On January 23, 2019, the Court of Appeals for the Seventh Circuit issued an opinion affirming the dismissal of an ADEA1 claim for disparate impact.2 In this opinion, the Seventh Circuit found that the cause of action for disparate impact under the ADEA is available only to existing employees, rather than new applicants. This holding begs the question – Does this mean that applicants for employment will never be able to bring a claim for disparate impact under the ADEA? The answer to this question is (as usual) it depends.
In 2014, CareFusion Corp. posted a job opening for an in-house counsel position. The job description required successful applicants to have three to seven years of relevant legal experience. Kleber, 58 at the time, submitted his application for the position, even though he easily exceeded the amount of experience allowed. He was later passed over for the job, which was eventually given to a 29-year-old who met the experience requirements. Kleber later filed suit against CareFusion, arguing that the experience requirements have a disparate impact on older applicants and is therefore unlawful employment discrimination. The theory of disparate impact is frequently relied upon by plaintiffs to show that, even though an employer’s practice is neutral on its face, the resulting disproportional impact on a group possessing a legally protected characteristic renders the practice unlawfully discriminatory. Unlike a claim for disparate treatment, disparate impact does not require the plaintiff to show the employer had intent to discriminate.
The claim for age discrimination due to disparate impact is rooted in Section 623(a)(2) of the ADEA, which states that it is 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.”3 The Seventh Circuit looked to the plain language of the statute to find that the claim for disparate impact is not available for applicants. After all, an employer cannot affect one’s “status as an employee” if the individual is not already employed with the company in some capacity. The Court also pointed to clear differences between Section (a)(2) and the preceding text, Section (a)(1), which clearly states that the prohibition to hire or fire an individual due to his or her age applies to current employees as well as to outside applicants.
The Supreme Court currently holds that Section (a)(2) prohibits practices that have a disparate impact on older employees, but it does not have a standing opinion regarding the Section’s applicability to outside applicants.4 To date, only one other federal Court of Appeals has taken such a narrow approach to interpreting the claim for disparate impact under the ADEA. In 2015, the Eleventh Circuit issued a nearly identical opinion in Villarreal v. R.J. Reynolds Tobacco Company.5 Here, the Eleventh Circuit also looked to the strict meaning of the law’s text to find that the claim is not available for outside applicants. The Supreme Court later denied the plaintiff’s petition to review the Eleventh Circuit’s decision.
Unsurprisingly, plaintiffs have had more success bringing disparate impact claims in districts that purport to look to the intention of the statute when interpreting its meaning, rather than to the strict meaning of its text. No other federal Appeals Court has offered its opinion on the matter, but several lower federal courts have done so. For example, the Northern District of California has stated that the “plain language of the statute supports the more inclusive interpretation”, pointing out that the Section (a)(2) uses the phase “any individual,” rather than “employee” to identify those who are protected by the statute.6
While the CareFusion opinion may seem like good news to employers, they shouldn’t rush to implement experience caps or other requirements that may adversely affect older applicants. Such practices remain subject to state employment discrimination laws, and state courts are often more plaintiff-friendly. For example, a similar allegation under the Illinois Human Rights Act would carry the potential for an award of uncapped compensatory damages for emotional distress, pain and suffering, etc.7 In the hands of a state court jury, potential damages could certainly exceed the damages available under the ADEA. Also, regardless of which state a company is located, plaintiffs can still use experience qualifications to show that the employer issued those requirements because it intended to discriminate against older applicant if such intention does exist. Accordingly, employers should take care to ensure that any experience limitations they maintain are not motivated by age discrimination and are based upon legitimate business needs.
References:
1 The Age Discrimination in Employment Act of 1967.
2 Kleber v. CareFusion Corp., 914 F.3d 480, 482 (7th Cir. 2019).
3 29 U.S.C. § 623(a)(2).
4 Smith v. City of Jackson, Miss., 544 U.S. 228, 228, 125 S. Ct. 1536, 1537, 161 L. Ed. 2d 410 (2005).
5 839 F.3d 958, 961 (11th Cir. 2016).
6 Rabin v. PricewaterhouseCoopers LLP, 236 F. Supp. 3d 1126, 1128 (N.D. Cal. 2017).
7 775 ILCS 5/1-101.
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