The U.S. Supreme Court enhanced job security for America’s aging workforce in a March 30, 2005 ruling in Smith v. the City of Jackson, Mississippi.  Employees over the age of 40 may now file an age bias claim without proving discriminatory intent by their employer. Under ADEA (Age Discrimination in Employment Act of 1967), employees now need only prove that their employer’s policy or plan has a “disparate impact” on them.

Disparate impact claims differ from “disparate intent” claims, in that they are used to challenge employment practices that do not involve intentional discrimination, but disparately impact based on race, gender and now age.

As an employer, the Court’s decision to allow disparate impact claims under the ADEA is likely to impact your employment practices:

• This decision creates the definite potential for increased liability for employers, and could trigger litigation from a growing sector – about half of America’s workforce who is now over the age of 40.
  
• You should assess whether your employment plans and programs may have an unintentional negative effect on employees over 40. Be sure you can articulate a legitimate basis for your plans. Are they based on reasonable factors other than age, such as bringing starting salaries in range with similar entities such as was the case in Smith v. the City of Jackson, Mississippi?
  
• Focus on plans associated with reductions-in-force, benefit, retirement policies and salary practices.  Consider the possible impact on employees over 40 prior to enacting any new plans or policies.
  
• This decision may trigger more age-bias claims, but it actually makes it easier for employers to defend against ADEA-based disparate impact claims as opposed to Title VII disparate impact claims. You can defeat a disparate impact age discrimination claim by showing that you relied upon “reasonable factors other than age.”

The ADEA differs from Title VII in that it contains a provision referred to as RFOA (reasonable factors other than age). This provision states “any action otherwise prohibited [under ADEA] is lawful ‘where the differentiation is based on reasonable factors other than age discrimination’.”  The ADEA’s disparate impact theory is narrower than Title VII because of the RFOA provision and because the Civil Rights Act of 1991’s amendment of Title VII did not address age discrimination claims.

The Supreme Court’s Decision:

Smith v. the City of Jackson, Mississippi involved a case brought by police officers in Jackson, Mississippi where the City had implemented a policy of granting raises to all police officers and dispatchers to bring starting salaries in line with the regional average. This policy resulted in officers with less than five years of service receiving proportionately greater raises than those with more seniority. It also resulted in officers younger than 40 years of age generally receiving proportionately greater raises than those officers older than 40. Thirty police officers and public safety dispatchers brought suit alleging that the City’s plan discriminated against older workers.

The Court considered language in the Title VII and guidance provided by the U.S. Department of Labor and Equal Employment Opportunity Commission on the ADEA. The Court relied on its unanimous 1971 interpretation of Title VII in Griggs v. Duke Power Co. which found that Title VII allowed disparate impact claims.  Upon review of the various statutes and applicable regulations, the Court concluded that while the ADEA does allow disparate impact claims, the City of Jackson’s plan was based on “reasonable factors other than age” and did not violate the ADEA.  Thus, while these claimants established a precedent that will help other future claimants, they ultimately lost their own case.