific test, requirement, or practice within the pay plan that has an adverse impact on older workers.” 544 U.S. at 241. In Jackson, while plaintiff employees had proved that the plan was relatively less generous to older workers, they had not identified any specific test, requirement, or practice “within the plan” that had an adverse impact on older workers. Id.

The Court also discussed the provision of the ADEA that permits differentiation based on “reasonable factors other than age,” as applied to the factors underlying the pay plan at issue. See 29 U.S.C. § 623(f)(1). The Court observed that the basic explanation for the differential in the Jackson pay plan was the City’s perceived need to raise the salaries of junior officers to make them competitive with comparable positions in the market. The Court held that the disparate impact was attributable to the City’s decision to give raises based on seniority and position. “Reliance on seniority and rank is unquestionably reasonable given the City’s goal of raising employees’ salaries to match those in surrounding communities… [Therefore] the City’s decision to grant a larger raise to lower echelon employees for the purpose of bringing salaries in line with that of surrounding police forces was a decision based on a “reasonable facto[r] other than age” that responded to the City’s legitimate goal of retaining police officers. Jackson, 544 U.S. at 242.

The Court therefore (1) held that the ADEA authorizes disparate impact claims, although the scope of such claims is somewhat narrower than the scope of disparate impact claims under Title VII, and (2) affirmed summary judgment for the employer city on the particular facts of that case.

Analysis

Under City of Jackson, employees may bring ADEA claims on the grounds that facially neutral employer practices or plans have a disparate impact on older workers. However, at least with respect to employer pay plans, it is probably not enough to just show that the end result of the pay plan was relatively less favorable to older workers than to younger workers. Employees would also need to identify a specific practice “within the plan” that adversely affected older workers. 544 U.S. at 241. In the trial court decisions applying City of Jackson under different factual circumstances, however, the practical difference between pointing out that a pay plan “is relatively less generous to older workers” and identifying a “specific test, requirement, or practice within the pay plan that has an adverse impact on older workers” is sometimes a little blurry. Id. For example, the Norfolk division of the Eastern District of Virginia denied an employer’s motion to dismiss an ADEA disparate impact claim, where the complaint alleged the employer “implemented a screening and evaluation process [that] did not evaluate applicants fairly[,] but instead discriminated against candidates based on age”; “employees who were substantially older and with vastly more experience in the position and field were systematically passed over for the ITS positions in favor of younger, less-qualified applicants”; and “support[ed] the allegations with statistical data highlighting the respective ages of the applicants and those selected.” Andreana v. Virginia Beach City Pub. Sch., No. 2:17-CV-574, 2018 WL 2182297, *6 (E.D. Va. May 9, 2018). Similarly, in Merritt v. WellPoint, Inc., 615 F. Supp. 2d 440, 446 (E.D. Va. 2009), the court denied a motion to dismiss where the plaintiffs identified several alleged “arrangements” made by the employer that had a disparate impact on older workers, including: “analytical models,” a “selection process which considered age, and age-related characteristics, as negative factors” including medical care or leave, the use of “metrics,” which disproportionately evaluated and/or impacted older employees, and a consideration of “age and/or age-related characteristics in the ‘cost’ of maintaining an older workforce.”)

The main takeaway is this. City of Jackson held that the ADEA, like Title VII, authorizes disparate impact claims. This means that an employee, to prevail on an age discrimination claim, does not necessarily have to prove her employer intended to discriminate against her because of her age. Under a disparate impact approach, an employee can prove age discrimination by showing the employer took an adverse action against her based on a standard or test that had the effect of adversely impacting older workers — regardless of whether the employer intended to adversely impact older workers. Unlike Title VII, however, the ADEA narrows its coverage by permitting any “otherwise prohibited” action “where the differentiation is based on reasonable factors other than age[.]” ADEA § 4(f)(1). The scope of disparate-impact liability under ADEA is therefore arguably narrower than disparate-impact liability under Title VII.

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