Disparate Impact Liability Extended to Age Discrimination

April 1, 2005

By: Kasey Swisher

Employees seeking relief from age discrimination have a new weapon:  Disparate impact liability. Originally applied to race, gender, religion, and ethnicity, disparate impact law allows employers to be held civilly liable for practices or policies that have an adverse impact on a statutorily protected group. If plaintiffs can show that a practice or policy creates a numerical disparity on a protected class, the employer is liable, even if the employer never meant to discriminate or if the practice is neutral on its face. 

Now, the United States Supreme Court has extended disparate impact liability to age. In Smith v. City of Jackson, the Court interpreted the Age Discrimination in Employment Act (ADEA) to include disparate impact liability. Though the ruling could potentially create a litigation rush, the Court created three barriers to plaintiffs seeking to recover under this theory.  First, plaintiffs will have to “isolate and identify” the specific employment practices that allegedly caused statistical disparities. Plaintiffs may not “simply allege that there is a disparate impact on workers, or point to a generalized policy that leads to such an impact.” This presents a heavier burden on plaintiffs seeking to recover for age discrimination than those seeking to recover under race or gender.    

Second, even if plaintiffs are able to point to the specific practices that created the disparity, the employer can defend these practices by merely showing that “the adverse impact was attributable to a non-age based factor that was reasonable.”   This is a much lower threshold than the “business necessity” showing that employers must make in race and gender cases.

Finally, once the employer has presented a reasonable basis for the practice/policy, the burden of proof shifts back to the plaintiff to disprove the reasonableness of the employer’s basis.  This is another major deviation from the disparate impact scheme in race and gender cases. In those cases, employers retain the burden of proof.

In sum, the culmination of these obstacles creates a significant burden on plaintiffs. This burden is highlighted by the Court’s refusal to allow the plaintiffs in Smith to state a claim—the same claim that produced the rule.  So while employees over 40 will have a new protection against their employers, several obstacles will likely limit the employees’ chances of success.

Looking to the future, many critics contend that the Court’s ruling actually raises more questions than it answers. For example, what about layoff policies that favor releasing employees with higher pay levels?  Most of these employees will have been with the employer for many years, and many will be over 40. Is the economic justification of the lay-off policy reasonable?

What about employment applicants? Does disparate impact liability apply to older applicants that are denied employment because employers favor hiring those with less experience that can be justifiably paid less. Though some lower courts have held that economic considerations may be reasonable, such everyday practices may now be under attack.