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Multimillion-dollar age discrimination verdict after layoff

Posted: November 27, 2008 5:59 p.m.
Updated: November 28, 2008 4:30 a.m.

When the federal government required one of its defense contractors to reduce its workforce, the contractor first evaluated its employees based on the criteria of performance, flexibility and critical skills.

After adding points to scores for years of service, the employer arrived at a list of 31 employees to be laid off.

On their face, the criteria were age-neutral, but all but one of the employees chosen to receive a pink slip were at least 40 years old, within the age group protected by the federal Age Discrimination in Employment Act.

The laid-off employees sued their former employer under the ADEA, alleging the disparate impact form of age discrimination.

Disparate impact refers to the use of policies or criteria by an employer in making employment decisions that are not overtly based on age, but which, when applied, allegedly have a disproportionate impact on older individuals.

The other type of employment discrimination, known as "disparate treatment," asserts that the employer intentionally treated applicants or employees differently because of their age.

The plaintiffs first established, using statistical experts, that such a skewed result against older workers under the layoff criteria would rarely happen by chance, and that the same factors that were most closely linked statistically to the older employees, flexibility and critical skills, were also the factors most influenced by the discretion of the contractor's supervisors.

The contractor countered that it was not liable because the ADEA provides that an employer action is not unlawful if differentiation among employees is based on "reasonable factors other than age." A jury returned a multi-million-dollar verdict for the plaintiffs.

Ultimately, the case reached the United States Supreme Court, which upheld the judgment for the plaintiffs.

The critical issue determined by the Supreme Court was whether the RFOA element needed to be proven by the plaintiffs or by the defendant employer.

In other words, did the plaintiffs have to prove there were no reasonable factors other than age underlying the employer's decision, or did it fall to the employer to present an affirmative defense and prove the existence of the other reasonable factors?

Examining the language of the ADEA and taking note of a previous ruling where a similar provision in the law was in the nature of an affirmative defense, the Court ruled that RFOA is an affirmative defense the employer must prove, and in this case, had not.

The Court's opinion anticipated criticism, which, in fact, was forthcoming, that its decision could open the floodgates for similar claims and make it too easy for plaintiffs to prevail.

It pointed out that even before the RFOA affirmative defense comes into play, the plaintiff in an ADEA disparate impact case must isolate and identify specific performance practices by the employer that are responsible for statistical disparities disfavoring older workers.

As the Court put it, "this is not a trivial burden."

However, concerns about tilting the scales too far against employers should be directed at Congress, according to the Court, since it created the RFOA concept and made it a defense to be proven by employers.

Based on the decision, very careful evaluation must be utilized if the unfortunate event of the need to lay off employees arises, and it should be done in conjunction with experienced legal counsel.

John H. Shaffery is a partner with Poole & Shaffery, LLP, a full-service business, corporate and employment law firm in Valencia. His column represents his own views and not necessarily those of The Signal. "It's The Law" appears Fridays and rotates between members of the Santa Clarita Valley Bar Association.


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