Supreme Court puts burden on employer defending age discrimination claim
The U.S. Supreme Court has ruled that an employer defending a claim made under the federal Age Discrimination in Employment Act (ADEA) that its employment decisions had an impermissible disparate impact on older employees bears both the burden of production and the burden of persuasion when it raises the defense that its decisions were based on permissible "reasonable factors other than age" (RFOA). With the end of the Cold War, Knolls Atomic Power Laboratory was forced to downsize and claimed that its reduction-in-force decisions were based on a nondiscriminatory evaluation of which employees would be most valuable under circumstances very different than what the lab had known hitherto. Of the 31 employees let go, 30 were over the age of 40. They sued under the ADEA and won a jury verdict initially affirmed on appeal by the U.S. Court of Appeals for the Second Circuit (CT, NY, VT), which found that Knolls's decisions were not a "business necessity" because Knolls could have designed a procedure with more safeguards. The Supreme Court vacated that appellate decision and remanded the case in light of its own intervening decision in Smith v. City of Jackson, 544 U.S. 228 (2005). Under City of Jackson, the Second Circuit then held, the test was no longer one of "business necessity" and the employees failed to sustain their burden of disproving the employer's RFOA defense.
On appeal, the Supreme Court held that the RFOA exemption, like the "bona fide occupation qualifications" exemption that appears alongside it in the ADEA, is an affirmative defense for which the employer bears the burden of persuasion. The decision, authored by Justice Souter, joined by Chief Justice Roberts, and Justices Stevens, Kennedy, Ginsburg, Alito, and joined in part by Justice Thomas, rejected Knolls's argument that because the RFOA clause bars liability where the employer acts for reasons "other than age," the clause merely elaborates on an element of liability. In fact, the Court observed, a disparate impact claim, by definition, assumes a non-age factor was at work; the focus of the RFOA defense is thus on the "reasonableness" of the action, rather than the "other than age" language. The Court also rejected the Second Circuit's rationale that because City of Jackson rejected the "business necessity" defense, RFOA "replaced" this defense and thereby kept the burden of persuasion on the employee. While the Supreme Court declared itself "now satisfied that the business necessity test should have no place in ADEA disparate-impact cases" because this would entail a wasteful, confusing, and overlapping standard of proof, it found that City of Jackson cannot be read as implying that the burden of proving any business-related defense falls on the plaintiff.
The Court addressed employer concerns by noting that a plaintiff employee must do more than merely allege a disparate impact resulting from the employer's generalized policy; instead, he or she must identify the specific test, requirement, or practice that had a disparate impact on older workers. "Identifying a specific practice is not a trivial burden, and it ought to allay some of the concern raised by Knolls's amici, who fear that recognizing an employer's burden of persuasion on an RFOA defense to impact claims will encourage strike suits or nudge plaintiffs with marginal cases into court, in turn inducing employers to alter business practices in order to avoid being sued. … That said, there is no denying that putting employers to the work of persuading factfinders that their choices are reasonable makes it harder and costlier to defend than if employers merely bore the burden of production; nor do we doubt that this will sometimes affect the way employers do business with their employees. But at the end of the day, amici's concerns have to be directed at Congress … . We have to read it the way Congress wrote it."
Justice Scalia concurred in the judgment but would have reached that result simply by deferring to the interpretation of the U.S. Equal Employment Opportunity Commission, the agency charged with administering the ADEA. Justice Thomas dissented in part to note that he continues to believe that disparate impact claims are not covered by the ADEA at all. Justice Breyer took no part in consideration of the case.
Meacham v. Knolls Atomic Power Laboratory, No. 06-1505 (U.S. Jun. 19, 2008)
[Editor's Note: Background on the case, including NSBA's brief to the Court supporting the employer's position and detailing the implications of the case for public schools, is below. NSBA's brief, written pro bono by Maree F. Sneed, John W. Borkowski, Audrey J. Anderson, Thomas B. Leary, and Gil A. Abramson of the Washington, D.C. firm of Hogan and Hartson LLP, argued that the test in this kind of case is not whether the employer's decision was a "business necessity" and that the ADEA does not place on the employer the burden of proving that common and necessary employment criteria were reasonable.]
NSBA School Law pages on oral arguments