Supreme Court Issues Major Age Discrimination Ruling

SAN FRANCISCO, CA (March 31, 2005) -- Workers over 40 do not have to prove an intent to discriminate and may allege age discrimination under the ADEA under a “disparate impact” theory. The proof required for such an action, however, may be more favorable to employers than in other discrimination cases.

On Wednesday, March 30, 2005, the United States Supreme Court issued a closely watched and highly anticipated decision regarding the scope of an older worker's burden in suing an employer under the Age Discrimination in Employment Act (ADEA).

In Smith v. City of Jackson (No. 03–1160; March 30, 2005), the Supreme Court affirmed a 5th Circuit Court of Appeals ruling dismissing the claims of police officers in Jackson, Mississippi, that the city's employee pay plan discriminated against older workers on the basis of their age.

The older police officers argued that when the city's pay plan gave proportionately higher raises to officers with less than five years of service, the older workers, most of whom had more than five years of service, were adversely affected because of their age. The city argued that the plan based salary increases on rank and seniority and was motivated by the city's desire to bring the starting salaries of police officers to a level comparable with and competitive in the market.

The Court ruled that the disparate impact theory of liability is available to plaintiffs under the ADEA, which means that a plaintiff need not prove that an employer intended to discriminate against older workers. As the Court explained, disparate impact cases involve employment practices that are facially neutral in their treatment of different groups, but that in fact affect one group more harshly than another. Disparate impact cases focus on the effects of an employer's action, rather than the motivation for it.

The Court further concluded, however, that the coverage of the ADEA is narrower than Title VII of the Civil Rights Act of 1964 – which prohibits discrimination based on sex, religion, or race – because of language in the ADEA that permits an otherwise prohibited action where the differentiation is based on “reasonable factors other than age.” In other words, an employer may avoid liability by establishing that it relied on “reasonable” factors to justify a policy or practice that has an adverse impact on older workers.

In Smith, the Court concluded that although the plaintiffs could state a case under the disparate impact theory, their claims were not valid. The city's decision to award raises according to rank and pay was based on a reasonable factor other than age, regardless of the fact that, in effect, this meant older workers generally would receive lower raises. The Court affirmed the dismissal of the plaintiffs' claims.

Although ultimately a win for the city in this case, the Court's decision certainly broadens the potential liability for employers and may have a significant effect on the litigation of age discrimination cases under the ADEA.

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