Hunton Employment & Labor Perspectives

A new proposed rule by the Equal Employment Opportunity Commission provides new guidance in determining what constitutes a “reasonable factor other than age” in defending against a claim under the Age Discrimination in Employment Act.  The EEOC introduced the proposed rule on February 18, 2010 and is currently soliciting comments until Monday, April 19, 2010.

The EEOC took this action in light of two relatively recent decisions by the U.S. Supreme Court relating to claims of disparate impact under the ADEA.  In Smith v. City of Jackson, 544 U.S. 228 (2005), the Court confirmed that an employer can defend against such a claim by showing that the challenged decision was based on a reasonable factor other than age (“RFOA”).  In Meacham v. Knolls Atomic Power Laboratory, 128 S.Ct. 2395 (2008), the Court held that the burden falls on the defendant to prove the affirmative defense of an RFOA.  Neither case specifically stated what factors are “reasonable.” 

The proposed rule explains that a reasonable factor is one that is objectively reasonable when viewed from the position of a reasonable employer under like circumstances.  It is one that would be used in a like manner by a prudent employer mindful of its responsibilities under the ADEA.  The proposed rule lists six considerations as potentially relevant to the reasonableness determination:

• whether the employment practice and the manner of its implementation are common business practices;
• the extent to which the factor is related to the employer’s stated business goal;
• the extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately;
• the extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
• the severity of the harm to individuals within the protected group, in terms of both the degree of injury and the number of persons adversely affected, and the extent to which the employer took preventative or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
• whether other options were available and the reasons the employer selected the option it did.

Not all criteria must point to reasonableness to establish the RFOA defense; the rule states that the list is illustrative, not exhaustive.  The rule also provides guidance regarding whether the factors considered by the employer were age-related.  The considerations for this inquiry include:

• whether supervisors are given unchecked discretion to subjectively evaluate employees;
• the extent to which supervisors were to evaluate employees based on factors known to be subject to age-based stereotypes; and
• the extent of training received by supervisors in applying evaluative factors and avoiding discrimination.

Assuming that the proposed rule will become final (after the public comment period expires), these considerations can serve as a filter for decision making.  Employers and their counsel who apply these considerations on the front end likely will find that risk is reduced, more sound decisions are reached, and challenges are more likely to be resolved in their favor.