Last Friday, the Equal Employment Opportunity Commission issued final regulations regarding employer defenses to disparate impact age discrimination claims. Disparate impact claims are those based on neutral employer policies that have a statistically significant negative impact on a protected employee classification. The new rules were issued in response to several U.S. Supreme Court decisions which concluded that the EEOC's prior requirement that employers prove business necessity for the policy was too strict.
Instead, employers can defend the disparate impact age claim by showing that the policy is based on Reasonable Factors Other than Age (RFOA). According to the EEOC, an employment practice is based on a RFOA when it is reasonably designed and administered to achieve a legitimate business purpose in light of the circumstances, including its potential harm to older workers. The EEOC stated that the facts surrounding each particular situation must be reviewed based on a list of considerations relating to reasonableness.
In practice, this individual factual assessment will mean that few disparate impact age discrimination cases will be subject to early dismissal. Employers will be required to show how the practice benefitted the business, and the steps they took to minimize the impact of the policy on older workers.
For example, if the employer implements a reduction in force, and that reduction has a disparate impact on older workers, the entire employee evaluation and selection process will be open to judicial scrutiny. The employer's defense to the claim will depend upon its ability to establish that the entire process was objectively reasonable. These rules will force employers to carefully plan and document their decision making processes for any employment decisions that could adversely affect older workers.